The amount of money that an investor must deposit with their broker or exchange to cover the credit risk that the holder offers to the broker or exchange is referred to as margin. When an investor borrows money from a broker to buy financial instruments, borrows money to sell them short, or gets into a derivative transaction, he or she is assuming credit risk.
Commodity Trading Risks
What is commodity trading? Commodity trading is the business of profitably purchasing and selling items generated by nature or by humans. Commodity trading may be divided into two types: spot trading and futures trading.
Spot trading entails purchasing and selling commodities on a cash basis at the current market price. Futures trading, on the other hand, involves purchasing and selling commodities at a preset price in the future.