Commodity Fundamentals: How to Trade the Precious Metals, Energy, Grain, and Tropical Commodity Markets

Glossary of Common Commodity Trading Terms

Accumulate When traders buy a commodity heavily and “take it out of the market.”

Actuals Commodities on hand, ready for shipment, storage, or manufacture.

Afloats Commodities loaded on vessels and on way to destination. It may refer to loaded boats in harbor and about to sail, but not to cargoes already at destination.

Arbitrage Simultaneous purchase and sale of the same quantity of the same commodity in two different markets, either in the same country or in different countries. Used to take advantage of what is believed to be a temporary disparity in prices.

At the market An order to buy or sell at the best price obtainable at the time the order reached the trading pit or ring.

Basis The price difference over or under a designated future at which a commodity of a certain description is sold or quoted.

Basis grade Specified grade, or grades, named in the exchange's futures contract. Other grades are tenderable, subject to price differentials from the basis, or “contract” grade.

Bid A bid subject to immediate acceptance, made on the floor of an exchange to buy a definite quantity of a commodity future at a specified price; opposite of offer. See also Offer.

Break A quick, extensive decline in prices.

Bulge A rapid advance in prices.

Buy on close To buy at the end of a trading session at a price within the closing range.

Buy on opening To buy at the beginning of a trading session at a price within the opening range.

C&F (cost and freight) ...