Commodities are traded using a variety of financial instruments, including futures contracts that are based on underlying physical commodities. By purchasing or selling futures contracts, investors bet on the future value of a specific commodity. When they expect the price of a commodity to rise, they buy futures contracts or go long, and when they expect it to fall, they sell other contracts or go short.
The necessity of commodities in daily life led ancient civilizations to establish trade routes for the exchange of their goods long before the development of contemporary financial markets.

Modern commodity trading in the United States began in 1848 at the Chicago Board of Trade. As a result, farmers were able to lock in grain sales prices throughout the year rather than just after harvest, when prices are typically low. Pre-agreed prices through futures contracts provided price protection for both farmer and buyer.

Commodity trading involves the buying and selling of raw goods, such as gold, oil, agricultural products, or other tangible items. It's a financial activity where traders aim to profit from fluctuations in commodity prices. Participants can include farmers, investors, and businesses seeking to manage price risks. The commodities market operates globally, providing a platform for buyers and sellers to engage in transactions. Futures contracts are commonly used, allowing parties to lock in prices for future delivery. Commodity trading plays a vital role in the global economy, impacting various industries and influencing prices that can affect consumers worldwide.