Influence of Trade on Economy

 

Trading is defined as the business of purchasing and selling of goods, products or services. A trade plays a key role in influencing the growth of economy of a country. It is one of the tools for the development of a nation.Hence, a developing country tries to integrate its economy with the world economy. This can be done by export trading, forex trading, commodities trading etc.

 

Export and Forex Trade

 

Export trade is basically selling goods abroad and thus it facilitates international trade. This results in expanding sales. It impacts the productivity since the unit costs are lowered. This makes a product very competitive in both international market as well as in the local market.If a local market is too limited and too small, then it doesn’t help in increasing the output of a company.

 

But the company needs to recover the investments it has made on manufacturing of these goods. Exporting these products abroad can help in increasing their output.This also increases the profits of a company. Usually, international customers place orders in bulk. Some products which are unique can lead to higher margins of profit in international market than in local market.

 

An export company is prevented from any fluctuation in the local or global market. Growth rate varies in different countries at a time. So, if there is low growth rate in one country then it is compensated by the high growth rate of another. Thus, balancing the overall growth.Since the international market is very competitive in nature, it is very important to focus on the product efficiency. This leads to selling of products with high quality.Also, it helps in the economic growth of its own country. Check out this website http://www.xglobalmarkets.com/ for further details about Trading.

 

Similarly, forex trading is also the lifeline of an international market. Forex trading is the selling and buying of currencies between the countries. Forex is derived from foreign exchange market. This is usually done through broker. Trading in different currencies helps a company to prosper and its growth is not stagnant. This also impacts the global market.Forex trading is done by buyers and sellers from different parts of the world who are connected through the global network.

 

Many liberties are offered by a foreign exchange trade which other market can find it very hard to afford.Forex trading is functional 24 hours. It has the greatest liquidity in comparison to all other finance markets. This means an asset can be transformed into cash fast and no price discount is required.No commission is required to pay the broker. Cost of transaction is also very low.

 

Concept of Commodities Trading

 

Commodities trading usually takes place in primary economic sector. Its main aim is to provide a centralized market to the sellers to sell the products to the buyers who are willing to consume these commodities. Even a simple farmer can fix a rate for the crops before it is harvested. This helps the farmer’s business to flourish. The efficiency of an economy of a country increases. Commodities are divided into four main categories. These are as follows:Firstly, it is the agricultural products such as soybeans, wheat, corn, cocoa, coffee, sugar, cotton, rice etc.

 

These are also known as soft commodities. Secondly, it is the meat and livestock. This includes products like pork bellies, feeder cattle, live cattle and lean hogs.Thirdly, commodities include the metals. These are also known as hard commodities. Metals such as copper, silver, gold and platinum. These are very precious metals that provides protection during economic crisis or inflation. It is a good investment.Lastly, it is the energies such as gasoline, heating oil, natural gases and crude oil.

 

Commodities trading needs to agree on standards so that products with good quality are traded. Leverage is one of the main benefit for commodities trading. Thus, high returns are generated by the company. Investors get a good chance for creating a diversified portfolio. This helps a trader to make large profits in any economic situation. For commodities trading deals, products should be homogeneous i.e. same products for an order should maintain uniformity in its look and quality. It is better to prefer trading products that will last for a long time. Because if it perishes then it will hamper the business.]

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Commodities Trading

This also increases the profits of a company. Usually, international customers place orders in bulk. Some products which are unique can lead to higher margins of profit in international market than in local market. An export company is prevented from any fluctuation in the local or global market. Growth rate varies in different countries at a time. So, if there is low growth rate in one country then it is compensated by the high growth rate of another. Thus, balancing the overall growth. Thirdly, commodities include the metals. These are also known as hard commodities. Metals such as copper, silver, gold and platinum. These are very precious metals that provides protection during economic crisis or inflation. It is a good investment.Lastly, it is the energies such as gasoline, heating oil, natural gases and crude oil. Commodities trading needs to agree on standards so that products with good quality are traded. Leverage is one of the main benefit for commodities trading. Thus, high returns are generated by the company.