This paper analyzes trade credit insurance in the commodity trading industry. Trade credit insurance is a cover that protects manufacturers, buyers, and service providers from losses from non-payment or commercial debts. Also, it prevents bankruptcy and helps companies manage credit and present opportunities for business expansion. Commodity trading involves buying and selling of raw and primary products. Commodities can either be hard or soft. Besides, hard commodities are natural resources while soft commodities are livestock or agricultural goods. Investors can gain exposure to commodities by investing in companies that have exposure to commodities or investing in commodities directly via futures contracts.
trade credit insurance in the commodity trading industry
THE BENEFITS OF TRADE CREDIT INSURANCE
Trade credit insurance has the following benefits in a business. First, it provides an opportunity for businesses to expand into new markets without fear. Second, it enables business people to make sound business decisions in terms of buying and selling of their products. Also, business people have the opportunity to make good decisions in terms of commercial debts. Third, it protects businesses against disastrous losses that arise from non-payments and debts. Fourth, it also enables businesses to collect debts more efficiently. Also, the businesses can obtain credit rating and protect their existing rating. Lastly, trade credit insurance in the commodity trading industry decreases the expenses from credit management administration.
benefits of trade credit insurance
THE STRATEGIES IN COMMODITY TRADING INDUSTRY
The commodity trading industry requires the following strategies for the success of the business. First, range trading is a strategy that uses the types of financial market trading. It involves buying when prices are at the bottom of the range and selling when prices are at the top of the range. These ranges are important in buying and selling of commodities. Second, the breakout strategy capitalizes on short term movements. A trader, therefore, buys just before the prices move substantially up and sells just before prices move substantially low. Lastly, fundamental trading is a strategy that relies on technical and fundamental indicators. However, it looks at the market fundamental factor rather than technical trading dynamics. Despite using these strategies, businesses need to secure trade credit insurance to protect them in case of any losses during trading.
strategies in commodity trading industry
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