Financial trading it’s all about positions. Financial traders are not interested in the underlying itself. For traders, the underlying is a means to and end and not the objective of his activities. At the end of the trade he is only interested in the financial result of the position. If he has to take physical positions for a reason, he will always close them (buy and sell equal amounts) in order to annihilate risk.

Commodity trading has a strong physical side as many times the counterpart wants to buy or sell real products because he needs to get rid of it physically or he needs to fill an existing gap. In financial trading, logistical requirements are minimized as physical positions are avoided. In commodity trading, as physical product may be moved, logistics have an important role to play and bottlenecks are the constraints and opportunities of the system.

Commodity trading is a much more complicated activity that supposes deep knowledge of the respective commodity and its logistics.