CHAPTER 28

Effective Risk Management Strategies for Commodity Portfolios1

There are fundamental differences between commodity markets and equity, bond, and currency markets. This chapter highlights those differences by outlining six operational guidelines that should be part of a firm's best practices when trading commodities as well as what an investor should know before investing in commodity trading firms.

The data and conclusions presented in this chapter are drawn from the author's experience advising commodity trading firms, and build upon a case study surveying best practices among three top commodity trading firms.