cfd-trading-info

Trading Commodities

 commodity trading

We live in an era of massive economic expansion. Compare the world of 50 years ago with the world today and it is clear that tremendous changes have taken place. The world population has grown and it looks like this trend still continues. In addition, the wealth in Western countries has increased tremendously. But the emerging economies of large countries such as Brazil, Russia, India and China (BRIC) are catching up rapidly. This economic expansion, combined with a rapidly growing world population means a huge drain on the global commodity reserves. This drives up the prices enormously. As a result, raw materials are in a bull market that is expected to last for a while (years).

 

Investing is foresight and savvy investors therefore benefit from this strong trend. They do so by taking positions in the commodity itself, for example by buying physical gold and silver, or by purchasing shares of companies that benefit from rising commodity prices, such as mining companies. 

 

For the private investor / trader, until recently, it was difficult to take positions directly in the commodities themselves. He was then sentenced to the futures market on foreign exchanges (New York, London, Chicago). Today, with the introduction of cfd's, most commodities are easy to trade in for anyone with a PC or smartphone and an Internet connection.

 

The CFD is a very flexible tool with leverage to be determined by the trader himself. It offers you as a trader / investor many opportunities and is, at the same time easy, to use. More about what a CFD is and what opportunities it offers can be found in the article: What is cfd trading - cfd's explained.

 

There are a number of good CFD brokers that offer commodity trading. The most important ones, with the most comprehensive range of commodities to trade, are Plus500, AVATRADE, eToro and Markets.com. They all offer a userfriendly tradingplatform with extensive capabilities and good multilingual support.  With eToro one can only trade gold, silver and oil. Plus500, AVATRADE and Markets.com all enable you to trade the following commodities: 

oil

gold

silver

natural gas

coffee

copper

cotton

palladium

platinum

corn

sugar

soybeans

Markets.com also offers trading in rice and cocoa. The leverage on commodities lies between 1:100 and 1:50 with Markets.com. Plus500 and AVATRADE also offer trading in heating oil, next to the commodities in the above list. With Plus500 the maximum leverage on all commodities 1:12. AVATRADE offers leverage on commodities ranging between 1:33 to 1:200 (gold). 

Commodities are generally very cyclical. The result is that the price movements are often erratic and volatile. This provides the investor / trader the chance to obtain above-average returns, but one can also lose a lot of money in a very short time. That is flip side of the coin. It is therefore recommended to you to delve into the commodity you want to trade, so that you know which factors determine the price of the commodity of choice. Your strategy should be adjusted to that. Having a trading strategy is essential. Whether it's based on fundamental analysis, technical analysis or both .... without a clear plan you will lose money and nobody wants that. But with some preparation, there is certainly much to gain in commodity trading. You will often feel the adrenaline flowing through your veins! success!