HFM information and reviews
HFM
96%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
89%
FBS information and reviews
FBS
88%
XM information and reviews
XM
86%
NordFX information and reviews
NordFX
86%

The Advantages of Commodities Trading


Commodity trading relates to the buying and selling of a large range of instruments including oil and gas, metals and cocoa, coffee, wheat and sugar. Commodities are categorised as hard and soft commodities. Hard commodities are metals or energies such as gold and gas, and soft commodities are agricultural products like cocoa, wheat and sugar.

Commodity trading is appealing due to the higher risk/return ratio. Commodity trades are highly leveraged which means that the margin required for trading is quite low compared to the overall position.

Read on to learn all about investing in commodities.

A History of Commodities Trading

Trading commodities has a longer history than the trading of stocks and bonds. In the present-day, commodities are still exchanged throughout the world. A commodities exchange refers both to a physical location where the trading of commodities takes place and to legal entities that have been set up in order to enforce the rules for the trading of standardised commodity contracts and related investment products.

Commodity types

Supply and demand

Supply and demand drive the commodities markets. Changes in supply affect the demand. Low supply means higher prices. So, if there are major changes in the supply of a commodity, this can lead to higher prices.

Benefits of trading commodities

How to trade commodities

Commodity trading for beginners involves speculating on the value of a given commodity and gaining returns from volatility in the commodity markets. There are different ways to trade commodities and include the following:

Final thoughts

Both beginners and experienced traders have several different options for investing in financial instruments and gaining access to the commodity markets. Commodity futures contracts provide the most direct way to participate in the price movements of the industry, but there are other types of investments with less risk that also provide enough opportunities for commodities exposure.

However, commodities can be risky investments because they can be affected by uncertainties that are difficult to predict, such as unusual weather patterns, epidemics, and both natural and human-made disasters.

#source


RELATED

Technical and Fundamental analysis

Technical analysis complements fundamental analysis by focusing more on numbers, patterns, and statistics, instead of the intrinsic value of an asset...

How to Invest in Stocks: A Beginner's Guide for Getting Started

A successful voyage of the Dutch East India Company ships brought great profits, but statistically, one sailing ship in three returned home - the others could not withstand storms and pirate raids...

Forex Market Hours

Other than being the largest and most talked about financial market out there, Forex has a very appealing characteristic - around-the-clock operation. Being available...

What Is a CFD? Contracts For Difference Explained

CFD trading may not sound like much at first, but it opens traders up to an entire world of possibility in terms of trading assets and finance. CFD is an abbreviation...

Earnings Season - Meaning, How To Make Its Best Use?

Traditionally, the earning season is a favorite time of year for active traders. This is a time when the potential for making profits increases many times over...

Frequently asked questions about Cryptocurrency CFDs

Bitcoin is a digital currency that was created in 2009. Its creators are unknown, as they disguised themselves using the alias of Satoshi Nakamoto. When Bitcoins are bought or sold...

A Guide to Cryptocurrency trading

If you've decided to invest in the cryptocurrency market, as with all investments, it's important to do your research. Although Bitcoin is the most well-known...

A Comprehensive Guide On How To Trade USD/CAD Currency Pair

The USD/CAD currency pair represents the relationship between the US dollar and the Canadian dollar and is a favored choice among currency traders due to its active trading hours...

Introduction To The Emerging Financial Asset Class

Cryptocurrencies are digital currencies built on blockchain technology that exploded in a few years from an industry worth just millions of dollars into a booming...

What Is A Blockchain Bridge?

Today, Bitcoin and other cryptocurrencies dominate the discussion in finance and on Wall Street, but what makes these emerging assets so valuable is the blockchain...

Ultimate guide to trading Bitcoin for beginners

Bitcoin is the world’s first cryptocurrency that paved the way for the multi-trillion dollar crypto market we can trade and invest in today. Read on to learn everything you need...

All that glitters ain't gold

Amid all the commotion in the equities and cryptocurrency markets, the yellow metal has looked somewhat neglected of late. At the height of the coronavirus crisis, gold was...

How To Embark On Day Trading With Just $500

In the fast-paced and dynamic world of finance, day trading has emerged as a compelling avenue for individuals seeking to capitalize on short-term market fluctuations...

Master the Art of FX and FX Indices Trading with FXTM’s Expertise

Embark on a journey through the dynamic world of FX and FX indices trading with FXTM, a global broker that's recognized for its trustworthiness and expert service. We provide traders with the opportunity...

Navigating the Transition from a Full-Time Job to Forex Trading

Embarking on a journey from a traditional full-time job to the world of forex trading is a path increasingly chosen by many. This decision, while potentially lucrative...

The Starting Point of Your Career as a Successful Forex Trader: From Definition to Regulators

Since 2020, the world and its economy have been in a state of constant turmoil caused by the notorious global pandemic or geopolitical struggles in different parts of the globe...

How Are Commodities Traded In Simple Terms

The lookout for how are commodities Traded is as old as the financial market itself. Perhaps commodities trading is even older than the financial market...

Ten Reasons You Should Learn To Read Price Action

As Charles Dow stated, the price is an excellent market data storage. It is the price that contains all the necessary information, and its movements demonstrate...

What is a Bear Market? A Complete Guide

Sometimes, during market cycles, the stock markets may plunge, and prices could fall. It may be for a short period of weeks or months, or even drag on for years...

The Moving Average Convergence Divergence (MACD)

The Moving Average Convergence Divergence (MACD) is a versatile and widely used technical indicator that offers insights into trends, momentum, and potential reversal points in the forex market...

Vantage information and reviews
Vantage
85%
FP Markets information and reviews
FP Markets
81%
IronFX information and reviews
IronFX
77%
T4Trade information and reviews
T4Trade
76%
Exness information and reviews
Exness
76%
Just2Trade information and reviews
Just2Trade
76%

© 2006-2025 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.