The best brokers
  • Plus500
  • eToro
  • XM

Trading commodities online

 

The online brokers are increasingly numerous in offering their clients the opportunity to trade in commodities, using financial instruments such as CFDs.

For the investor, it is clear that this range of assets offers certain advantages not available through other investment products.

 

 

Why trade in commodities?

Forex brokers had a good reason to implement tools enabling the trade of commodities. It can prove highly judicious to speculate on these assets as commodities are among the most profitable assets on the market.

It is notably due to a strong expansion in industrialised countries such as China or other Asian countries, that commodities have been able to significantly increase their value over the last few years.

However the advantages of speculating on commodities do not stop there. In fact it can be noted that some commodities such as precious metals, sometimes play the role of a refuge value role for investors, notably due to points stated earlier. A fall in the supply and a rise in the demand actually offers highly interesting opportunities for investment over the long term.

Due to this fact, when the traditional financial markets experience a decline, numerous traders invest hugely in commodities and thereby force the prices to rise.

 

Which commodities can be traded online?

Among the different commodities that are speculated online, we find several defined categories: 

  • Precious metals such as gold, silver, palladium, zinc or nickel.
  • Fuels such as oil, natural gas or charcoal.
  • The agricultural commodities such as coffee, sugar, corn, wheat, soya, cotton or, more generally speaking, cereal crops.

Of course, it is mainly gold and silver that attract the highest volumes of online investment, even if the other products also prove to be interesting and profitable.

 

How to trade commodities using CFDs:

Different to stock investments, CFDs enable you to speculate on an asset without having to actually buy it. These contracts, called ‘Contracts for Difference’, operate in exactly the same way as for trading currencies as they relate to taking a rising or falling position on the market at an exact given time in order to make profits at the time when the positions closes or ends.

Furthermore, these indicators that enable you to determine the direction that a commodity price will probably take are often numerous and highly pertinent. This could relate to the value of the U.S. Dollar which is the currency used to quote the price of assets or maybe the weather conditions, natural catastrophes or international reserves.

Start to invest in commodities:

Commodities can now be traded online like the majority of other assets, particularly with online trading platforms through Forex brokers. You can in fact use CFDs to invest in these assets.