Introduction to Trading Commodities

trading commodities

Binary options are versatile, giving you a range of assets to trade in so that you can remain within your comfort zone. In addition to the traditional trades that included stocks and indices, it is possible to trade in commodities on almost all CFD / Forexs trading platforms. The excellent advantage of trading in commodities is the fact that this enables traders to considerably spread their risk. Being able to carry out varying trades on the same platform also makes these trades more viable.

Commodities are different from other trades as they involve items which are meant to satisfy specific human needs. The most commonly traded commodities include Gold, Silver and Copper. Cash crops also can be found under commodities, such as Coffee, Tea, Soybeans, Wheat and even Corn. One of the most traded commodities on the market it Oil. Commodity trading hours will differ from one broker to the next, although most of them are traded during the week in working hours.

When trading in commodities, you follow the same goals that you will find with other CFD / Forexs, and that is to ensure you expire either below or above a select purchasing price within a certain amount of time.


Commodity Fluctuations

It is the price fluctuations of commodities that will drive a profit or a loss with CFD / Forexs trading. To begin with, the prices are governed by demand and supple. When there is high demand, then the prices will increase to accommodate that demand, yet when there is high supply, then the prices will reduce.

When you choose to trade in commodities, you need to learn how to keep track of these fluctuations as they will affect your return on investment. Therefore, you must be aware of what is happening within economies to help determine your chosen direction.

As you make a decision to trade in a certain commodity, you will need to decide whether to place a call or a put. When a commodity has downside pressure affecting it, it would be wise to purchase a put. If it appears that the price of the commodity is moving towards an upward trend, then purchasing a call would be better.


Higher Profits

When you have a range of assets to choose from, it is essential to understand the types of returns to expect as you develop your portfolio. Commodities are highly profitably, particularly gold, silver and oil. If you are making excellent trades, then you will have worthwhile returns. However, making a small mistake will cost you. Many people will choose to include commodities within their CFD / Forexs trading portfolio as these offer some stability and protection, particularly when faced with volatile markets.

To walk away with a profit following a trade in commodities, your trade needs to expire while you are in the money. This will enable you to make a return on your investment. if you lose the trade, then you will also lose your entire investment.


Commodity Risks

Commodities are regularly traded on globally recognised exchanges from all over the world. They face specific risk that differs from all other trading options, and that is the face that they can change on a weekly basis. Depending on the commodity, an inventory update is made available on a weekly basis through publication. This update will provide details that affect the price of the commodity, and can lead to instant profits, or large losses. Before you make your trade, ensure that you are well versed with whatever information has been published in the inventory update.


Trading Limitations

Although there are many commodity options available for trade, there are a limited number of people who are able to actively trade in commodities. That is because of the margin requirements, which are often too high for novice or intermediate CFD / Forexs traders. This means that for the most part, traders who are high rollers are the ones who have enough capital to comfortably enable them to trade in commodities.


Stabilizing your overall CFD / Forexs trading portfolio is what you can count on when you begin trading commodities. These do not change in value as quickly as other assets, and since they fulfil human needs, they are here to stay.