CFD Commodities

 

What is Commodity Trading?

Commodities simple as bread, rice, milk are basic goods, a necessity of human life. 
But for investors, commodities such as: gold, platinum, silver, oil, grains are also a necessity and an important part of their portfolios. In the capital market, these instruments tend to offer more security, especially in times when the markets are erratic. 

The commodity market is one of the oldest financial markets, basically an ancient one. Trading commodities has a longer history than trading stocks and bonds. In the past trading of these goods was only done by professional traders, it required money, time and expertise. 

But thanks to the improvement of technology, it has never been more accessible to the public. There is a significant number of increased options for participating in the trading markets made for every trader.

Trading CFD commodities doesn’t actually mean that traders are owning them. CFD commodities allow investors to speculate on the price movements and an advantage here is being exposed to leverage, where the trader is able to use less capital to gain greater exposure to an underlying instrument, increasing the potential for profits, as well as losses. 
 

Types of Commodities:

 

• Metals

During periods of unstable markets, metals, especially gold are considered safe, reliable, investment assets. Most investors are in fact more likely to invest in metals in periods of high inflation and currency devaluation.  
 

• Crude Oil

There are only a limited number of countries which can cover their energy needs from their own land and own sources, this is one of the reasons why energy trading has become important globally. 

It is also relevant to mention that about a third of global oil demand is from cars, and 40 percent of the growth since the year 2000 has come from the automobile industry.

Energy trading involves assets like oil and natural gas. The most-traded one is Crude oil. Its price also determines the price of gasoline and natural gas and it has been favorite oil between swing and day traders. Demand is generally the highest during the summer and winter months, but for different reasons. During the summer, increased driving boosts the demand for crude oil and causes prices to rise. During the winter, a higher demand for heating oil causes prices to move higher.

 

• Agriculture products

In the modern world agricultural products are also traded as CFD Commodities. Wheat, coffee, sugar, soybean, cocoa, cotton and orange juice can be traded on our platform. For investors that are interested in the agricultural sector, experts suggest that population growth combined with limited agricultural supply creates profit triggered by rising commodity prices.

Even a soft futures contract exists. It is a legally binding agreement for the delivery of cocoa, coffee, cotton, frozen concentrated orange juice and sugar in the future at an agreed upon price. These types of trades have: quantity, quality, time, and place of delivery.

But in reality, considering how many opportunities you have thanks to the new technology, you can profit simply from: speculations based on price movements. 

And not by actually buying and reselling some cocoa, sugar, cotton etc. 
 

Why invest in Commodities?

Commodities act as a shield against inflation -  Historically commodities have had a positive connection with inflation. Inflation is measured by tracking the price of goods and services which often contain commodities directly, as well as products closely related to commodities.
They make your portfolio less fragile - In moments of natural disaster, political scandals, geopolitical conflicts and inflation, commodities defend your portfolio from the rising prices.
Stability - The number one traded commodity in the world is gold. It’s an investment that has a unique value for investors, it is generally stable and balanced.