Over time, trading in commodities has come a long way ever since markets have become more diverse. And investing in commodity trading would never lead to a loss when you are keeping a track of the market fluctuations or getting yourself trained in this complicated yet exciting investment process. In addition to that, commodity trading could diversify the portfolio of investors across various assets along with providing a potential hedge against inflation. Moreover, whenever inflation grows, the cost of commodities that you already possess will be raised as per the location. You do not have to be worried about the trends in the commodity market as long as you have got training from the expert team of Wealth Way FX.
Since commodities are the goods that are movable and that can be bought and sold, apart from money and incremental claims. Given below are the four major kinds of commodities, namely:
Agricultural products: They are the crops such as wheat, soybeans, lumber, coffee and others. These products come under soft commodities.
Livestock and Meat: Products such as beef, milk, cattle, pork bellies and others come under these kinds of soft commodities.
Metals: The best examples of these sorts of hard commodities are Silver, gold, Copper, Palladium and Aluminum. Both precious and industrial metals are considered commodities.
Energy products: The ones such as crude oil, unleaded gasoline, ethanol, coal and propane are yet another sort of hard commodities.
Once navigating the commodity market maze, initially, you must open a Demat account from a reputed brokerage house. One must ensure that competitive rates are provided by the brokerage. Then as per the commodity trading tips provided by them, you may deposit the amount and be cautious about the market. Furthermore, for analysing the market and the risk appetite, traders may think of devising a commodity trading plan. Also, buying into future contracts is the most recommended way that is followed by many of those commodity trading companies.
The utmost value of commodity trading could be derived after having a proper plan for trading and executing them. As there are better options for engaging in commodity markets, more and more traders have been entering this industry, unlike the past years when it was only limited to traders. The experts of Wealth Way FX will give you in-depth research and required recommendations now and then. Our curriculum is curated in such a way that a beginner could become an expert.
Traders must take into consideration that, on commodity exchanges, commodity trading only takes place on stipulated trading days. The days from Monday to Friday, except for holidays are the time when trading in commodity derivatives takes place. Nevertheless, the commodity trading time of derivative segments is from 9.00 hours to 23.30 hours.
Just like every other business, little knowledge in commodity trading would bring about loss in the end, no matter how much qualified you are. When you are hiring a commodity broker for your trading purposes, they could make insightful trading decisions for you and provides strategies to increase your knowledge of the commodities market.The best commodity broker would also warn you about the risks associated with taking a margin and commodity derivatives, besides making you aware of the process of commodity trading. Along with that, brokers could perform research and present market reports.
You can trade in the exchange listed in commodities without spending paying a lot of money as an upfront margin, you can track the performance of an individual commodity or the commodity sector. The value of the commodity is derived from the demand and supply characteristics, these characteristics depend on various factors which includes weather, economic growth, population growth etc. Depending on the commodities and the commodities can be traded alone or in the pairs.
| INSTRUMENT | DESCRIPTION | MINIMUM SPREAD | AVERAGE SPREAD |
|---|---|---|---|
| BRENT | Brent Crude Oil Futures | 0.03 | 0.05 |
| WTI | West Texas Intermediate - Crude Oil Futures | 0.04 | 0.05 |
| Coffee | Coffee Futures | 0.3 | 0.9 |
| Corn | Corn Futures | 0.6 | 1.25 |
| Soybean | Soybean Futures | 1.35 | 1.77 |
| Sugar | Sugar Futures | 0.04 | 0.06 |
| Wheat | Wheat Futures | 0.7 | 1.27 |
| Cocoa | Cocoa futures | 4 | 5 |
| XBRUSD | Brent Crude Oil Spot vs United States Dollar | 0.01 | 0.04 |
| XNGUSD | Natural Gas Spot vs United States Dollar | 0.001 | 0.004 |
| XTIUSD | WTI Crude Oil Spot vs United States Dollar | 0.02 | 0.035 |
