Commodity trading is as old as the financial markets, and perhaps even older than that. The first example of an organised exchange for trading commodities dates back to Amsterdam in 1530. These days there are a whole host of markets available to trade with just a few clicks of a mouse or taps on your mobile device, but some commodities remain as popular as ever.
Trading commodities
Choose your market – Choose the commodity, such as Crude Oil Brent, Gold or Natural Gas, that you want to trade.
Decide to buy or sell – Buy (go long) if you think prices will rise, or sell (go short) if you think prices will go down.
Enter a trade size – Decide on how many units you want to trade. The value of one unit can vary depending on the instrument you’ve chosen to trade.
Manage your risk – Select from a range of stop-loss orders including guaranteed stop-loss orders (GSLOs). Guaranteed stop-loss orders work exactly the same as regular stop-loss orders, except that for a premium, they guarantee to close you out of a trade at the price you specify regardless of market volatility or gapping. If the GSLO is not triggered, we refund the premium charge in full.
Monitor your position – After placing your trade, monitor your open positions (including any stop orders or take profit orders) to follow your real-time profit or loss. Please remember that losses can exceed your deposits.
Close your position – If your trade is not automatically closed out as a result of a stop or take profit order being triggered, close your trade when you are ready.
Types of commodity trading
There are a range of commodities you can trade, including agricultural commodities such as corn, soybean and wheat. It's the energy markets, in the form of oil and gas trading, and metal markets (like gold and silver), however, that tend to be more popular with traders these days.
We offer prices on over 100 spot and forward commodity instruments on our Next Generation trading platform, including Crude Oil (Brent and West Texas), Gold, Silver, Copper, Natural Gas and Coffee (Arabica and Robusta).
The commodity markets are traded in a similar way to other types of financial markets, but there are some points to be aware of in order to avoid any shocks or surprises when dipping your toe into commodities trading. In this article, we focus on two of the more actively traded commodities: oil and gold.