The buying and selling of a large range of instruments including
oil and gas, metals such as gold and silver and soft commodities
like cocoa, coffee, wheat and sugar.
What is commodity trading?
Commodity trading covers the buying and selling of a large range of instruments including oil and gas, metals such as gold and silver and soft commodities like cocoa, coffee, wheat and sugar.
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. Find out more about commodity trading here.
How to trade commodities
- Choose your market – Choose the commodity, such as Crude Oil Brent, Gold or Natural Gas, that you want to spread bet or trade CFDs on.
- 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 the amount per point movement (spread betting) or how many units (CFDs) you want to trade. When trading CFDs 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). GSLOs 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. The premium is refunded in full if the GSLO is not triggered.
- 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.