Commodity trading is the buying and selling of a wide range of commodities such as energy, metals, oil, gas and agricultural products.
Trading commodities CFDs (“contracts for difference”) is a great way to diversify your portfolio and hedge risks. Malfex has carved a niche for itself in the commodity trading market in Australia, offering the optimal trading experience.
Choosing from a wide variety of products, while benefiting from the latest real-time technology and available commodity prices. When you choose to trade commodity CFDs with Malfex, you get access to commodity prices worldwide with high execution speeds, low slippage, deep liquidity and tight spreads.
Trade CFDs on a wide variety of global commodities, including gold, silver and oil with an Global-regulated broker provider giving you access to different asset classes on the same platform or a range of platforms as well as sophisticated risk management tools and trading tools.
Discover the benefits of Commodities trading on one of the most powerful trading platforms available, Metatrader 5 (MT5) and CTrader. Available across desktop and mobile platforms the Metatrader 5 & CTrader platform are ready when you are.
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Commodities trading represents the buying and selling of set quantities of homogeneous, or near-homogeneous assets. Popular commodities include Brent Crude Oil, Gold and other precious metals and soft commodities such as coffee, cocoa, soya etc. Price movements in commodities are usually seen as bellwethers for the overall health of the industry that produces/consumes them.
Commodity prices can be impacted by factors such as adverse weather, seasonal availability, natural disasters and other non-market factors typically found in other financial instruments. Typically, commodities trading in commodities can be either speculative or for hedging purposes. Traders can trade commodity markets to express their outlook on certain industries or to hedge their trading portfolio.
Through careful analysis, CFD traders predict the potential direction of commodities prices and attempt to capture gains based on price fluctuations. The market is open 24 hours a day, 5 days a week.
You decide to buy 2,000 barrels of XTIUSD because you think that the XTIUSD price will rise in the future. Your margin rate is 1%. This means that you need to deposit 1% of the total position value into your margin account.
Now, in the next hour, if the price moves to 83.10/83.11, you have a winning trade. You could close your position by selling at the current price of USD 83.10
| If the price of XAUUSD | To | You could Gain or Lose for a Long Position | Resulting in a Return of the Initial Margin | |
|---|---|---|---|---|
|
Rises by 1% |
83.84/83.85 |
USD 1660 |
100% |
|
|
Declines by 1% |
|
USD -1660 |
-100% |
Commodities are raw materials or agricultural outputs that appear naturally, and are used in the production of other goods. They are recognised as the building blocks of the global economy and play a significant role in financial markets.
There are two types of commodities
For the purposes of trading, Commodities are further classified into four main categories:
The most traded Commodities are those which have an established market of buyers and sellers. This translates to high levels of liquidity and lower trading costs – two of the main attractions when trading Commodities CFDs.
Gold: Of the precious metals, gold continues to lead the way. Throughout history, gold has been a valuable commodity. The gold standard was in operation for almost a century and central banks continue to hold gold reserves. It is easily transferable for cash and often used as part of a hedging trading strategy as it often trades opposite to the United States dollar (USD).
Other Metals: Silver, platinum and palladium are among the most traded commodities. As they are considered a safe-haven investment, there is a wide range of Trading Strategies Using Precious Metals.
Crude Oil: The widespread use of oil makes it one of the most in-demand commodities. Petrol and diesel are examples of refined oil which highlights its importance in all forms of transportation. Its value as a source of energy is the reason why oil prices are heavily scrutinised.
Read our comprehensive list of Top Commodities To Trade.
There are several ways to trade commodities such as precious metals and oil. As they are a physical product, investors have the option of purchasing precious metals such as gold, silver and palladium. One of the main hurdles of doing so is the cost associated with storing such a valuable product.
This is one of the reasons why commodity futures trading emerged. Through exchange-traded funds (ETFs), you are able to enter into an agreement to buy or sell shares of an underlying ETF at an agreed price prior to a specified date. Many large corporations use futures markets to hedge against market volatility.
Malfex offer CFD trading in commodities where you do not own the underlying asset and enter into a contract which, unlike futures contracts, do not have a specified end date. Trading Gold CFD allows you to hedge against high risk market conditions using your margin trading account. Similarly, gold is also traded against major currencies in Forex Trading.
New York Board of Trade (NYBOT)
Chicago Mercantile Exchange (CME)
New York Mercantile Exchange (NYMEX)
Intercontinental Exchange (ICE)
CBOT – Chicago Board of Trade (CBOT)
A commodity is a basic material and economic good mainly used as a resource in manufacturing production and services. Commodities are categorised into hard and soft materials. The four main types of commodities are metals, livestock and meat, agricultural, and energy products. In economics, a deliverable commodity is an asset class of futures contracts and options (derivative securities) interchangeable with other fungible goods in the commodity market. Commodities trading volumes on a futures exchange increase in periods of high inflation and general instabilities. Thus, traders and investors who buy and sell contracts often use commodity trading as portfolio diversification and inflation hedge.
Account Verification & Funding → Open a Live Account and a Demo Account, determine the amount of funding over the required minimum and activate your trading account with the necessary KYC process.
Education & Practise → Learn, research diligently and familiarise yourself with commodities trading from the robust educational section. Understand how the commodity market works and practise on the Demo Account.
Market Research & Plan your trade → Prior to starting commodity trading on your Live Account, browse through Malfex analysis, market news and tools, including the economic calendar, to choose a commodity maket asset to trade CFDs on.
Trade Size & Market Direction → After you have carefully selected the financial instrument (commodity) you want to trade on, take an informed decision on the size of your trade (lots, pip value etc). If you expect the commodity price will to rise you go long (Buy). If you expect a decrease of the commodity value you go short (Sell).
Risk Management & Account Protection → There are numerous risk assessment tools, features and trading strategies to help you protect your trades from market volatility and price fluctuations. Use the traders toolbox instruments, including Stop Loss order, Take Profit, Hedging Strategy to reduce the trading risks.
Trade Monitoring & Close Trade → Monitor your trades, track profit and losses and protect your trading account with real-time actions, using any of the available trading platforms, webtrader and mobile trading application. Close your trade when you want if you did not reach profit or loss limits.
The most traded commodities in the world are the highly volatile WTI Crude Oil and Brent Crude Oil, Natural Gas, Gold and other base metals, Coffee, Sugar, Wheat, Cotto, Corn and Soybeans.
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RISK WARNING: Forex and CFDs are leveraged financial instruments that carry a high degree of risk and may expose you to significant losses. Trading in CFDs may not be suitable for all investors. Before trading, you should ensure you fully understand the risks involved and consider your level of experience. If necessary, you should seek independent advice. Please read the full Risk Disclosure Statement for further details.
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