Commodities are traded all over the world, sometimes directly as an asset, sometimes through CFD, which are contracts based on the price of a chosen asset, while there is no ownership of the physical goods. Commodities as other assets, there is no need to possess the asset physically, just trade however you want.
Every financial consultant’s advice is to diversify your trading portfolio. As many commodities you have, better is for you. They are a safe asset (most of the time) and what is most important, they do not go bankrupt.
They are a good protector against inflation. When economies go through inflation, commodity’s prices go up. Commodities are traded on margins, which means that you will be more exposed in the market even if you invest a small amount of capital. So, all you need at this moment is a minimum amount of capital to fund your trading account of $250 and a smart device to log in to your account.
What influence commodity prices?
Several factors can affect the price movements and cause significant fluctuation.
Supply and Demand
When supply and demand balance out, prices of the asset stay the same. Anytime the market feels that the supply will be reduced because of any weather condition or production cuts, prices tend to rise and higher supplies lead to low prices.
Stock and Inventories
The amount of commodity available can be affected by many factors like: weather, crop diseases, production problems during the process, political decision over taxes, fees, charges on the production process, transport, unfavorable trading laws, etc.
Since most commodities are prices in the US dollar, they are strongly connected, and they influence each other. Some commodities are connected with certain currencies like the Canadian dollar (CAD) is connected to oil trading prices since Canada is a large exporter of oil. Monitoring them and trading at the right time are important to make a profitable decision.
Inflation Inflation is a reason for the commodity prices to rise. Usually they move in a positive correlation.
Which commodities should I trade?
Commodities are considered a safe haven. They have the ability to diversify the risk in a trading portfolio. Many of them go in the opposite direction of other asset’s behaviour. For example if the price of the US dollar goes down, the value of Oil goes up. We provide you with an advanced charting package, in order to have in real time any price movement of all commodities.
OIL– US (WTI)- WTI stands for West Texas Intermediate, known also as Texas light sweet. It is used as benchmarking in the oil sector. WTI contracts are sold on the New York Exchange. WTI historical data can be found at the Department of Energy, Energy Information Administration.
OIL- UK (Brent Crude)– It is a class of light crude oil that is used as a benchmarking price of oil in global markets. It is sourced from the North Sea and it is compounded by Brent Blend, Forties Blend, Oseberg and Ekofisk crudes (BFOE). The index represents the average price of trading in the 21 day of the month.
GOLD– Trading Gold is one of the oldest trading markets. Gold is traded all over the world. The London bullion market has been the benchmarking for the worldwide market. Gold is traded during any hour of the day, based on the price movements, made public in the table of the prices.
CORN– Corn produced in the US dominates the trading markets. Its price is influenced mainly by the demand for corn ethanol, weather conditions in the largest areas of corn production, US, China, South Africa. Corn price is related with the performance of the US dollar also, the commodity sector in general.