Commodities Trading

Commodities Trading

Trade Commodities with FP Markets

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for our full list of Commodities and typical spreads

A combination of competitive pricing, advanced platforms and a wide range of Commodities allow FP Markets to provide traders in Ireland with the optimal trading experience. Commodities are a unique asset class and play an important role in global financial markets. They are regularly used by traders to manage high risk trading conditions through portfolio diversification and hedging.

Contracts For Difference (CFDs) are an easy way to start trading Commodities as you can gain exposure to market prices without the need to acquire the physical commodity. Choose from a wide variety of products while benefiting from the latest real-time technology and available commodity prices. Advanced trading platforms including MetaTrader 4 ensure fast execution speeds and low slippage.

Relationships with some of Ireland’s largest financial institutions ensure deep liquidity and tight spreads which translates to low-cost trading. Trade CFDs on a wide variety of global commodities with access to real-time oil prices and energy commodities such as natural gas. Other raw materials such as precious Metals including gold, silver, platinum and palladium are also available for trade.

What are the benefits of Commodities trading?

  • Leverage up to 30:1

  • Choose from a wide range of products including energy commodities, metals and agricultural products

  • Enter and exit trades whenever you want to, 24/5, across almost all commodities markets

  • Maximum trading opportunities with the ability to go short or long, irrespective of volatility levels

  • No price manipulation and no requotes

  • Risk Management - Useful for trading strategies such as portfolio diversification and hedging

  • Benefit from low margin, low-cost trading, without compromising execution

The Top Ten
to Trade

Commodities are essentially the raw materials from which other goods are created; the basic building blocks of the global economy. Consequently, they often serve as an excellent investment vehicle. Commodities fall into two broad categories: hard commodities and soft commodities.

Hard commodities are those that are mined from the earth or extracted from natural resources. This category includes metals such as gold, silver and iron, and energies such as oil, natural gas and coal. Soft commodities are agricultural products such as livestock and crops. The commodity markets are popular among traders. This is because they are highly volatile, a feature that provides traders with greater opportunities for success. What separates commodities from other goods is the fact they are interchangeable and standardised, with their values set by the relevant commodity exchange.

However, when it comes to commodities trading, not all commodities are equal.

Some are better than others. With a wide range of commodities on the market, it’s important to know what makes a commodity good for trading.

  • Crude Oil

  • Gold

  • Silver

  • Platinum and Palladium

  • Base Metals: Copper, Iron, Steel, Aluminium

  • Coffee

  • Natural Gas

  • Soya Beans

  • Corn

  • Wheat

What Makes a Good
Trading Commodity?

When trading commodities, liquidity is the primary thing you should consider. This is because liquidity determines the ease with which you can sell or buy a commodity. A liquid market is generally associated with relatively lower risk as there will likely be someone willing to take the other side of a trading position. A good commodity will usually have a well-established market of buyers and sellers at any given time.

Highly liquidity also means that a commodity will have less risk of slippage. Slippage refers to the losses that occur when bid-offer spreads are wide and it’s a common occurrence among commodities that exhibit low degrees of liquidity. Liquidity differentiates the most-traded commodities from the rest of the flock. This leads us to an all-important question.

What is the best Platform to trade Commodities?

MetaTrader 4. The world's most popular trading platform.

Spreads from 0.0 pips & leverage up to 30:1

Customisable interface, including colours of technical indicators

One-click trading

Live price streaming on Live accounts and Demo accounts 128-bit encryption for secure trading

Expert Advisors (EAs)

Customisable alerts

Compatible with iOS, Android and Mac devices

6 Reasons to Choose FP Markets

An Australian regulated Forex broker.

Globally Regulated

Segregated client funds
& regulation in Australia

Tighter Spreads Market

leading spreads from
0.0 pips, 24/5

Faster Execution

Low latency, ultra-fast
execution under 40ms

Advanced Platforms

MT4, MT5 & WebTrader with
superior client portal

24/7 Multilingual
Customer Support

Award-winning support &
personal account managers

Established in 2005

15+ years
trading experience

What is Commodities Trading?

Commodities trading represents the buying and selling of physical substances. They are often used to produce other goods and services. Commodities as an asset class are broken down into hard commodities and soft commodities. Hard commodities are natural resources including Brent Crude Oil, natural gas, iron ore and precious metals. In contrast, soft commodities must be grown and cared for. They include coffee, cocoa and soybeans along with agricultural commodities such as live cattle.

Price movements in commodities are primarily caused by supply and demand factors which makes them vulnerable to volatility as a result of macroeconomic factors. Fluctuations in commodity prices can occur as a result of events such as adverse weather, seasonal availability, natural disasters and other non-market factors typically found in other financial instruments.

The manner in which commodities are traded is also different. Unlike shares on a stock market, commodities are mostly traded in the form of futures contracts. Commodity futures trading and exchange-traded funds (ETFs) allow for hedging as traders are able to invest either in one particular commodity or a specific sector.

FP Markets offers a range of Trading Account Types, all of which allow for commodities trading in the form of CFDs. Traders can access oil markets and energy markets predict the potential direction of commodities prices and attempt to capture gains based on price fluctuations. There is no need to worry about time zones in Ireland or the United States as the commodity market is open 24 hours a day, 5 days a week.

An Example of Leveraged
CFD Commodities Trading

Suppose you want to trade CFDs, where the underlying asset is the XTIUSD a commodity, also known as Crude Oil. Let us suppose that the XTIUSD is trading at:

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 10%. This means that you need to deposit 10% of the total position value into your margin account.

Now, in the next hour, if the price moves to 83 / 83.10, you have a winning trade. You could close your position by selling at the current price of USD 83

In this case, the price of crude oil moved in your favor. But, had the price declined instead, moving against your prediction, you could have made a loss. If that loss reduced your free equity to less than USD 16400, your broker would have issued a margin call and will close all your trades if the equity falls at 50% of 16400.

If the price
To You could Gain or Lose
for a Long Position
Resulting in a Return
of the Initial Margin
Rises by 1% 82/82.92 USD 1640 10%
Declines by 1% 81.18/81.20 -USD 1640 -10%

CFD Commodities (MT4/MT5)

Symbol Product   Standard A/c
    Min Avg
WTIWest Texas Intermediate Crude Oil vs US Dollar Future0.040.04
XBRUSDBrent Crude Oil vs US Dollar Cash0.030.05
XNGUSDNatural Gas vs US Dollar Cash0.0240.03
XPDUSDPalladium vs US Dollar Cash15.922.94
XPTUSDPlatinum vs US Dollar Cash5.156.67
XTIUSDWest Texas Intermediate Crude Oil vs US Dollar Cash0.020.04

Soft Commodities (MT4/MT5)

Symbol Product   Standard A/c
    Min Avg
COCOACocoa vs US Dollar Cash0.632.48
COFFEEUS Coffee vs US Dollar Future2.252.33
CORNCorn vs US Dollar Cash1.672.09
SOYBEANSSoybeans vs US Dollar Cash1.382.12
WHEATWheat vs US Dollar Cash1.392.12

Types of Commodities

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

Hard commodities: Refers to natural resources that are mined or extracted

Soft commodities: Agricultural products or livestock

For the purposes of trading, Commodities are further classified into four main categories:

Metals: Includes precious metals such as gold, silver, platinum, palladium and copper

Energy: Crude oil and natural gas are the main energy products that are traded. Heating oil, gasoline and electricity are among others

Agriculture: Agricultural commodities are centred around staple crops and animals. Wheat, rice, corn, soybeans coffee are among the most common crops. The classification of animals includes livestock and meat such as live cattle, pork, and eggs.

Livestock and Meat: Eggs, Pork, Cattle and more

What Are the Most
Traded Commodities?

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.

How 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.

FP Markets 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 CFDs 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 Ireland.

Trading - FAQ

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