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COMMODITIES


Trading Commodities with UFXMarkets

Why Trade Commodities?

The ability to Trade commodities has been round for a while but it is now experiencing a growth in popularity as more people begin to find that commodity trading is a great way to build their investment portfolios and that it can also be very profitable. Individuals that are interested in commodities trading need to first find an online broker and a trading platform such as UFXMarkets where they can trade. A superb platform like UFXMarkets can make a huge difference in how you do your trading and how well you do it. The key to successfully trading commodities is understanding the market and also knowing when best to trade or hold your commodities, your online broker and platform can help you work out when it is best to trade and understand where the price action is going.

So why is the commodity market becoming so popular and why should you trade a commodity online?  To begin with the advent of high speed internet connections makes online trading easy for trading commodities, which by definition are “something of value that can be traded on a large scale” This means that trading a commodity in the traditional sense of the word (taking delivery of the commodity) is actually impossible.  Popular commodities refer to items like oil, natural gas, soybeans, gold, spices, and other goods that are not actually taken delivery of by the trader.  Gold trading online is a very popular form of this type of trading.  It allows investors to partake in online gold trading which can be very profitable if they are on the right side of the market.

The reason that so many businesses, industries, and individuals like to trade commodities is that everyone uses commodities and needs them in order to provide a service or a product.  Prices of commodities largely depend on the supply and demand for that commodity that you may be interested in investing in.  For example if you have purchased soybean and there is a sudden shortage of soybean you will find that because there is a higher demand by the industry for a commodity with a low supply the value of your investment will increase.  When this occurs it is an opportunity to trade soybean and realize your profit from the investment.
Investors that have been trading stocks and commodities for a time find that by investing in commodities they are able to diversify their total investment portfolios and reduce their risk of a sudden and expensive drop in their investment portfolio.
The great thing about commodities is that there are abundant amounts of diverse commodities to choose from when you start your trading venture.  At UFXMarkets, they offer a great variety of commodities for their investors to choose from.  For example they have corn, sugar, cotton, and coffee from the agricultural sector.  If you are more interested in trading precious metals they offer Gold and Silver, they also offer oil and gas in the energy sector.  When taking on a commodities trade it is important to remember that different commodities have different reactions to the market conditions.  Metals are often considered to be a safer route if you are looking to invest and perhaps just starting out.  If you are looking at investing in energy sources than you should look into the fact that those prices are positively correlated with business and industry conditions.  Food commodities vary greatly and can fluctuate based on anything from consumer spending, or to the vagaries of the weather and politics in the areas where those commodities are grown.  These commodities are for more experienced traders as they offer a challenge, however, because there are a lot of unknown factors that can influence that commodity, it is prudent to be cautious.

Once you have found your broker you can open up your trading account and get started with your trading.  The way that online trading works is that you do not purchase the commodities directly, your online broker does that for you so in this case your UFXMarkets broker will purchase your commodities on your behalf from a seller. You do not purchase the commodities directly but rather, you buy a Contract for Difference (CFD) CFD contracts are simply agreements that say that if the when the buyer sells the contract and the spot price is higher than original price, the seller will pay the buyer the difference, if the price is lower, the buyer pays the seller the difference.  Commodities trading can be very lucrative if you the market is read correctly, however, many investors find that trading in gold is easier as it is not as volatile as other commodities and in general if other non-commodity assets lose value, gold will appreciate.


RISK WARNING: CFDs are leveraged products that incur a high level of risk and can result in the loss of all your capital and may therefore not be suitable for all investors. You should not risk more than you are prepared to lose and before deciding to trade, please ensure you understand the risks involved, take the level of your experience into consideration and seek independent advice if necessary. We strictly do not provide investment advice. To read our full risk disclosure statement please, click here.



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