Commodities are tradeable physical assets such as metals, including gold, silver, platinum, and copper as well as crude oil, natural gas, and other resources. The value of commodities to a trader is that they have little connection with the ups and downs of currencies and the stock market, helping create a diverse and stable investment portfolio. Modern investment offers a variety of easy ways to take part in commodities trading—the most common of these is trading CFDs (contracts for difference). These let you take a position on a commodity’s price without actually owning the asset. Commodity prices are influenced by economic, political and environmental factors such as Supply and Demand, Technological advances, Geo-political tensions, Weather conditions and Natural disasters.
Advantages of Commodities trading
- Commodities can be an important means for investors to diversify their portfolio.
- Offers traders and investors the opportunity to participate in the commodity markets by trading derivatives on a range of metals, energies and soft commodities with low margin requirements and hedging strategies allowed to manage their price exposure.
- Exposure to major commodity groups (metals, energy and agriculture)
- Trade long and short
- Hedge open positions or a portfolio of commodity stocks/ETFs