Trade Commodities

First time trading commodities?

First off if you are unfamiliar with trading commodities you’re in luck, because our Learn Centre has an extensive library of videos and articles that will introduce you all the types of instruments easyMarkets offers, in the meantime here’s a little overview. We use commodities every single day. If you look down at your outfit there is a good possibility that you are wearing multiple items that use one or more of these commodities as a raw material. Plastics, clothes, fuel for transportation and production of electricity. Due to the daily use or necessity of commodities they are greatly affected supply and demand. Beyond these basic factors commodities’ prices can also be affected by geopolitical and adverse weather events – because many commodities are produced in specific geographic locations.

For example, it’s common knowledge that a disruption of crude production in the Middle East can cause an increase of the commodity’s price due to a drop in supply, even though S. Arabia is only the third largest producer of oil.

An example of this effect when Hurricane Harvey caused refineries along the Gulf Coast in the US to cease production in the Summer of 2017. In this case though the refineries closing caused a drop in demand for crude, pushing prices down but causing gasoline to increase because of the drop in supply. We saw coffee prices increase in 2017 when Brazil – the world’s third biggest producer – experienced an extended drought causing a drop of supply and an increase of the commodity’s price.

Unlike commodities other financial products can be affected by a plethora of factors including but not restricted to: diplomatic or political events and change in governments’ policies. This of course doesn’t mean that people should invest in one in lieu of the other – you will likely see the word “diversify” when reading about investment and trading. This means investing in multiple types of products, since they behave very differently. For example the Forex market is very active, the prices of currencies on this market move frequently throughout the day. Government bonds on the other hand – for the most part, remember there are always expectations – are much more stable.

Another thing to consider when you begin your trading journey, is risk management – which although explicit in its name, many new traders actually overlook it. Risk management begins with knowledge knowing what is going on in the world politically, economically and even physically, can help you achieve your investment goals. It can be detrimental to be unaware of an event that could affect markets you trade on or can be even more precarious if you have active trades on it. easyMarkets though offers a lot of tools to help both new and experienced traders with risk management.

So easyMarkets Proprietary Platform and Apps not only give you access to the commodities markets, it even helps you reverse losing trades with dealCancellation. Think about it like trade insurance – for a small fee you can cancel a losing order within a specified period of time. Of course, this is just one of the many tools available to our customers – including free guaranteed stop-loss, take-profit and fixed spreads.