What Are Commodities?

There are two types of them — hard and soft ones:

minerals mining
1

Hard commodities require mining or extraction. These are crude oil, iron, and metals (gold, silver, and others). They can be divided into subcategories — Energies, Metals etc.

agriculture
2

Soft commodities are commonly agricultural products. These are wheat, sugar, corn, coffee, etc. Traders use subcategories like Agricultural or Livestock commodities to classify them.

How to Trade
Commodities?

There are several ways to win from buying or selling them without physical purchases — using CFDs (Contracts For Difference) or futures contracts. At A1 Capitals, we use CFDs for that.

These are derivative financial instruments, literally, agreements to trade some commodity at a specific price on a certain date, which allow traders to speculate on the price movements. The price for them depends on how much the asset costs. So, you don’t own any material but only benefit from forecasting its growth or fall.

What Are the Most
Liquid Commodities?

Traders prefer to speculate on prices of WTI crude oil, Brent crude oil, natural gas, gold, silver and copper, as well as agricultural products — wheat, soybeans, cotton, as they all have high volumes. It ensures great liquidity and high chances for earning money.

The price for every commodity is affected by:

Supply and demand
Currency movements
Stocks and inventories
Transportation and storage costs
Economic growth or the inflation level
Geopolitical events
Elements of nature

Picking Up a Strategy
for Trading Commodities

The key step to winning from trading raw materials is to have a well-thought strategy based on deep analysis. You can start with setting long or short positions if you believe that the price will either increase or decrease, still, the research of the commodity traded is crucial.

1
Start with finding reports of brokerage and research companies.
2
Follow daily news from financial newspapers. Subscribe to the commodity-related newsletter to keep focused.
3
Rely on both fundamental and technical analysis when trading commodities.
4
Choose one of the existing trading strategies (Breakout trading, Range-bound trading, etc.) or create your own if you already have experience in this industry.
5
Manage risks with Stop Loss, Trailing Stop, and Guaranteed Stop orders. Minimize losses and maximize profit!
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The A1Capitals brand and company is owned and operated by Fenix Group Ltd. Please note that Fenix Group Ltd is an international company providing services to customers from different countries. By continuing your work on the Company`s platform you agree that the Company's laws of jurisdiction apply to your relations with the Company.

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Risk warning

Trading CFDs and spot contracts involves a high level of risk. CFDs trading may not be suitable for you. Therefore, make sure that you fully take into account all financial and legal aspects and accept the risk of loss that may occur in the investment process. If necessary you should seek legal advice.

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