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By: Corwin Blair

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CFD trading on Commodities

There are advantages using CFDs to trade on commodities. This would be a better option over other futures markets trading. If you are a new futures trader, you can trade in smaller quantum to test your ability and skill in futures market trading. Underlying futures contracts are more demanding which come on in bigger volumes.

CFD trading allows you the short term or long term option on many different markets as you want to test out your insights and trading abilities. You can also trade in various commodities that are of international flavor and not limited to the local commodities but in the local currency to avoid currency risk. Risk management strategies are available and in place to help you reduce the risks associated with commodities futures trading. A commodities trader needs to keep his knowledge base of commodities updated to give him more choices to trade. It is advisable to keep in touch with the happenings in the commodities markets to be aware of the more profitable trading choices.

Types of Commodities


Commodities come in various forms; you have energies and metals with agricultural commodities being the most popular. Energy commodities refer to oil and its derivatives while metal commodities refer to gold, silver and platinum. Agricultural commodities refer to soft goods such as wheat, sugar, coffee, cocoa and paddy. These commodities are usually traded in specific contracts where each contract is of certain volume, weight or any other preferred and agreed measurement for that particular commodity.

Commodity trading with CFDs can bring you profit when the price of the contract changes. You can trade the commodity on what it is worth now, which is known as the spot price, or you can trade the commodity on a set price for the future. The latter has already taken into account all related costs such as holding or carrying costs of handling the physical assets till the maturity date is reached.

How Commodity trading with CFDs works


Commodities are usually traded based on the underlying futures markets and their respective contracts. There are spot trades on various popular commodities such as gold and silver which specify the metal commodity’s price at a set time. When a trader expects the preferred commodity to rise in price, he will trade on it with a CFD buy contract; the trade is closed when the contract is sold at the bid price. Conversely, when you expect the commodity price to fall,Forex Trading you open a position to sell the CFD contract at the bid price and close with a higher price to make a profit.

Are you new to CFD trading? Learn how Forex Trading work, what the risks are and how you can manage them, discover how to place your Commodity Trading and much more. Read my articles at Corwin Blair Articles and my bookmarks at Corwin Blair Bookmarks.


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