Commodities Trading Australia
Trade CFDs on commodities including Gold and Crude Oil on an award-winning MT4 platform.
Commodity Market
Commodities encompass tangible raw materials such as corn, wheat, oil, and precious metals. The process of buying and selling contracts for these raw materials is known as commodities trading. While physical exchange is possible, a significant portion of trading occurs through futures contracts, wherein traders agree to purchase or sell the commodity at a predetermined price and date.
Commodity CFDs trading involves traders speculating on the performance of these raw materials. This practice bears resemblance to foreign exchange and index CFD’s trading, where traders enter into speculative transactions centred around commodities to generate profits. However, unlike trading shares, investors engage in speculative transactions centered around commodities to generate profits. These commodities possess intrinsic value and consistent supply, often originating from various suppliers.
The dynamics of trading hinge on the interplay of supply and demand; a restricted supply drives the commodity’s value upward, while an abrupt surge in supply results in a substantial decline in its price. As such, the flow of commodity trading is intricately linked to the equilibrium between demand and supply within the commodity market.
Market players must deal with the commodities exchange if they want to trade various commodities and agree on derivative contracts. Derivative contracts are generally agreements or tradeable contracts whose value changes according to the price of an asset and not from owning the asset itself. A commodities exchange makes it convenient to trade in commodities like gold without physically owning them. Some of the most known commodity exchanges include the New York Mercantile Exchange (NYMEX). The Chicago Mercantile Exchange (CME) has the most diverse tradable derivatives for speculation and risk management.
Commodity Trading
Commodities trade involves staking on how the price of a commodity will move. When people anticipate the prices will go up, they buy futures (long positions). When they think the price will go down, they sell futures (short positions).
Even though you can opt to purchase the physical commodity and sell it on your own, it is more common to find people trading futures contracts. The contracts have specifications on delivery dates, prices, and quantities, among other rules. Significant manufacturers and large-scale consumers often trade global commodities for risk management to shelter themselves from price fluctuations.
Trading commodity CFD’s online has attracted more traders to the available products. There is increased convenience and ease of transacting compared to traditional commodities trading. When traders trade commodity CFDs online, they do not need to contact a broker to place an order. Everything you need as a trader is readily available in an accessible online trading account. You can use your live trading account to see all the charts you need and get all the analysis tools you need.
Online CFD commodity trading gives an upper hand to traders because they enjoy instant delivery or settlement of trades, unlike in old times. There is no need to own paper certificates and as a result a trader can upgrade their trades immediately if they see a newer opportunity. Some strategies such as scalping small price movements are easier to master.
Trading diversification is easier to achieve due to the CFD commodity products available. One fact about online commodity trading is that most have little to no correlation and you do not often experience price shocks amongst different commodity products. That protects you from the price shocks you would experience with trading a purely-equities portfolio. This makes it appealing to risk averse traders.
Strong liquidity in the international commodities trading market provides traders with various trading opportunities. This means you are able to buy and sell commodities in a fluid active market. Liquid assets are just assets that you can easily buy and sell without queuing orders for a long time. Therefore, all the futures contracts fall within the liquid assets category.
4 Types of Commodities Investment
1. Physically invest in the commodity
The most direct form of investing in a commodity is to purchase the commodity physically. It is the oldest form of commodities investment. You can sell physical goods at a good bargain whenever you no longer find them useful. However, it carries many logistical challenges because you need to plan for storage and safe delivery.
One such trick is to buy gold by looking for a coin dealer. The coin dealers have gold coins and bars available in different sizes, quality, and rarity. Most have the years they were minted, and rare coins will attract higher prices.
Due to the sizes, you can get gold coins with many conveniences compared to most commodities. On the same note, a gold coin is relatively easy to move around with you. However, some commodities, such as beef cattle, crude oil, and bags of corn, are bulky and inconvenient. Individual investors will need help to transport most other physical commodities.
2. Invest money in futures contracts
3. Buy and sell commodity stocks
An indirect yet simple way to invest in commodities is to buy stocks in companies that mine these commodities. You could buy energy or metal stocks from companies like Glencore (oil, gas and coal) or AngloGold (gold and platinum). The prices of these company stocks do not directly fluctuate with the commodity prices.
4. Invest in commodity ETFs and diversified commodity mutual funds
Some investment funds offer exposure to commodities. You can trade in these ETFs to avoid holding the commodities. The investment funds invest in the commodities, stocks of the commodities or a mixture of both.
Good examples of these investment funds include the SPDR Gold Trust ETF ($GLD), available on the NYSE. Investors who want to place bullish bets on oil prices would want to invest in the United States Oil Fund ($USO).
Some funds also offer investment opportunities in a cluster of different commodities. The iShares S&P provides a commodity-indexed trust, a fund benchmark containing 24 various commodities in a list of spread-out sectors.
| Type of investment | Order example | Where to get |
|---|---|---|
Physical investment | Gold coins | Physical dealers and Bullion traders |
CFD commodity products | Online brokers | Online brokers like ATFX |
What Commodities Does ATFX Offer?
Commodities Broker
Engaging in commodity trading from the comfort of your own home eliminates the need to navigate the environment of traditional floor trading. Instead, you have the ability to trade directly from your personal computer or tablet. This modern convenience, coupled with a high level of transparency, empowers you to execute trades even when you’re on the go.
The convenience and improved trading experience over recent years owe much of their credit to brokerages. These entities have taken on a role of equipping traders with state-of-the-art trading platform technologies, complete with the essential tools for successful trading. These platforms offer a unified hub where real-time analytics and technical education seamlessly coexist, facilitating informed decision-making in one centralized location.
You however need to get a reliable and dependable broker who wlll offer you the right tools at affordable charges. State-of-the-art platforms and easy access to them will ensure that you can make timely decisions and take advantage of opportunities. Whenever you have a reliable broker, you will get regular correspondence on technical updates that will improve your trading experience. For example, you will get emails introducing you to updates on the platform or adding new instruments you may be interested in.
A good broker ensures you have the right customer support from its platform, including live chat or social trading. The infrastructure also needs to have minimal lags or slippage.
Why Trade Commodities with ATFX?
ATFX offers some of the most
competitive spreads.
Commodity Trading Platform
In order to facilitate seamless interaction among the numerous participants in the market, a unified hub is essential. Commodity trading takes place through software platforms that facilitate communication for farmers, producers, investors, and analysts, all within a single online space. Your broker offers a downloadable trading platform that ensures transparent, secure, and controlled environment.
To ensure safe and reliable trading, traders should deal with licensed brokers. When evaluating a trading platform, several factors need consideration:
1. Platform’s security
A state-of-the-art trading platform should bare the reputation of the financial institution providing it. In other words, if there are a lot of slippages, security breaches and loopholes, it means that the broker is not trustworthy. Aside from being licensed, a broker should protect any funds you deposit into the trading platform. Platform security is an essential aspect of trading because a website needs to meet all the security credentials, such as SSL certification, to ensure that only you can access the platform at any point. It keeps away URL intruders.
2. Convenient deposit and withdrawal options
Being able to make deposits or withdraw your profits is important for a trading platform. It will help you make urgent trade decisions without any challenges resulting from cash balance delays.
3. Training and education
Commodity trading is a high-stakes type of trading. For that reason, you need a platform that lets you place your trades and gives you timely fundamental and analytical information. In CFD commodities trading, information and how fast you can get it can make a big financial difference.
Register for an account
Open your account
Complete the Live Trading Account application form. Once we have verified your identity and once you have passed our knowledge assessment, we will set up your account.
Fund your account
Start trading
FAQ
Commodities can be split into two subsections, hard commodities (such as oil, gold, and rubber) and soft commodities (such as coffee, wheat, and corn). Hard commodities are generally higher in price, but both are traded extensively on the commodity market. Commodities are traded in numerous different exchanges all around the world. In the UK, oil, gas and other energies are traded at the Commodities Investment Exchange (COMEX) and non-precious metals at the London Metal Exchange (LME). At ATFX we provide access to the commodities market with our Commodities CFDs and our clients can trade Commodities CFDs all in one place in the comfort of their own homes.
If you choose to start trading commodity CFDs, here is a very simple 5-step guide that you can follow:
1. Choose a trading platform
Begin by selecting a trustworthy and licensed FX and CFD broker that allows trading of CFD commodity products. (please note that some brokers do not offer commodites CFDs). The best platforms have a wide variety of commodites CFDs tradeable at narrow spreads and low minimum margin requirements. You can create an account with trading platforms like ATFX by completing our application process. Opening an online trading account requires new clients to provide identification details like names, date of birth etc.. Then they can place a strong password which they will be using to log into their accounts every time they need to check it. This should be enough to differentiate you from other members of the same trading platform.
2. Make your first deposit
Different brokers will offer different minimum deposits to start trading commodities CFDs. Some of these start as low as $10. Choose a trading platform that does not charge deposit fees on payments made in major currencies. You should access various deposit options such as bank deposits, debit/credit card deposits and other payment solutions like Skrill and Neteller. Electronic deposit solutions or credit card deposits are an investor’s favourite because they reflect a balance instantly, unlike having to mail a cheque to the broker. In many cases, you will find that the method you used to deposit will also be the method you used to withdraw funds.
3. Research the commodity CFDs market
As you have probably been doing demo trading on commodities CFDs, you can now do in-depth research into the commodity market and pick out a few commodity CFDs products. Research the respective market and consider coupling that with the fundamental issues affecting each commodity’s behaviour. In this case, you should be looking at what affects the demand and supply for each commodity and how their prices affect the broader economic indicators. Considering that much of the trading routine also needs psychological composure, taking time to research the market will give you more confidence when placing trades. It shows that you have traded products after careful consideration and not out of knee-jerk decisions. Taking 30 minutes to plan and execute your trade will save you much more than having to close losing trades.
4. Choose your first trade
After you have found the preferred CFD commodity to trade, you can time the right price so that you can enter the trade. Identify the exact ticker to see the chart and its corresponding prices. It should conform to your technical and fundamental expectations. Some technical expectations include how the price has historically reacted whenever it has reached a certain level. For example, you can check whether the commodity’s price trades at historical lows or highs. People tend to buy more of a commodity when it is trading at historical lows as they wish the speculate on the price gaining over time. It always makes good financial sense to buy low or sell high. Traders who place large trades and wait for longer periods can potentially make reasonable profits because prices tend to make reversals when they reach historical lows or historical highs.
5. Execute your first trade
To execute the first trade, once you have the right entry conditions, select the amount of money you want to risk and trade the specific commodity CFD. Open trade, choose the right trade size and place your order.
Once your order is placed, you must monitor whether it is in your favour. One tactic experienced investors use is to have a specific trade size in mind first. Next, they will place fixed percentages of the total amount in spaced trades until the amount they had budgeted has been committed. For example, if you wanted to invest $100 in a certain position, you could begin with placing $20 trades and keep on adding towards the full $100 as the trade moves towards your predicted trend.
Finding a place to buy stocks or currencies may be a walk in the park, but it is not the same for commodities. Most brokers do not support commodity trading on their platforms. Therefore, you need to explore online brokers and find which one supports commodity trading on their platform. Even so, it would be best if you found which commodities broker offers trading positions in the commodities you wish to trade. These will also occur in different forms, such as futures or options. ETFs are a good way to trade commodities through a broker.
Assess the platforms available and consider the fees charged whenever you want to begin your journey as a commodity trader on an online platform. The fees are important because you do not want to settle on a platform that cuts off much of your profits to settle fees and commissions. Your trading experience should be fair to both you and your broker.
When you trade on the ATFX platform, you will enjoy the right charting tools and get technical indicators to help you pick out the possible trades. Technical indicators and charts let traders identify commodities trading on historic highs or lows and judge some possible recurrent trends. Investors who do not have previous experience trading financial instruments also get to download training tools and manuals that will enable them to streamline their trading and take part in thousands of opportunities that appear every trading week.
Another essential decision you must make when choosing where to trade commodities is to do with the convenience and ease of making your deposits and withdrawals. Using an online broker is faster, safer and more confidential than the physical delivery of cheques or cash to trade commodities face-to-face with a stranger. When you opt for an online commodities trading platform, you only need to deposit cash electronically in an account you manage. You can access your commodity account and monitor your balance anytime and without logistical impediments like opening hours.
When choosing where to trade commodities online, you are welcome to research and see what the platforms offer and consider as many reviews as possible. Good reviews let you conclude how well your trading experience will go.
Now that you know where to trade commodity CFDs when you are ready to trade, you need to know who you will be used to place your trades in the commodities market. A commodities CFD broker is a company that provides all the facilities you need to place commodity CFD trades if you agree to pay spread or commission. Once you open an account with a commodities CFD broker you can then trade commodity CFDs.
As a requirement a good commodity CFDs broker will follow all the regulations necessary to protect your money that you deposit with them. . Avoid unregulated brokers so you do not end up in risky situations that will put your capital in danger.
Carry out all your commodity CFD trading with a platform that makes it easy to deposit your capital and withdraw any of your proceeds as and when you need them. For security on your broker’s part, ensure that the website has the latest security standards to keep away intruders from accessing your private information. Confirm if your broker has an SSL certificate (Secure Sockets Layer) on their website to prevent intruders. This will have a displayed certificate on the website footnotes, or you can also check it from the website URL. The website URL will have a ‘lock’ icon to show that it has the latest SSL updates and protection from domain cloners.
