Broker Special – How To Trade Commodities On Alpari

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Alpari deliver CFD and forex trading across a range of markets. Here, they explain how to trade commodities using a range of investment vehicles on their platform.

What Are Commodities?

Commodities are natural resources or foods, often the raw materials for manufacturing. Cotton, wheat, soybeans, cattle, lumber, natural gas, coffee, rice and sugar are just a few examples.

In commerce, they become basic goods that are interchangeable with others of the same type and form one of the major asset classes.

Crude oil, gold, and silver are the most frequently traded commodities.

how to trade Alpari commodities

How Does Commodity Trading Work?

As an individual trader, you don’t need to physically own a commodity to gain from it. You can buy or trade a commodity, then profit from changes in its price through various financial instruments:

Futures

A futures contract is an agreement to exchange a certain amount of a commodity at a future date. As the buyer, you pay for the contract at the time of purchase. If the price rises between the purchase date and the date the contract expires, you make a profit.

Options

With an options contract, you have the right to buy or sell a commodity at a later date, at an agreed price. Unlike futures, traders don’t have to buy or sell at the end of the contract if they choose not to.

Spot Commodity Trading

A spot commodity is different from a futures or option contract – where the commodity is exchanged at some point in the future. In the spot market, commodities are traded on the current market, with the aim of making profits on small movements in prices. The idea is either to go long when you believe the commodity’s price is rising, or short when you expect it to fall.

It’s always important to remember, however, that losses still occur with commodity trading and you should always trade responsibly.

Benefits

  • High leverage: You can take a position in a commodity by paying only a fraction of the value as margin. Also, the margins in the commodity futures market are lower than with equity futures and options.
  • Less manipulation: Commodity markets are less likely to be rigged or manipulated because they’re governed by international price movements.
  • Diversification: As an independent asset class, commodities are a good way to diversify your portfolio.

Commodities offer an exciting and rewarding way to trade the markets. At Alpari International, we provide an easy-to-use trading platform, with all the tools, metrics, analysis and support you need for a great trading experience.

To help you get used to the process without risking your own money, you can practice with a simulated trading account.

Think you’re ready to give it a go? Open a demo account with Alpari International today.

To learn more about the world of commodity trading, check out the helpful guide on the Alpari Education section.

ALPARI INTERNATIONAL IS THE BUSINESS NAME OF EXINITY LIMITED WHICH IS REGULATED BY THE FINANCIAL SERVICES COMMISSION OF THE REPUBLIC OF MAURITIUS WITH AN INVESTMENT DEALER LICENSE BEARING LICENSE NUMBER C113012295.

Registered address: 5th Floor, 355 NEX Tower, Rue du Savoir, Cybercity, Ebene 72201, Mauritius

Trading Forex and CFDs involves significant risk and can result in the loss of your invested capital. You should not invest more than you can afford to lose and should ensure that you fully understand the risks involved. Trading leveraged products may not be suitable for all investors. Before trading, please take into consideration your level of experience, investment objectives and seek independent financial advice if necessary. It is the responsibility of the Client to ascertain whether he/she is permitted to use the services of the Alpari International based on the legal requirements in his/her country of residence.

Alpari International does not provide services to residents of the USA, Mauritius, Japan, British Columbia, Quebec, Saskatchewan Haiti, Suriname, the Democratic Republic of Korea, Russia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Armenia, Moldova, Tajikistan, Uzbekistan, Turkmenistan, Ukraine and Georgia.

@2020 Alpari International

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