Practice Commodities Trading
Since we first started using the earth’s natural materials to power industries, fuel markets and feed populaces, we’ve traded in these resources on the stock market. These are commodities – mined or farmed ingredients that are used to make the refined goods we buy and use and wear, every day. When traded on the exchange, commodities are highly susceptible to the economic status of the country in which that commodity is sold, so there are always opportunities to profit off of the changes in the global commodity market.
So, let’s talk a little more around commodity trading here, what commodities are, the types of commodities, and why they’re a good trading option.
What are commodities?
As mentioned, commodities are the raw materials that are mined or farmed and are used to make the refined goods we use. Let’s detail that a little more here, though:
Agricultural
These are commodities like crops and livestock, which exist as food sources for specific markets, and can also specifically include sugar, cocoa, soybean, wheat, cotton, cattle, and pigs.
Energy
Energy commodities are materials like oil, and natural gas – these are vital, as they provide fuels that power most of the world’s industrial, home and transportation industries. Some other examples of energy commodities are coal, electricity, and ethanol.
Metals
Metals are an important commodity in a number of global industries. For example, iron and copper supply the construction space, silver, and gold are made into jewellery, and are also a popular investment property. Platinum, apart from its jewellery application, is also used in a number of manufacturing tools, and industrial machinery.
Why trade commodities?
For the intrepid beginner trader, why would commodity trading be a good option? Well, commodities are their own unique entity when it comes to finding adventure in the land of trading. Here are just a few reasons to try your hand in the commodity trading space.
Success in volatility
Commodities are a volatile property. Why? Simply because their movement on the market is dictated by the global economic status. So, economic crises, natural disasters, and wars, can cause commodities to rise or fall on a dime. This means that success can be found in markets experiencing an uptick, as well as those that are falling. Commodities simply provide more opportunity to find success in the market.
Diversification
Again, commodities are their own unique creature – they often don’t conform to regular market movements that other properties, like stocks and bonds, are susceptible to. In fact, often when stocks and bonds fall, commodities may rise, and so having some ‘eggs’ in a few commodity baskets can lower risks for traders.
Hedging
Those same economic crises, natural disasters, and wars can also cause inflation that often devastates trader portfolios, as currencies lose purchasing power. Commodities, though, often skirt these economic downturns, and in fact, tend to rise. Including commodities in a portfolio, then can often protect that portfolio against these significant economic events in the market.
As with any part of becoming better at investing, it’s best to practice. To help you practice commodity trading online, Top Trader Market and MetaTrader 5 have a learning portal that lets you trade in real-world scenarios, without spending a cent of your hard-earned funds. Practice commodity trading, learn the ins and outs, and the volatilities of the commodity trading space, and then when you’re ready, take your money to the real market, confident in your ability as a better trader.
