Commodities trading

Keen to understand more about commodities? Here’s an overview to help elucidate the world’s oldest form of trading.

What is commodities trading?

Commodities trading is the buying and selling of raw materials or primary agricultural products. There are hard commodities, which are generally mined natural resources like gold or oil, and soft commodities, which are livestock or agricultural goods.

Commodities trading predates all other forms of trading, as burgeoning civilisations would barter for food and supplies. In modern times, the physical commodities market is hugely dependent on futures prices, enabling producers (such as farmers) to secure a price from buyers in advance.

However, the sophisticated network of commodities exchanges that exists today enables speculative traders to access the price movements of these assets in the short term.

Why trade commodities?

Trading on commodities gives you exposure to the prices of oil, gas, metals and more, without ever having to take physical delivery of the asset or worry about storing them. Unlike futures contracts, CFDs do not have a specified expiry date, giving you flexibility on when you close your position.

Many investors view commodities as a potential hedge against inflation, as their prices are not highly correlated with other assets. Gold in particular has historically been considered a safe haven, as it tends to retain its value during times of economic uncertainty.

Trading commodities also enables you to use leverage to amplify your exposure. This can magnify your profits but also your losses, as both will be based on the full value of the position.

Why trade commodities with Capital.com?

We offer spread betting and CFD trading on an ever-growing range of commodities, giving you exposure to their price movements without having to buy them outright. We provide spot prices on these commodities rather than futures, giving you flexibility over when you close your position.

Identify potential entry and exit points with our smart, intuitive charting tools, and set price alerts to notify you of significant market moves. Protect yourself against adverse market moves with our range of risk-management tools, including trailing stops which lock in positive market moves while protecting against losses.^*

Learn more about commodities trading

^*Stop-losses may not be guaranteed.