Learn to trade commodities online


Other factors influencing oil prices include decisions by the Organisation of Petroleum Exporting Countries OPEC and other major oil producing nations, such as Iran, on how much oil is produced and supplied to the market. An ability to try and forecast how well or badly the world economy may fare in the months ahead is a definite plus point when it comes to trading a commodity like oil.

But there is plenty of news that can cause fluctuations in the price on a day-to-day basis — and on an even shorter-term scale than that. If for example the US releases figures that show its economy is improving more quickly than expected, this could cause a surge in the price of oil as traders start to bet that demand will increase, consequently putting up the cost of a barrel.

Or it could be that an oil-producing country resists international pressure to stabilise oil prices by increasing production. This could see further slides in the oil price as investors worry that more of the commodity will be produced than is needed. It really is a market that can be buffeted by plenty of world events, so it pays to stay on top of major economic news releases. Another enduringly popular commodity is gold, which has long been considered a store of wealth and has held a special allure for many of us — as the Californian gold rush back in the s would undoubtedly attest.

Traditionally, in times of trouble and market volatility, gold is perceived as a 'safe haven' — somewhere for investors to store their money away from other riskier assets. Although the yellow metal can in theory be traded in many currencies, the typical market quote is to price gold in dollars, usually as 'dollars per troy ounce'. This relationship to the US dollar is an important one and is another factor that will have an influence on the price of gold. If the dollar becomes more attractive to investors and starts to rise, the price of gold will usually drop.

In recent years, some people have seen the US dollar as a safe haven for their money and that has reduced the appeal of gold. This is another aspect to weigh up when trading gold: For example, if the US central bank, the Federal Reserve, decided to cut interest rates, this would normally weaken the US dollar and lift the price of gold.

As with oil, because gold is such a global commodity it pays to keep a watchful eye on the major economic announcements such as interest rates and unemployment figures, which are released on a regular basis. The energy markets are also popular among commodity traders.

The advent of renewable energy has generated added interest for commodities such as national gas, heating oil and gasoline. One way to get a feel for commodity markets is to watch their moves over a period of time so you can experience the sort of things that happen and understand what makes prices change.

This could see further slides in the oil price as investors worry that more of the commodity will be produced than is needed. It really is a market that can be buffeted by plenty of world events, so it pays to stay on top of major economic news releases. Another enduringly popular commodity is gold, which has long been considered a store of wealth and has held a special allure for many of us — as the Californian gold rush back in the s would undoubtedly attest. Traditionally, in times of trouble and market volatility, gold is perceived as a 'safe haven' — somewhere for investors to store their money away from other riskier assets.

Although the yellow metal can in theory be traded in many currencies, the typical market quote is to price gold in dollars, usually as 'dollars per troy ounce'. This relationship to the US dollar is an important one and is another factor that will have an influence on the price of gold. If the dollar becomes more attractive to investors and starts to rise, the price of gold will usually drop.

In recent years, some people have seen the US dollar as a safe haven for their money and that has reduced the appeal of gold. This is another aspect to weigh up when trading gold: For example, if the US central bank, the Federal Reserve, decided to cut interest rates, this would normally weaken the US dollar and lift the price of gold.

As with oil, because gold is such a global commodity it pays to keep a watchful eye on the major economic announcements such as interest rates and unemployment figures, which are released on a regular basis. The energy markets are also popular among commodity traders. The advent of renewable energy has generated added interest for commodities such as national gas, heating oil and gasoline.

One way to get a feel for commodity markets is to watch their moves over a period of time so you can experience the sort of things that happen and understand what makes prices change. CMC Markets is an execution-only service provider. The material whether or not it states any opinions is for general information purposes only, and does not take into account your personal circumstances or objectives.

Nothing in this material is or should be considered to be financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Here is a simple example of a speculator we will call him a futures trader executing a trade and how it would work.

Once the futures trader has established a futures trading account , he would then call his broker to initiate a trade. He would let the broker know if he was looking to buy or sell long or short , the specific commodity he wants the trade in, the month and year of the contract he is looking to trade, the quantity, and the price which he is willing to buy or sell for or he can say Market Order to have the trade executed at the current market price in the trading pit.

Sometimes conditions are present when the trade can not be executed for some reason which is rare but can happen. After the trade is executed, the floor broker would relay price paid or sold and relevant information back to the trader's broker. The futures trader's broker would then let the futures trader know the price that the Buy or Sell the trade was executed. In recent times, more trading has been done through the use of online futures trading , eliminating the use of telephones and calling of brokers on the telephones.

The futures trader can trade directly from their computer and have the trade routed directly to the trading floor of the exchange. At the exchange some orders electronic markets are executed immediately in the exchanges computers. This is becoming the more preferred method of trading because it tends to be quicker. He then calls his broker or enters an order into his computer trading platform to sell the futures contract he has bought earlier in the day.

Commissions and fees would be deducted from his buy and sell. And remember the risk of loss exists in futures trading. This is just a brief example of how commodity trading works.