Commodities Trading

Because of their very attractive potential for return, commodities are becoming increasingly popular with financial investors. This is especially true of crude oil trading and gold trading and their respective markets which, due to the recent rise in gold and oil prices, have created profitable investment opportunities for all types of traders.

Commodities trading with Finotec also includes silver trading. The white metal also offers very interesting opportunities since its price has been highly volatile in recent years and is thus considered one of the most volatile commodities markets tradable today.

Commodities - How It Works

When trading commodities with Finotec, you do not actually purchase or own the traded good. (Imagine if you were to buy and store gold or oil!) Thanks to financial instruments and derivatives such as futures contracts or ETFs, you speculate on the price of a given commodity. This means that you can buy or sell the commodity and take advantage of its price variation (upward and downward) without having to actually own the goods. Finotec offers several commodities to trade via futures contracts, as well as spot silver and spot gold to trade on the spot market (under the symbols XAU and XAG). The main difference between trading the spot market and trading futures market is the timeframe of the transaction. Trading commodities futures may be used either for speculation or hedging purposes. When you are speculating via commodities futures, you are predicting the future direction of a given commodity, hoping to benefit from your prediction. You open a long position (in other words, you buy) if you believe the price of the commodity will go up, and you open a short position (or sell) if you believe it will go down.

By choosing correctly – and at Finotec, we provide you with all of the resources you need to do so – you can make money regardless of the market direction. Short selling is one of the major advantages of commodity futures trading. So, whether a region’s economy is thriving or declining, commodities trading always offers a potential for profit

One of the major appeals of commodities trading with Finotec is the Leverage options that we offer. Leverage is indeed what makes commodity trading so potentially profitable in a relatively short time-frame and limited initial capital. At Finotec, when you trade commodities via futures, you get up to 20:1 leverage. This means that to open a long position on a 500-unit crude oil futures contract with a trading rate of $92, you will only have to deposit 1/20th of the full value of the contract: 92x500/20 = $2,300.

Nowadays, all sorts of raw and primary products are traded on commodity markets including agricultural products such as corn, coffee, rice and wheat, metals such as gold, silver, and iron, fuels such as crude oil and diesel, to name just a few.

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Reading Commodity Quotes

The price of gold and silver refers to their price per ounce and in USD. For example, when you see a price quote for gold as follows: 653.65/654.15, it means that an ounce of gold is traded for 653.65 USD (sell) and 654.15 USD (buy).

For crude oil, the price refers to its price per barrel. For example, when you see a price quote for crude oil as follows: 68.335/68.365, it means that a barrel of crude oil is traded for 68.335 USD (sell) and 68.365 USD (buy). Crude oil prices are affected mostly by geopolitical issues, as well as supply and demand conditions in gasoline.

As mentioned above, commodity trading with leverage can lead to large profits, but it may also lead to substantial loss. When buying a commodity futures contract, your risk is theoretically limited to the price of the commodity dropping to zero (a very unlikely scenario). When selling, your risk is theoretically unlimited since the price of a given commodity has no absolute ceiling. In practice, however, you can limit your loss by offsetting your position when the market is moving against you or by placing a stop-loss order.

Trading Commodities with Finotec

On the Finotec Trading Platform, buying and selling commodities is easy. We offer the most popular commodities to trade, including gold, silver, crude oil and others, and we plan to add more in the near future . Within one click, you can buy or sell those commodities 24 hours a day and benefit from 1:20 leverage (5% margin).

Also, with Finotec, you can view real-time quotes, charts and graphs with all of the technical indicators you need to analyze trends and predict market movements. And to keep you informed and updated about the latest developments in the commodity markets, our experts provide you with weekly and daily reports which include an analysis of price movements in crude oil, gold, silver and other major commodities.

As a Finotec client, you can view real time crude oil prices online or receive them via SMS or phone. Upon buying or selling a specified commodity on the platform, you may request to be notified by SMS, phone or e-mail when its price goes up or down or when it reaches a certain level. At Finotec, there are no commissions for dealing commodities. We get paid for our brokerage services through the spread (the difference between the bid and the ask price).

Finotec Commodities Platform

The multi-product Finotec Trading Platform allows you to trade a wide range of financial instruments including commodities, forex, options, stocks, CFDs and futures. Each product however comes with its own resources and tool kit. Therefore, when trading commodities, you have direct access to all the news, the graphs, trading tools and indicators you may need to inform the position you intend to take. The platform gives you access to the world’s largest commodity markets at competitive prices.

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Related Commodities Trading Information