COMMODITY CFDS

Commodities are hard assets, basic goods or raw materials that can be grown, extracted, or mined and can be bought or sold.

Commodities are most often used as inputs in the production of other goods or services. For traders, they are important securities that can diversify their portfolios.

Commodities trading determines the price of all commodities. As a result, the prices of the most important items you use every day are volatile. In some cases, like gasoline, they change from day-to-day.

There are many advantages of trading commodity CFDs – which allow traders to speculate on price fluctuations in both directions.

Commodity markets work on the principle of demand and supply. Any rapid increase in demand will have a direct impact on price, providing an opportunity to generate higher profits in a limited amount of time.

This is why Commodity CFDs are often used as a hedge by traders. By diversifying their trading portfolio with Commodity CFDs, traders can protect themselves from losses in other asset classes. For example – Gold is known as a safe haven. In times of volatility, many investors and traders buy Gold – pushing its price upward.

This depends on the current global economic outlook. Commodity prices are often volatile and can fluctuate rapidly in short time frames. The role of a trader is to analyse the commodity market and make informed decisions on whether the price of any given commodity is likely to increase or decrease.