Commodities like sugar, soybean and wheat are an asset class that you may have thought out of your reach but given spread betting there might never have been a better time to start trading commodities. In these volatile times you can use spread betting, futures, options and CFDs to access commodities trading and make money out of trading them in much the same way that you do spread betting on gold or crude oil. It is also worth noting here that sugar is one of the most liquid soft commodities you could spread bet on with a bid-offer of about $1.7.
Trading Commodities
Finally in this short review of the markets you can trade, you can consider trading on commodities. Commodities are usually traded in large quantities, and trading volume is high, which means they are readily available, even though you may find higher spreads than with some other markets.
Commodities include a whole host of items. One of the most well-known is crude oil, which actually comes in two variations, West Texas and Brent. The price of oil can be affected by many world matters. OPEC is in control, but you can find political situations where countries can reduce their output or increase it, with a corresponding effect. In fact, we don’t have many days supply of oil in store at any particular time, so the price is responsive to market impacts. Longer-term oil prices are affected by the severity of winters, increasing efficiencies, shale oil production, and demand such as that from China, with its expanding economy.
Another well-known commodity that can be traded readily is gold. The price of gold has been less volatile recently than historically, but can still give opportunities. Gold is always regarded as a safe haven for cash when it seems that cash is becoming worth less and stocks and shares are in a down market. Threats of war seem to cause a rush to physical wealth such as gold. Again, you can use technical analysis techniques to anticipate possible moves.
Along with gold, silver is another precious metal that has much the same characteristics, even though it is significantly cheaper than gold. If you chart gold and silver together you will quite often find they move in concert. The interesting thing is that their characteristics are very different. Most of the gold that has ever been mind is still available in some form such as jewellery. But very little of the total production of silver is still around. Silver is used in industrial processes, and was notably used extensively for photography in the last century. It gets used up, and companies that need it are always looking to buy it on the futures market in order to lock in the price. Even so, gold and silver prices tend to be in a fixed ratio over the years.
There are many other commodities. All the soft commodities include the agricultural products such as corn, wheat, hogs, and cattle. Obviously these prices are seasonal and are also affected by the weather. You’ll find that the prices tend to have wider spreads than the hard goods.
Whatever market you decide to trade in, you are spoiled for choice. But if you change your focus from week to week, as you find it difficult to make money in your latest slot, the danger is that you will never learn any of the markets and be unable to trade effectively. You need to focus for a time on particular markets and get to know them. Every trader has strengths and weaknesses, and in time you will find a market that is best suited to your style of trading.
