COMMODITIES

Commodities Trading Explained

Trading commodities usually work as a hedge against inflation or unfavorable conditions of the market (e.g. the monsoon, if we’re talking about farming). Gold can be used as a hedge in case the economy collapses.
The most popular way of trading commodities is through a futures contract on a specialized exchange. The futures contract is an agreement to buy or sell a particular amount of a commodity at a specified time and price. By doing this, big businesses who are users of a certain commodity can protect themselves from violent price swings.

How To Trade

In order to start trading, all you have to do is to create an account at Fannexx, deposit funds, sign in to the application – and go for it.

When trading commodities you must meet a minimum balance requirement. After you have put in the required amount, you need to think about your investment strategy. Do you want exposure to a lot of commodities as a way to diversify your portfolio? Do you want to make a profit on the performance of a particular commodity? Choose the commodity you want to purchase, the month when the contract expires and the number of contracts.

Time-Saving

Having bought commodities futures or CFDs you don’t normally need to monitor markets and prices everyday, since these are primarily long-term investments.

Less Manipulation

Governed by international price movements, commodity markets are less prone to rigging or price manipulation and thus allow traders to gauge market developments better.

Market Transparency

This makes it easier for traders in the commodity markets to make informed decisions, hedge against price fluctuations, and make better price estimations.

High Leverage

The margins in the commodity futures market are lower than equity futures and options, enabling traders to pay only a fraction of that value.

Commodities Specifications