Commodities Trading
Where Can I Open a Commodities Trading Account? |
There are many spreads firms which offer a wide range international markets including commodities like gold, crude oil and coffee, but also stock markets, forex and equities.
Some firms, such as FinancialSpreads.com, offer account holders the usual benefits of spread trading including two-way trading and tax free* trading with zero commissions. They also let you trade a good number of commodities futures markets 24 hours a day, 5 days a week. For more details see 24 hour spread trading.
| Gold Daily - Spread Size |
4 |
5 |
5 |
4 |
5 |
4 |
4 |
7 |
| Gold Daily - Min Stake |
£1 |
$0.60 |
£1 |
£0.1 |
£1 |
£1 |
£1 |
£1 |
| Gold Futures - Spread Size |
6 |
8 |
6 |
6 |
7 |
6 |
6 |
14 |
| Gold Futures - Min Stake |
£1 |
$0.60 |
£1 |
£0.1 |
£1 |
£1 |
£1 |
£1 |
| Brent Crude Oil Futures - Spread Size |
4 |
6 |
6 |
6 |
5 |
4 |
4 |
12 |
| Brent Crude Oil Futures - Min Stake |
£1 |
$2 |
£1 |
£0.5 |
£1 |
£1 |
£1 |
£1 |
| US Crude Oil Futures - Spread Size |
4 |
6 |
6 |
6 |
5 |
4 |
4 |
12 |
| US Crude Oil Futures - Min Stake |
£1 |
$2 |
£1 |
£0.5 |
£1 |
£1 |
£1 |
£1 |
Comparison Notes.
Advantages of Commodities Spread Trading |
Commodities spread trading has a number of important advantages over some of the more traditional investment options:
- Spread trading is tax free*. With commodities spread trading you are not actually taking possession of any assets, you are simply speculating on the future price of a commodity. As a result, you don’t pay income tax, capital gains tax or stamp duty.
- Unlike traditional methods of trading commodities, spread trading offers you a simple way of speculating on markets to go down as well as up. If you think the price of crude oil will go up, you can take a position on that. Likewise, if you think that the gold market will fall you can also take a position on that.
- Most spread trading companies, like the ones listed on this page, do not charge broker’s fees or commissions on your trades. Naturally this can help to keep your trading costs down.
- Financial spread trading offers investors a huge range of international markets. You can take positions on gold, UK crude oil, US crude oil, wheat etc but from the same account you can normally take positions on:
- Indices eg the FTSE 100, Dow and DAX 30
- Stocks eg UK, US, German and French shares
- Forex eg dollar/yen, euro/dollar, sterling/dollar
- Government Bonds
- Interest Rates
Financial Spreads » "With FinancialSpreads.com you get all the advantages of
Spread Trading as well as commission free CFD Trading on 2,500+ markets, 24 hour trading, professional level charts and..." read
Financial Spreads review.
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Looking at the InterTrader site, they are currently pricing the Gold Rolling Daily market at $1,403.9 - $1,404.3. Therefore, you could speculate on the price of gold to:
- Move above $1,404.3, or
- Move below $1,403.9
With gold spread trading you trade in £x per $0.1. Therefore, if you decide to have a stake of £4 per $0.1 and gold moves $0.5 then that would change your profit/loss by £20. £4 per $0.1 x $0.5 = £20.
Commodities Rolling Daily Markets |
Note that this is a 'Rolling Daily Market' and therefore there is no set settlement date so if your trade is still open at the end of the trading day, it will just roll over into the next trading session. If you let your trade roll over and are spread trading on the market to:
- Go up - then you would normally pay a small financing fee, or
- Go down - then a small payment is usually credited to your account
For details see rolling daily spread trading.
Gold Rolling Daily Example |
If we think about the spread of $1,403.9 - $1,404.3 and make the assumptions that:
- You have analysed the gold market, and
- You think that gold will move higher than $1,404.3
Then you might buy at $1,404.3 for a stake of, let’s say, £2 per $0.1.
With such a trade you make a profit of £2 for every $0.1 that gold pushes above $1,404.3. Of course, it also means that you will lose £2 for every $0.1 that gold drops below $1,404.3.
Put another way, if you buy a spread trade then your profit/loss is calculated by taking the difference between the closing price of the market and the price you bought the spread at. You then multiply that price difference by your stake.
As a result, if after a few trading sessions the commodity rose then you might consider closing your position to secure your profit. If the market rose and the spread moved to $1,410.6 - $1,411.0. You would settle your position by selling at $1,410.6. As a result, with the same £2 stake this trade would make you a profit of:
Profit / loss = (Settlement Level - Opening Level) x stake
Profit / loss = ($1,410.6 - $1,404.3) x £2 per $0.1 stake
Profit / loss = $6.3 x £2 per $0.1 stake
Profit / loss = £126 profit
Trading commodities spreads is not straightforward. With this example, you had speculated that gold would go up. Naturally, it could decrease. If gold had started to fall then you might choose to close your position in order to limit your losses.
So if the market dropped to $1,398.7 - $1,399.1 then you would sell back your position at $1,398.7. This would result in a loss of:
Profit / loss = (Settlement Level - Opening Level) x stake
Profit / loss = ($1,398.7 - $1,404.3) x £2 per $0.1 stake
Profit / loss = -$5.6 x £2 per $0.1 stake
Profit / loss = -£112.00 loss
Note: Gold rolling daily market taken as of 21-Feb-11.
Financial Spreads » "With FinancialSpreads.com you get all the advantages of
Spread Trading as well as commission free CFD Trading on 2,500+ markets, 24 hour trading, professional level charts and..." read
Financial Spreads review.
|
Crude Oil Trading Example |
Looking at Tradefair, they are currently pricing the Brent crude oil ‘April’ futures market at $105.08 - $105.13. This means you could speculate on the price of a barrel of Brent crude oil:
- Moving higher than $105.13, or
- Moving lower than $105.08
On the settlement date for this 'April' futures market, 11-Mar-11.
With crude oil spread trading, you trade in £x per $0.01. So, if you decided to risk £2 per $0.01 and Brent crude moves $0.05 then that would change your P&L by £10 given that £2 per $0.01 x $0.05 = £10.
Crude Oil Futures Example |
So, if we think about the spread of $105.08 - $105.13 and assume:
- You have analysed the oil markets, and
- Your analysis leads you to think that Brent crude will finish higher than $105.13 by 11-Mar-11
Then you might decide to go long of crude at $105.13 for a stake of £1 per $0.01.
Therefore, you win £1 for every $0.01 that the price of a barrel of Brent crude oil moves above $105.13. Conversely, however, you will lose £1 for every $0.01 that the Brent crude market sinks below $105.13.
Looking at this from another angle, should you ‘Buy’ a trade then your P&L is found by taking the difference between the final price of the market and the price you bought the spread at. You then multiply that difference in price by your stake.
As a result, if, on the expiry date, the Brent crude oil market closed higher at $106.42, then:
Profit / loss = (Closing Price - Opening Price) x stake
Profit / loss = ($106.42 - $105.13) x £1 per $0.01 stake
Profit / loss = $1.29 x £1 per $0.01 stake
Profit / loss = £129 profit
Trading commodities doesn't always work out as you would have liked. In this example, you wanted the commodity to increase. Naturally the price of oil could also have fallen.
If Brent crude oil had fallen and settled at $103.76, you would end up making a loss.
Profit / loss = (Closing Price - Opening Price) x stake
Profit / loss = ($103.76 - $105.13) x £1 per $0.01 stake
Profit / loss = -$1.37 x £1 per $0.01 stake
Profit / loss = -£137 loss
Note - Brent crude oil ‘April’ futures spread quoted as of 21-Feb-11.
Where Can I Find Commodities Trading Charts? |
Most spread trading companies offer candlestick charts in addition to a wide range of historical data and analysis. For example, the commodities spreads charts offered by most of the firms listed on CleanFinancial.com let you add a range of automated settings such as Moving Averages and Bollinger Bands.
So depending upon how you want to trade the markets, you can quickly change the charts to show the data across a variety of different time scales from minute-by-minute to hour-by-hour to week-by-week.
Example Commodities Chart
Commodities Trading Companies – Account Services Comparison |
The companies detailed below all offer account holders a range of commodities markets as well as all the normal spread trading benefits mentioned above, ie commission free, tax free* trading, two-way trading and a wide variety of markets.
| Online Application |
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| Credit Account |
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| Deposit Account |
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| Stop Loss Available |
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| Automatic Stop Loss |
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| 24 Hour Trading |
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| FSA Authorised and Regulated |
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| Candlestick Charts |
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Comparison Notes.
Commodities Trading and Risk Management |
All investments come with some element of risk and with spread trading you can lose more than your original stake or investment.
Before you trade, note that spread trades carry a high level of risk so ensure that spread trading matches your investment objectives. Familiarise yourself with the risks that are involved. Seek independent advice where necessary.
At the same time though, you can employ fairly simple risk management techniques to reduce your downside such as:
- Putting limits on your trade in order to limit your losses without impacting your upside, for more details see Guaranteed Stop Losses
- Trading with small stakes, eg you can trade with smaller stakes such as £1 per point or $1 per point. You won’t win as much as if you trade with larger stakes, but any losses will also be smaller.
It’s always surprising how many investors get greedy and ignore these techniques.
Financial Spreads » "With FinancialSpreads.com you get all the advantages of
Spread Trading as well as commission free CFD Trading on 2,500+ markets, 24 hour trading, professional level charts and..." read
Financial Spreads review.
|
Commodities Trading - 18 June 2013 |
| 18-Jun-13 |
[3:50pm] Copper prices continue to decline.
The futures market has hits its lowest level since the beginning of May as demand concerns weigh more on prices than any measures central banks could take with respect to extra stimulus measures.
Crude oil prices have remained somewhat mixed with Brent prices struggling to break through recent-range-highs.
US crude prices continue to push up towards the highest levels seen in the last 4 months.
Update by Michael Hewson, Senior Market Analyst, 
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| 18-Jun-13 |
[7:37am] After the close of Wall Street, WTI Crude Future (JUL 13) was about flat to $97.83.
The contract was above its 20DMA (@ $95.01) and above its 50DMA (@ $93.96).
Gold closed down $5.8 to $1385. The precious metal was below its 20DMA (@ $1391) and below its 50DMA (@ $1423).
Copper Future (JUL 13) on Comex closed about flat to 319.4c/lb.
The contract was below its 20DMA (@ 329.18c) and below its 50DMA (@ 328.22c).
The London Metal Exchange reported its copper inventories increased 11400 tons to 629475 tons.
Update by 
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| 18-Jun-13 |
[6:31am] A rally in the stock market and a weaker dollar offered support to crude oil prices, although many traders in the energy sector seem to be waiting on the sidelines.
Therefore, Nymex crude only just managed to close higher, settling $0.15 up at $98.15, with developments later in the week expected to shape the short-term trend.
Gold market participants do not seem to be convinced that holding onto the precious metal is currently the right option.
As a consequence, the market has seen a drop of 17% since the beginning of the year.
Investors continued that trend yesterday by pushing gold prices another $6.6 lower to $1,384.4, a sign that inflation concerns are not on the cards for now.
Update by Jonathan Sudaria, Market Dealer, 
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| 18-Jun-13 |
[5:00am] Crude Oil Update
In Asia, crude oil for July delivery is trading 0.1% or $0.07 higher at $97.84 per barrel.
Yesterday, crude oil for July delivery fell 0.1% or $0.08 to $97.77 per barrel.
This followed a media report that Fed's Chairman Ben Bernanke might disclose plans to wind down its $85 billion-a-month in asset purchases when he holds a press conference after the conclusion of two day policy meeting.
However, crude oil prices traded higher earlier in the session, as investors feared that Syria's civil war might extend to other parts of the Middle East.
Crude oil prices also rose, on hopes of increase in energy demand, after data revealed upbeat New York region manufacturing activity and gauge of confidence among US home builders hit a seven-year high.
Metal Trading UpdateGold for immediate delivery is trading marginally lower at $1,384.40 per ounce.
Gold for August delivery fell 0.3% or $4.50 to close at $1,383.10 per ounce yesterday, as demand for the safe-haven asset waned, following some upbeat US macroeconomic data.
Gold prices also fell, as investors looked ahead to the US Federal Reserve policy meeting later this week for clues to the central bank's next monetary-policy step.
Yesterday, copper 3-month futures declined 0.3% or $18.5, to end at $7,067.00 /MT. Aluminium 3-month futures ended 1.1% or $20.0 lower at $1,850.00 /MT.
Update by Ishaq Siddiqi, Market Analyst, 
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| 18-Jun-13 |
[5:00am] Commodities Price Update:
 WTI Crude is trading $0.07 (0.07%) higher at $97.84 ($/barrel)
 Brent Crude is trading -$0.06 (-0.05%) lower at $105.57 ($/barrel)
Gold is trading $0.35 (0.03%) higher at $1383.45 ($/oz)
Copper is trading -$0.01 (-0.16%) lower at $3.19 ($/lb.)
Wheat is trading $1.88 (0.27%) higher at 685.25¢ (US cents/bushel)
Cotton No.2 is trading -$0.74 (-0.84%) lower at 87.75¢ (US cents/lb.)
In the last session:
In the last session, Coffee C closed -0.57¢ (-0.46%) lower at 123.23¢ (US cents/lb.)
In the last session, Sugar No.11 closed 0.05¢ (0.30%) higher at 16.81¢ (US cents/lb.)
Update by
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For more see our 'latest commodity trading reports'.
This content is for information purposes only and is not intended as a recommendation to trade. Nothing on this website should be construed as investment advice.
Unless stated otherwise, the above time is based on when we receive the data (London time). All reasonable efforts have been made to present accurate information. The above is not meant to form an exhaustive guide. Neither CleanFinancial.com nor any contributing company/author accept any responsibility for any use that may be made of the above or for the correctness or accuracy of the information provided.
Risk Warning: Spread betting and CFD trading carry a high level of risk to your capital and you may lose more than your initial investment. Spread betting and CFD trading may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.
'Commodities Trading' by DB, updated 18-Jun-13
For related pages also see:
Commodities Spread Betting, updated 19-Jun-13
Commodities spread betting guide with live prices & charts. Plus daily market analysis, commodities spread betting price comparison, tips on where to trade commission-free and tax-free* as well as...read article: Commodities Spread Betting.
Gold Spread Betting, updated 19-Jun-13
Guide to spread betting on gold with live prices and charts. Plus daily market analysis, a gold spread betting price comparison, tips on where to trade commission-free and tax-free* as well as...read article: Gold Spread Betting.
Crude Oil Spread Betting, updated 19-Jun-13
Guide to spread betting on crude oil with live prices and charts. Plus daily market analysis, crude oil spread betting price comparison, tips on where to trade commission-free and tax-free* as well as...read article: Crude Oil Spread Betting.
Commodities Trading, updated 18-Jun-13
A look at popular commodities trading accounts, commission free trading accounts, charts, a gold and crude oil price comparison, how to trade commodities futures, market analysis and...read article: Commodities Trading.
Gold Trading, updated 18-Jun-13
Here we compare gold trading accounts and review how to trade the precious metal. We also have market analysis, a gold daily (spot) & futures price comparison, charts and...read article: Gold Trading.
Crude Oil Trading, updated 18-Jun-13
Here we compare crude oil trading accounts and review how to trade the two main oil futures markets. We also have regular analysis, a Brent (UK) and WTI (US) crude price comparison, charts and...read article: Crude Oil Trading.
Silver Spread Betting, updated 19-Jun-13
Silver spread betting guide with daily analysis. Plus live Silver charts & prices, where to spread bet on commodities futures tax-free* and commission-free as well as...read article: Silver Spread Betting.
Copper Spread Betting, updated 19-Jun-13
Copper spread betting guide with daily analysis. Plus live Copper charts & prices, where to spread bet on commodities futures tax-free* and commission-free as well as...read article: Copper Spread Betting.
Commodities Trading News, updated 17-May-13
An index of commodities trading articles covering: commodities futures news, commodity market analysis & spread betting on commodities futures. Plus commodities trading strategies, commodities charts, price comparisons and...read article: Commodities Trading News.
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