What Is Commodity Online Trading And How Can You Benefit?

Posted by icmarkets on October 17th, 2014

All commodities markets have tremendous impact on people and nations. Historically, shortages on critical commodities have sparked great wars, while oversupply would devalue prices of core commodities. There are four major categories of traded commodities, including energy (different oil and gas), metals (gold, silver, copper, platinum, etc.), livestock and meat (lean hogs, live cattle, feeder cattle, etc.), and agricultural (corn, soybeans, cocoa, rice, sugar, coffee, etc.)

Throughout history and in modern times, commodity trading was and continues to be an essential business. In fact, the strength of historic empires and today's modern governments can be proportionate to their ability to manage and create complex trading systems and ease trades. They serve as the wheels of commerce and economic development for their treasuries.

Traditional methods (such as calling your commodity broker to place your orders and waiting for calls for an order price) are getting old as more people are trading online. Online commodities trading is exactly like traditional trading, made a lot easier by trading platforms where it is easier to analyse markets through charts, quotes, and strategy evaluations. Order entry is also a lot more convenient than traditional trading methods, as everything you will need is available online. It is critical that you choose an online commodities trading broker with a good product and offers a good service with low commission rates. Thus you can get the most of your investment. Here are some of the greatest advantages of online commodities trading:

• Leverage - Commodities operate on margin, so to take a position, only a small fraction of the total value has to be available in cash in your trading account. This however, may lead to poor money management and excessive risk taking, which enhances both chances of profits and losses.

• Commission costs –It is cheaper to buy or sell a futures contract than to buy or sell the underlying instrument.

• Liquidity – Futures contracts are liquid, due largely to the involvement of speculators.

• Going short – Futures contracts are sold and bought as easily, enabling any speculator to profit from rising markets as well as falling ones because there is no uptick rule.

• No decay – Other traded goods like options suffer from time decay. The closer they come to expiry, the less time that the option has to come into the money. Commodities don't suffer from time decay as they don't expect a strike price at expiry.

About IC Markets

Headquartered in Sydney, International Capital Markets Pvt Ltd is a provider of online forex trading services. It offers individual traders, money managers and institutional customers proprietary technology, tools and education to trade online. IC Markets has distinguished itself among industry leaders with its unique True ECN forex technology, proprietary tools and services, and remarkable focus on customer service. IC Markets is regulated by the Australian Securities and Investments Commission in Australia.