Commodities are everywhere. From crude oil energy to the agricultural products we use for food. If it can be delivered and has liquidity, you can buy and sell it; you can trade it on XTrade!
Well that is mostly true. To be classed as a commodity it needs one of the following three things:
So wheat, pork bellied pigs and gold are commodities, where as stocks and shares are not, for example. If you buy commodities, there is the real possibility (if you don’t get out of the investment) that they will deliver what you have bought to you, and you will then have to sell whatever it is on. This being the case, choose your commodity wisely and keep an eye on your investment.
Yes, it is fun to trade stocks and shares on XTrade, but you will soon love trading commodities too, why? Not only is it safer to trade CFDs as you won’t have to take anything home but the trade also takes in the bigger picture. It takes in not only market demands but things like the economy on a global scale and advances in technology. You can predict the way the market is going by keeping tabs on economic players such as China and India to see declines in commodities such as steel that will have a knock on affect for the rest of the planet.
There is more chance for investment plays when there are certain new diseases and health scares in the livestock sector, which due to constant demand doesn’t tend to fluctuate much and is predictable when it does. Grim news reports like these send investors wild. There is something ever so satisfying when you earn money by reading global signs.
When you are trading on future prices, things like grain are less likely to predict unless you have excellent insights into your specific trade. Therefore XTrade recommends you to not dedicate more than ten percent of your portfolio to this sector.
Gold is cool, and it seems to be where the large majority of investors go to as a safe haven when times are rough. Like other precious metals, gold has a reputation as a reliable commodity. When inflation is through the roof or currency is at an all time low, many investors prefer to invest in what they know. The trustworthy option that creates nice returns. That certainly seems to be the case as when the US dollar weakens, gold prices usually go up.
Risks, however, are inherent with all commodities and gold is no exception. There are exchange related risks and halt trading in price movements being another. The volatility of gold is exciting as its trends are super unpredictable. Long term investments are exposed to all sorts of chaos stemming from natural disasters, discoveries of new deposits of gold and even the emotional whims of investors themselves.
All in all, commodities are incredibly cool to learn about and to trade in, especially when using XTrade’s excellent trading platform.