Client LoginCommodities trading is the buying and selling of assets like crude oil and natural gas in set quantities. The market is typically dominated by energy and metals (excluding gold and silver), and their price movements are often seen as a barometer for the broader economic health of their respective industries.
At Dolphin Markets, you can trade CFDs on a wide variety of global commodities, including copper and oil. Our platform allows you to enter and exit trades whenever you want, with most commodities markets open for trading nearly 24 hours a day, 5 days a week.
At Dolphin Markets, you can trade commodities using Contracts for Difference (CFDs) on our MT5 platforms. This type of trading allows you to speculate on the price movements of a commodity without having to own the physical asset. A CFD is essentially a contract between you, the trader, and us, the broker.
For example, imagine you open a long (buy) CFD trade on USOIL when its price is $78.45. If the price rises to $79.45 and you close your trade, you would make a profit of $100 (assuming a contract size of 100 per lot). Conversely, if the price drops to $78.00 before you close the trade, you would incur a loss of $45.
In short, with CFD trading, you are either paying or receiving the difference between the opening and closing prices of the commodity.
There are traces of commodities trading as far back as ancient China and 4500 BC where the Sumerians (modern day Iraq) used jugs filled with clay tokens that were shaped to represent the animal or crop they had in their possession. This evolved over time until 1611 when the Amsterdam Stock Exchange was created. It was the world’s first stock exchange and was originally a market for commodity exchange.
The most significant development in commodities trading occurred in 1848 when the Chicago Board of Trade (CBOT) was set up. Its regulated structure provided the exchange of futures and options contracts. Commodities exchanges are now located worldwide with some specialising in multiple commodities or a lone material. Major commodity markets include the Chicago Mercantile Exchange (CME), New York Mercantile Exchange (NYMEX), London Metal Exchange (LME), the Multi Commodity Exchange of India Ltd (MCX) and the Australian Stock Exchange (ASE).
Commodities trading was previously limited to professional traders as it required a substantial amount of time, resources and expertise. Technology and the introduction of additional commodities trading products have changed this. Individuals can now trade commodities using advanced online trading platforms such as MetaTrader 5. The ways to trade commodities have also expanded to include derivative products such as options, futures contracts, contract for difference (CFDs) and exchange traded funds (ETFs).
Metals
Precious metals are rare and remain valuable due to their infinite lifespan and the absence of the prospect of oversupply. The most traded metals are gold, silver, platinum and palladium. Popular metals such as gold and silver can be traded against major currencies in a similar manner to forex trading.
Energy
Includes oil, natural gas and other petroleum based fuel products. Crude oil can be refined into petrol, chemicals, lubricant and other products making it the most traded energy source. Brent Crude and West Texas Intermediate (WTI) are the two major types used to benchmark global oil prices.
Agriculture and Livestock
Relates to major crops and livestock which are in high demand. This includes wheat, rice, corn, coffee, sugar, cotton, oats, soybeans, live cattle, eggs and more. They play a pivotal role in the economy, especially in developing countries which rely heavily on agricultural exports for their economic growth and development.
One of the most interesting characteristics of the commodities market are the factors which impact pricing. Directly related to supply and demand, these include adverse weather conditions such as natural disasters and severe climate changes.
The ability to access commodities using online trading platforms has allowed individual traders to benefit from them. Commodities are often utilised for portfolio diversification as they are generally negatively correlated with stock prices. They are also considered to be an excellent hedging tool against inflation as commodity prices rise when inflation is accelerating. Similarly, many traders invest in commodities to hedge against geopolitical uncertainties such as wars, political events and trade agreements.
GROSS PROFIT ON TRADE: $3,951 – $3,851 = $100
GROSS LOSS ON TRADE: $3,951 – $4,051 = -$100