CFD Commodity Trading

CFD commodity trading is a simple and accessible way for investors to speculate on the price movement of various commodities, from precious metals to energies. Traders do not own the underlying commodities when they invest in a CFD, which means that there is no need to worry about storing or selling commodities like coffee and gold.

This guide will explain how CFD commodity trading works with detailed examples, while also running through popular assets. Read on for tips on how to get started, as well as a list of the top brokers offering online CFD commodity trading in the UK.

Best CFD Commodities Brokers

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    AvaTrade's 1250+ leveraged CFD products span a wide range of asset classes including stocks, indices, commodities, bonds, crypto, and ETFs. You can speculate on underlying assets in the broker’s feature-rich web and mobile platforms with market-leading research tools to help discover opportunities.

  2. XTB

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    XTB offers a huge selection of more than 2,100 CFDs spanning forex, indices, commodities, stocks, ETFs, and cryptos (location-dependant). Leverage up to 1:30 is available in the EU and UK, while global clients and pro traders can access up to 1:500. XTB stands out for its CFD trading resources and tutorials to assist traders in developing short-term trading strategies.

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    CMC lets you trade CFDs on 12,000+ assets across currencies, indices, commodities, shares, ETFs and treasuries. Spreads are relatively tight, there are no hidden fees and the industry-leading MetaTrader 4 platform is also supported for leveraged trading. Year after year, CMC shines as one of the best CFD brokers in the market.

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    Eightcap offers a wide range of trading options with 800+ CFDs across stocks, indices, bonds, commodities, and cryptocurrencies (depending on location), with leverage up to 1:30/1:500. It excels in its tools, notably the AI-enabled economic calendar covering 25+ countries with impact filters (high, medium, low). However, its commodities offering, particularly in softs like cotton and wheat, as well as the limited precious metal and energy assets, is its weakest area.

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    FXCC offers a narrow range of CFDs beyond forex with a limited selection of metals, energies, indices and cryptos. However, it stands out with its high leverage up to 1:500, which will serve experienced traders looking to maximize their buying power while speculating on rising and falling prices.

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    Trade CFDs on Spreadex's diverse list of instruments with leverage up to 1:30 and highly competitive spreads. While this broker's USP is spread betting, the excellent trading terms and range of markets makes it an equally good choice for CFD trading.

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    Pepperstone maintains its position as one of the fastest and most dependable CFD brokers during our latest round of testing. With execution speeds averaging around 30ms and an outstanding fill rate of 99.90%, the broker ensures a seamless trading experience without requotes or dealing desk interference. It also provides ample trading opportunities across over 1,300 assets.

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    Over 8,000 CFDs are offered on a vast array of instruments, encompassing stocks, indices, forex, and commodities. Moreover, the TWS platform lends itself to seasoned traders, offering a comprehensive selection of over 100 order types and algorithms, alongside premium market data sourced from reputable sources such as Reuters and Dow Jones.

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    You gain access to over 2,250 CFDs, available for trading 24/5 across popular markets such as forex, commodities, indices, stocks, and bonds. Utilizing deep liquidity and advanced bridge technology, IC Markets ensures optimal conditions for scalpers, hedgers, and algo traders alike.

  10. XM

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    Traders can speculate on leveraged CFDs with zero commissions, spanning popular markets including currencies, equities and commodities. Additionally, the MetaTrader platforms collectively offer dozens of advanced technical indicators built for short-term strategies.

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    Trade 5,000+ CFDs from a single account with no hidden fees and free live market data. The suite of markets is impressive vs alternatives, including access to shares, indices, commodities and bonds.

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    DNA Markets offers a small suite of 250 CFDs covering stocks, indices, forex, commodities and cryptos, providing opportunities to speculate on rising and falling prices. There are no restrictions on strategies with leverage up to 1:30 (Australia) or 1:500 (rest of world).

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    With the ability to take both long and short positions on 5,500+ CFDs across forex, stocks, indices, commodities, and cryptocurrencies, FOREX.com excels. Its exclusive Web Trader platform offers an excellent trading experience, equipped with over 80 technical indicators and average execution speeds of just 20 milliseconds, ensuring an optimal environment for serious traders.

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    You can trade CFDs on over 3,000 assets and access rich market data through the integrated TradingView charts. There are also comprehensive free learning tools available for beginners via the eToro Academy, including dedicated CFD trading courses and guides.

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    RoboForex offers a growing suite of over 12,000 CFDs, encompassing forex, stocks, indices, commodities, futures and ETFs. With an initial deposit of $10 and micro lot trading through to very high leverage up to 1:2000, RoboForex caters to a broad range of derivative traders. On the downside, analysis reveals execution speeds of 1-3 seconds, noticeably slower than IC Markets at 0.35 seconds, and suboptimal for fast-paced strategies like scalping.

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    You can trade CFDs across a range of diverse markets with flexible account types and leverage up to 1:1000. With access to both MT4 and MT5, traders can execute multiple short-term CFD trading strategies using the dozens of pre-integrated technical indicators and graphical objects.

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    LQDFX offers a modest collection of CFDs covering currencies, metals, stocks, indices, commodities and cryptos. The 50+ technical indicators and drawing tools pre-included in MT4 will facilitate both short-term and long-term strategies.

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    Trade leveraged CFDs on over 1000 assets with low-cost spreads. You can also take advantage of the broker's integrated signals to help you determine when to enter and exit positions.

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    IG offers a huge selection of 17,000+ CFDs, providing more trading opportunities than most CFD brokers. Traders can go long or short on popular markets like stocks, currencies, commodities and cryptos, while custom price alerts and the IG Academy continue to enhance the trading experience.

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    BlackBull Markets CFDs are offered on forex, stocks, indices, commodities and cryptos with tight spreads and high leverage. The ECN accounts offer fast execution and low slippage, and the broker provides traders with plenty of extra tools and features plus 24/7 customer support.

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    Traders can speculate on 1000+ financial markets with high leverage up to 1:500. You can bet on rising and falling prices in currencies, commodities, indices, shares, and more without owning the underlying asset. With the comprehensive choice of CFD trading platforms, users can also switch between desktop, web and mobile for a seamless trading experience.

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    FxPro offers thousands of CFDs on forex, commodities, indices, shares and futures. The broker's analysis and charting capabilities continue to stand as some of the best in the industry, with Trading Central integration, advanced order types and access to custom indicators.

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    Plus500 presents commission-free CFDs encompassing a vast array of markets, spanning currencies, stocks, indices, and commodities. You can engage in long or short positions on popular assets, benefiting from adaptable leverage without encountering any concealed fees.

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    You can go long or short on a range of CFDs covering forex, commodities, shares, indices and cryptos. High leverage up to 1:500 is available for experienced traders in some locations, whilst beginners will appreciate access to micro-lots. There are no restrictions on short-term trading strategies using CFDs.

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    You can trade 275+ CFD instruments covering equities, currencies, commodities, indices and cryptocurrencies. The broker offers flexible trading software and account options, plus access to the unique dealCancellation risk management tool, which is ideal for beginners.

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    Access highly leveraged CFDs across forex, commodities, indices, stocks and bonds with 24/5 customer support. Build a diverse portfolio with hundreds of CFD assets.

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    CFDs are available on forex, stocks, indices, metals, oil and cryptos, with support on MT4 and MT5. Execution speeds are also decent, averaging 0.5 seconds, though there is also a VPS service facilitating 24/7 connectivity for algo strategies.

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    CFDs are available on forex, indices, commodities and cryptos, although the range of 100+ instruments is limited compared to alternatives such as Quotex with 400+. Leverage is available up to 1:500 but the $250 minimum deposit is noticeably higher than competitors.

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    Markets.com offers a strong variety of CFD products, not only covering popular asset classes but also more interesting markets such as IPOs and Bonds. The low fees and educational resources will appeal to beginners, whilst seasoned CFD traders will appreciate the feature-rich charting platforms.

  30. Axi

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    Axi offers 220+ products covering forex, shares, commodities, indices and cryptos. Spreads on EUR/USD come in at around 0.2 pips in the Pro account and 1.1 pips in the Standard account. These are competitive and aligned with equivalent accounts at leading low-cost brokers like Pepperstone.

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    The broker offers a small range of 100+ CFD instruments spanning key markets, with high leverage up to 1:500. Pricing is reasonable, with round turn commissions coming in at $6 alongside tight spreads. Multiple short-term strategies are also permitted, including hedging and scalping.

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    VT Markets offers over 1000+ CFDs spanning currencies, stocks, indices, ETFs and commodities. The MetaTrader charting platforms provide dozens of technical tools alongside integrated market analysis resources and zero restrictions on short-term trading strategies.

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    My tests uncovered around 100 CFD products covering forex, indices, commodities and cryptos. Leverage is available up to 1:400 and it’s good to see that scalping, hedging and EA strategies are permitted.

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    PrimeXBT offers CFDs across four asset classes with very high leverage up to 1:1000. Beginners can also take advantage of the broker’s useful technical analysis guides and CFD education, plus 24/7 in-platform support via live chat.

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    Traders can access CFDs across forex, indices, commodities and stocks. There are no restrictions on short-term strategies, which is good news for scalpers and algo traders. There’s also an excellent range of free tools on offer, including a custom price ticker.

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    FXTrading offers CFDs on a wide range of assets, including forex, stocks, commodities, indices and cryptocurrencies. Commodities include a selection of softs as well as metals and energies, and the eight indices offered include the US30, US500 and UK100. Flexible leverage is available with excellent risk management tools.

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    ThinkMarkets continues to offer an excellent range of around 3500 CFD instruments covering forex, indices, stocks and commodities. Leverage is available up to 1:30 in the EU and UK, while global clients can access up to 1:500.

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    M4Markets offers CFD trading across forex, stocks, indices, commodities and cryptocurrencies. Traders can access powerful charting platforms with multiple order types and built-in indicators. There’s also a good selection of data-driven analysis tools supplied by reputable provider, Acuity.

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    SuperForex offers CFDs on a good range of assets, though it only really shines when it comes to forex, thanks to its very diverse list. On the other hand, the significant leverage available on most assets increases profit potential, though traders will need to watch out for spreads, which compare poorly to some competitors.

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    Access over 2,000 CFDs across diverse markets including indices, commodities and bonds. There is also premium daily analysis and strategy resources for savvy traders.

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    Trade 400+ CFDs on forex, stocks, commodities, indices and cryptocurrencies with the choice of commission-free or raw-spread accounts with transparent fees. Speculate on rising and falling prices with no hidden charges.

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    IronFX’s asset list of 300+ instruments covers forex, stocks, commodities and index CFDs. Maximum leverage from 1:30 to 1:1000 is available depending on account location. Traders can access superb technical analysis features, including 30 pre-integrated indicators and 9 charting time frames.

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    Ingot Brokers offers CFD trading on 1000+ instruments including stocks, commodities and cryptocurrencies. The MT4 and MT5 platforms offer comprehensive features for active CFD traders, including multiple order types and pre-integrated technical tools.

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    You can trade a range of CFD instruments across forex, shares, indices and commodities. There’s an excellent selection of platforms for traders, including TradingView and MT4, plus additional tools for experienced algo traders including API solutions.

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    You can trade hundreds of CFDs on major asset classes including currencies, shares and futures. Spreads are not overly competitive starting at 0.9 pips, although the $50 minimum deposit and zero commissions will allow active traders to keep their costs down.

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    Dukascopy offers highly leveraged CFDs with rates up to 1:200. A wide selection of asset classes are available, including currencies, equities, commodities, ETFs and cryptos. Spreads are also tight starting from 0.1 pips and traders get 24/7 support.

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    Trade CFDs on forex, stocks, indices, commodities and cryptos with high leverage up to 1:500 on the no-commission ClassiQ account. The raw spread account options have low commissions from $4 round-turn and offer lower maximum of leverage of 1:200 or 1:400, which is still competitive.

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    Trade CFDs on forex, indices, metals, oil and cryptocurrencies with high leverage up to 1:500 and competitive spreads, with the choice between zero commission or raw spreads.

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    Videforex CFDs are available on forex, indices, cryptocurrencies and commodities with up to 1:500 leverage and tight spreads from near zero. CFDs incur a commission fee of 1%–2.5% and up to 5% for leveraged trades.

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    Rock Global offers low-price CFDs on forex, shares, indices and commodities. The broker charges zero-commission trading on commodities and indices, and zero-spread, commission-only trading on shares. Leverage varies by instrument with 1:200 available on indices and 1:10 on blue-chip stocks.

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    FXTM’s CFD offering spans 250+ forex, stocks, commodities and indices, plus crypto CFDs at the global entity. Leverage up to 1:30 is available from the CySEC-regulated branch, though highly seasoned traders can also access massive 1:2000 rates from the global entity.

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    You can trade a competitive range of CFDs encompassing crypto, indices, energies and metals, with very high leverage up to 1:1000. ECN pricing is available, with spreads from 0.0 pips and low commissions from $2.50. A Cent account is also available for those on a smaller budget.

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    CFDs are available on a breadth of underlying assets, including stocks, indices, commodities, forex and cryptos. High leverage up to 1:500 is available alongside a 0.01 minimum lot size and award-winning software. For the tightest spreads from 0 pips, opt for the Premium account.

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    Trade CFDs on forex, indices, stocks, commodities and cryptocurrencies with leverage up to 1:3000. Swap-free trading is available, and all account types trade with competitive spreads and are commission-free except the Go Pro account, which charges a $7 round-turn commission.

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    CFDs are available on popular asset classes with a competitive $1 minimum deposit. The MT5 integration will allow serious short-term traders to utilize the vast library of technical tools, bots and indicators, but the lack of any CFD trading education puts the broker behind many alternatives.

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    Focus Option offers CFD trading through an intuitive mobile app, with 300+ tradeable instruments spanning forex, cryptocurrencies, commodities, shares and indices. Leverage ranges from 1:20 to 1:50 and spreads are variable, starting from 1 pip, with no commission.

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    Trade CFDs on forex, stocks, metals, energies, indices, cryptos and dollar futures. Sage FX offers tight spreads and high leverage on all instruments from 1:100 to 1:500.

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    Access thousands of CFDs with competitive pricing and leverage up to 1:500. A range of asset classes are available, including currencies, shares, indices, metals and commodities. CFDs can be traded on the market-leading MetaTrader platforms.

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    PU Prime offers CFD trading on hundreds of shares, as well as indices, commodities, bonds and cryptocurrencies. The leverage available varies by asset, and spreads also vary greatly between instruments and account types with the tightest near zero and the widest in the hundreds of pips. Stock, index, commodity and bond CFDs are traded on the leading MT4 platform.

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    SimpleFX stands out with highly leveraged trading options up to 1:1000 covering popular asset classes, including stocks, indices, currencies and commodities. Additionally, the social community serves as an excellent resource for gathering CFD strategy tips and short-term trading ideas.

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    Errante customers can trade stocks, indices, commodities and cryptocurrencies with leveraged CFDs. The level of leverage available depends on regulatory oversight, with 1:30 the maximum allowed in the EU though this varies by asset.

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    CFDs are available on hundreds of markets including forex, indices, shares and commodities. Traders can go long or short with reliable trading tools, excellent market research and transparent pricing.

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    Swissquote offers spot, forward and synthetic contracts on a breadth of markets, including stocks, indices, bonds and commodities. The pricing model is transparent with no hidden fees. Clients can diversify portfolios and hedge risk with low margin requirements.

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    Trade CFDs on forex, stocks, metals, energies, cryptos and indices with high leverage up to 1:1000 on major currency pairs, 1:200 on metals, 1:100 on indices, 1:33 on stocks and energies, and 1:5 on cryptocurrencies. The range of 200+ instruments is not the biggest on the market, but the variety of asset classes provides flexible trading options for most traders.

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    FP Markets' CFD trading covers a range of markets, including 10,000+ equities, indices, commodities, cryptocurrencies and ETFs. Spreads are tight and traders get fast execution speeds.

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    Core Spreads offers CFD trading on 40 forex pairs plus 13 commodities, including metals and energies, and 13 global stock indices including the UK100 and US30. CFDs are traded through the MT4 platform with leverage up to 1:30 in line with UK regulations.

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    Anzo Capital clients can use MetaTrader 4 and MetaTrader 5 to trade CFDs on stocks, equity indices, crude oil and precious metals with competitive price levels.

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    HYCM traders can access CFDs on a range of stocks, indices, commodities and ETFs with floating spreads and maximum leverage varying by instrument. Clients also have a choice between two industry-leading platforms.

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    Global Prime offers CFD trading opportunities on 150+ global markets including forex, indices, commodities, cryptocurrencies and bonds. Spreads are tight with a raw ECN account available starting from zero.

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    Fortrade's list of leveraged CFDs covers a wide range of asset classes including forex, stocks, bonds, indices, commodities and cryptocurrencies. Traders can access leverage up to 1:30 and will trade with zero commission, fast execution and low latency on MetaTrader 4 or the bespoke platform.

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    Traders have the opportunity to engage in CFD trading across a broad spectrum of assets, including currency pairs, stocks, commodities, bullion (gold and silver), indices, and cryptocurrencies. Experienced traders can access high leverage up to 1:1000 in certain jurisdictions. However, a notable downside is the restriction of scalping strategies which may deter experienced traders.

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    FXOpen offers CFDs on multiple assets including forex, stocks, commodities, indices, cryptocurrencies and ETFs. Leverage and spreads vary by instrument, with spreads starting from zero and fast order execution.

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    Libertex's list of CFDs covers a decent range of tradeable underlying assets, but there isn't much depth with only around 250 in total. Leverage up to 1:30 for retail clients is available in accordance with CySEC regulations, and traders can choose between three excellent trading platforms. Best of all are the tight spreads available on all markets and the zero commissions on investments in stocks.

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    Trade CFDs on forex, stocks, indices, commodities, ETFs, bonds and cryptocurrencies with variable leverage up to 1:30. The broker provides great value to traders with six free trades per day on US, UK and European stocks, tight spreads on forex and low commissions on ETFs.

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    Trade CFDs on a broad range of asset classes including forex, energies, precious metals, company shares, indices and cryptos. The excellent trade execution and opportunity to trade with direct market access pricing sets this broker apart from rivals.

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    Trade CFDs on forex, stocks, commodities and indices with tight spreads and leverage limited to the FCA-sanctioned maximum of 1:30. Infinox traders benefit from lightning-fast execution speeds and a choice between STP and ECN pricing, making this a flexible option for beginner and serious traders.

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    Trade CFDs on 75+ instruments, including forex, energies, metals, and indices with variable leverage up to 1:500 on major pairs, 1:200 on minors and exotics and 1:100 on commodities and energies.

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    OspreyFX offers leveraged CFDs on forex, commodities, stocks, cryptos and indices. Deep liquidity is available from 50+ providers with a competitive ECN account that will suit active trading strategies, including scalping.

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    Trade a decent range of markets via CFDs, with commissions of $6 per lot. There is also a reasonable $10 minimum deposit and 24/7 customer support for new traders.

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    Trade all markets via CFDs, with retail leverage up to 1:30. With the RStocks Trader account, clients can access over 12,000 CFDs with algorithmic analysis tools and intuitive charts.

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    AdroFx offers a most selection of around 100 CFDs on stocks, cryptos, indices and commodities. Its appeal lies in the high leverage up to 1:500 which you can't find in heavily regulated jurisdictions and the commission-free pricing model which will serve beginners. You can speculate on both rising and falling prices from the same product with CFDs.

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    Trade flexible CFDs on forex, commodities, indices and cryptos with tight spreads, fast execution, micro-lot trading and leverage up to 1:500. There are also no restrictions on trading strategies.

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    EZ Invest offers leveraged CFDs on popular asset classes, including forex, stocks, indices and commodities. Execution speeds are decent but a large deposit is needed for the best pricing conditions.

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    Trade 8,900+ CFDs spanning forex, stocks, indices, commodities, options and bonds with powerful tools and signals.

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    Access a modest range of CFD instruments across key markets, including indices and commodities. Clients can trade directly from charts with high leverage up to 1:500 and customisable time intervals.

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    You can speculate on popular financial assets covering forex, commodities, indices, metals and bonds. You can get started with $0 minimum deposit, making the broker a good pick for beginners. There’s also over 130 technical indicators available collectively in the MT4 and OANDA Trade platforms.

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    Trade CFDs on 100+ instruments from popular asset classes. Leverage up to 1:200 is available on precious metals, while stocks, indices and energies can access 1:20 max leverage and 1:10 for commodities. On the negative side, the depth of assets is limited vs other CFD brokers.

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    With CFDs on 20+ Polish and 30+ US stocks, as well as energies and seven global stock indices covering US, UK, European, Australian and Japanese markets, Just2Trade offers a superb selection of global assets.

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    You can take positions on a range of popular trading markets including forex, stocks, energies and metals. Leverage is high at 1:500 and live spreads can be viewed in the web-accessible platform and app.

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    World Forex's leveraged CFDs are available on a modest suite of 100+ instruments, including stocks, commodities and forex. Very high leverage up to 1:1000 is available for account balances up to $1000, with lower levels available to accounts with higher balances.

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    Trade commission-free CFDs on 3000+ instruments from forex, stock and commodities markets with volumes starting from 0.1 lots, a low minimum deposit of $10 and tight floating spreads. The selection of CFDs beats most competitors.

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    Trade CFDs on forex, commodities, indices and crypto assets. With spreads from 0 pips and generous incentives and bonus offers setting Vault Markets apart from competitors, this Namibian broker will appeal to aspiring traders.

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    Trade CFDs on forex, stocks, indices, energies and metals with fast execution and variable leverage. Spreads are tight and commission-free trading is available on some assets.

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    Trade 200+ CFDs with leverage up to 1:1000 on a powerful proprietary platform. Asset classes include stocks, forex and crypto with ECN execution. You can bet on rising and falling prices with leveraged CFDs.

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    Trade CFDs on an array of assets with ultra-low spreads

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    Engage in leveraged CFD trading across a wide array of instruments, encompassing forex, stocks, commodities, and indices. Yet while the selection of asset classes is satisfactory, the charting software and floating spreads for short-term traders fall behind that of competitors.

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    Trade leveraged CFDs in a range of financial markets.

Investing In Commodity CFDs Explained

CFD commodity trading allows investors to speculate on assets that they may not otherwise have access to, such as gold, silver, oil or natural gas. CFD stands for ‘Contract for Difference.’ It is a financial product that pays the difference between the opening price (at the time of purchase) and the closing price (at the time the contract is sold).

When purchasing CFDs, traders have the potential to go long and profit from a rise in the underlying commodities’ value, or go short and earn money if the value drops. As a derivative product, the investor does not own the underlying commodity. As such, they do not have to worry about taking on delivery and storing barrels of oil, for example.

Trade Example

The best way to understand CFD commodity trading is to look at an example. Imagine that an investor believes the price of UK Brent oil, which is currently trading at a sell/buy price of £85.99/86.00, is going to rise. They purchase 100 units, for which the broker offers a 5% margin rate, meaning the trader must put down a deposit margin of £430 (5% x (100 units x £86.00)).

It should be noted that this does not mean that losses are limited to £430, this is simply the amount of money that must be in the trader’s account to authorise the trade.

After a couple of hours have passed, UK Brent is now trading at a sell/buy price of £87.50/87.51. At this point, the trader decides to close their position. The gross profit is then calculated from the difference between the price when the CFD was purchased and the price when it was sold. In this case, there is a movement of £1.50 (£87.50 – £86.00). This is then multiplied by the number of units (100) to give a total gross profit of £150.00.

Most brokers offering CFD commodity trading will charge a commission on top of each trade. This is typically around 0.1% and applies to both buying and selling the contract. Therefore, in this case, the investor will pay £8.60 (100 units x 86.00 original buying price x 0.1%) and £8.75 (100 units x 87.50 selling price x 0.1%) in commission for each action, giving a total of £17.35. Therefore, the net profit for this CFD trade is £132.65.

Types Of Commodities

Traders can invest in CFDs relating to many different goods and resources. The most popular commodities for CFD trading can be split into three distinct categories:

Precious Metals

Metals have historically been the most popular commodity to trade. Investors can purchase CFDs relating to the value of gold, silver, platinum, aluminium, zinc, and copper, among others. Their popularity stems from their history as a store of value for some of the world’s best-known currencies. While most nations have moved away from the gold standard, metals continue to hold their value and provide exciting investment opportunities to traders, especially during periods of inflation and economic downturn.

How to trade commodities with CFDs

The London Metal Exchange (LME) is well-known for providing trading access to a range of metals. Investors interested in gold CFD trading can also head to a broker such as Trading 212 to get started.

You should always do your market research and follow a solid strategy when trading gold CFDs. Also, be sure to check the hours that trading is permitted by your chosen broker. The current price of gold in various countries can be found on TradingView.

Agriculture

Agricultural commodities are perfect for traders who are seeking to add a little more risk to their CFD trading portfolio. This asset group includes natural resources and foods such as coffee, orange juice, sugar, wheat, corn, and livestock.

These assets tend to be more volatile than metals. The price of an agricultural commodity can be affected by a host of external factors, including poor weather and natural disasters. They can present a good opportunity to turn a profit, however traders should ensure to implement risk management strategies to protect themselves against large losses.

Best CFD commodity trading platforms

Energy

Energy commodities cover a broad range of resources. These can include fossil fuels such as UK Brent Oil, petrol and natural gas, as well as renewable energy sources at green-focused exchanges.

Like their agricultural counterparts, energy commodities tend to be quite volatile. As seen with the Covid-19 pandemic and the crisis in Ukraine, oil and energy prices can fall and rise very quickly due to changes in supply and demand.

What is CFD trading commodities?

Spot VS Futures CFDs

Commodity CFD trading can be conducted in two ways: Spot and futures CFDs. Spot trading involves the contract being bought and sold at the current market price of the asset. The trade is opened and closed immediately or “on the spot”. This is the simplest form of commodity CFD trading for UK-based investors. Traders can monitor the live price of any commodity over a set period, and buy or sell at set entry and exit points.

On the other hand, futures CFD trading involves entering an agreement with a broker to purchase an asset such as rice or silver at a pre-specified price in the future. This allows traders to potentially benefit by locking in a better price than they would receive in the spot trading market.

Other than the price used, there are some differences between spot and futures markets at CFD brokers. Spot trading typically features lower spreads than futures trading. However, overnight charges will be incurred when positions are held longer in spot CFD markets. Futures markets do not tend to charge for swaps or rollovers.

The other difference is that spot CFDs do not typically expire, so they can be held for as long as the trader wants. On the other hand, futures commodity CFDs have a set expiry time and date.

Benefits Of CFD Commodities Trading

  • Do not have to own and store hard or soft commodities, such as gold
  • A small margin is required to purchase contracts
  • Easy to implement risk management tools
  • Traders can go long or short

Drawbacks Of CFD Commodities Trading

  • While leverage can increase winnings, it also increases losses
  • Spreads and commissions can negatively affect profits

Getting Started Trading Commodity CFDs

If you want to start CFD commodity trading, follow this step-by-step guide:

  1. Choose a broker: The first and most important step is to choose an online broker that offers CFD commodity trading. Alongside ensuring they offer commodities, traders should also consider the various fees and commissions they will be charged to trade. This can include researching typical spreads, as well as overnight fees and any other charges that the broker may have. Next, those who wish to make use of leverage should look at the margin rates offered by different brokers. Finally, try to ensure your chosen broker has a good reputation and offers high levels of customer support, including 24/5 coverage if possible.
  2. Select an asset: With a broker selected, you need to choose which assets you want to invest in, from metals like gold and silver to agricultural products such as coffee and rice. First-timers may want to opt for more stable commodities like gold, silver and platinum which tend to be less volatile. Those with more experience could turn to higher-risk commodities such as corn and oil which have prices that fluctuate more often.
  3. Pick the direction of trade: Decide which way you think the price of the asset will move. If you believe it is going to rise in value, go long. If you think it will drop, go short and buy a selling CFD.
  4. Choose the number of units: Select the number of units that you wish to purchase. When trading with leverage, more units will mean a larger deposit is required. It could also mean that your losses will be amplified, so always exercise caution.
  5. Use risk management tools: These tools are the key to ensuring that you trade safely. Add a stop loss mechanism to make sure that you cannot lose a substantial amount. Also, consider implementing a take profit order to bank profits if the price of your chosen commodity rises suddenly.
  6. Monitor and close: Once the trade is placed, sit and monitor. Check the live prices regularly and keep an eye on your account in case of a sudden change in value. Once you are satisfied with the growth of a CFD, close the trade and take your profit.

Bottom Line On Trading CFD Commodities

CFD commodity trading allows a much wider base of investors to get involved in an exciting and profitable market. Retail traders can speculate on price movements without owning underlying assets like rice and corn, and they can trade with leverage to potentially increase returns. The variety of commodity assets ensures there is something for everyone with a low-or high-risk appetite.

If you want to start CFD commodity trading today, check out our list of the best UK brokers.

FAQ

What Is A Commodity CFD?

A Contract for Difference (CFD) is a financial product in which the profit or loss is calculated from the difference between the price of an asset at purchase and the price at the time the contract is closed. They are derivative products in which the trader does not own the underlying commodity, such as gold, silver, oil or natural gas.

Which Are The Best Commodities To Trade CFDs With?

There is no simple answer as to which commodities are best for CFD trading. More cautious traders may prefer precious metals like gold and silver, whereas those with an appetite for risk may prefer oil and corn.

What Does It Mean To Go Long In CFD Commodity Trading?

If you go long, you are buying the contract. This is done when you believe the price of the asset, such as gold, will rise. The other option is to go short or sell the contract. In this case, you want the value of the commodity to drop.

Is CFD Commodity Trading Allowed In The UK?

Yes, CFD commodity trading is permitted in the UK. Many FCA-regulated brokers offer the derivative product to retail customers. Leverage is usually capped at 1:30 in line with regulations.

What Is Margin Trading In Commodity CFDs?

Many brokerages allow CFD commodity traders to borrow money from the broker, also known as leverage or margin. Essentially, the trading platform will offer a set rate of leverage (such as 1:30) for which the trader will put down a deposit of £1 for every £30 being traded. This can increase profits, but it can also lead to higher losses.