Commodity trading involves you investing in products such as energy, food, metals, etc. It’s an ancient form of trading that has existed for as long as the commodities have. Back in the days, you had to store the commodities you bought but now it’s different.
Today you use commodity brokers to trade and they are all available online which makes it very practical. Our preferred way of trading commodities are as CFDs and we have listed all the best CFD brokers below. They are all regulated and 100% safe to use.
Today almost all commodity trading is done online through brokers and depending on what type of investment you want to place there are different brokers to choose from. In most cases, commodity trading is divided into four popular investment types that you have to understand before you find yourself a commodity broker. The investment types are CFDs, futures, ETFs, and stocks. Below we explain the different commodity investments in detail as well as offer tips on how to find the best commodity brokers.
Find the best trading platform. You capital is at risk when trading. Be careful.
CFD Brokers to Invest in Commodities
CFD trading is a speculative form of trading that has exploded in popularity over the past few years. It was originally created by stockbrokers who were looking for alternative ways to invest in stocks in order to give themselves a tax break. When you buy CFDs, you invest in the market price and your goal is to predict whether the price of a commodity will increase or decrease.
Due to its speculative nature, CFD trading can easily be used to invest long and short, meaning you can bet with or against the market. If you want to invest in commodities using CFDs you need to find a CFD broker that offers the commodities you’re looking for. We have dedicated large parts of this website to reviewing CFD brokers and you can pick and choose between them. If you’re looking for the absolute best CFD commodity brokers we suggest you go with one of the following:
Buy Commodities using Futures and ETFs
Futures are securities that can be traded on most of the world’s exchanges. Futures are sometimes referred to as a forward and it’s a contract that you sign with a broker. The contract contains information about a certain amount of commodities that you agree to buy at a set time in the future – hence the name. Although, as an investor, you will most likely close the contract before the end date to profit from the price changes and avoid having to accept the commodities you agreed on buying. As a private investor, you will have to find a broker that offers futures and set up a brokerage account. Many of the world’s leading traditional stockbrokers offer futures on commodities and many other assets.
Many companies use futures to avoid fluctuating markets. A good example would be airlines which buy large amounts of fuel as futures to secure the market price and avoid having to purchase the fuel for higher prices in the future. This type of futures trading is called hedging.
ETF is short for exchange-traded funds and it’s an alternative way of buying commodities without having to buy futures. An ETF mirrors the price of an underlying asset, in this case, a commodity or a group of commodities called an index. It is easy to start investing in ETFs since they trade just like stocks and are available via most traditional stockbrokers. You can often find ETFs as part of a CFD broker’s selection of assets. However, not all commodities have a related ETF which makes this somewhat limited as an option to trade commodities.
Here is another article on the best ways to invest in commodities. You might want to give it a read if you are serious about investing in commodities.
Recommended Commodity Brokers:
- Plus500 is the epitome of a reliable and stable broker. The company is based in Israel and they are listed on the London Exchange which is something very unique among brokers. Plus500 also offers the most popular commodities in the world as CFDs. For example, you can invest in gold, silver, gas, crude oil, and much more. On top of that, Plus500 offers CFDs for stocks and other assets and is just a great all-around broker.
- Markets.com has been on all our top lists since we got started in the business, and for good reason. Their selection of assets is vast and covers the majority of all markets, including commodities. With an industry-leading demo account, friendly and efficient customer service, and an easy-to-use platform it is obvious why Markets.com is the favorite broker of thousands of traders from all over the world.
- Trade.com provides a clean and simple interface with tools that can be used by beginners and advanced traders alike. Their selection of assets can compare to Markets.com and we really enjoy trading on their platform. Natural gas, coffee, rice, platinum, and soybeans are just a few of the many commodities they currently offer as CFDs. In addition, Trade.com has thousands of underlying assets in other markets.
- 24Option was one of the most recognizable names in the industry for a long time. They recently decided to re-brand as a CFD broker and they are already excelling at the task. With years of experience from the trading world, it comes as no surprise that 24Option’s product is industry leading. You can trade anything from commodity to forex, cryptocurrencies, and stocks using the MetaTrader 4 platform with 24Option.
- eToro has an impressive selection that covers several asset classes, among them stocks, cryptocurrencies, ETFs, and, of course, commodities. eToro also has unique features that let’s you copy other traders and benefit from their analytic work to get the best possible results from your commodity trading.
- AvaTrade was one of the first brokers that we got really impressed by and they have kept driving the market forward for years. Today, they have 8 different asset classes on offer with commodities being one of them, meanng you can trade gold, coffee, crude oil, and other products.
- IG Markets is one of the top brokers in the industry and they have been for several years and they also happen to be one few brokers that can offer binary options on the American market through a platform called Nadex. However, an important part of their impressive selection of CFDs offered to the European market are commodities.
Commodities Broker Requirements:
There are three simple golden rules to remember when looking for any kind of broker, safety, assets, and platforms. If a broker lives up to those three requirements you will most likely have a good experience. Let us explain further.
Safety – is the most important aspect to consider when trading commodities or other assets. And by safety, we are referring to you, your personal information, and your money. The easiest way to make sure that you’re safe when you invest is to always use a regulated broker with a license to offer the assets you want to trade with. All the brokers we recommend are regulated with a license from some of the toughest agencies in the world. They also have a great reputation among users and other companies in the industry. We would never recommend a broker that wasn’t safe.
Assets – are the second most important aspect and it is absolutely essential to consider. You have to find a broker that offers the assets you want to invest in since not all brokers offer all assets, but most CFD brokers offer a mix of many assets. Some brokers focus on cryptocurrencies, while others provide mostly stocks, and some offer commodities. We have written detailed reviews about all of the brokers we recommend, and the reviews contain all the information you need about available assets, services, and products.
The platform – is the third factor and it is very important although not essential. The thing is that all brokers offer different platforms and your goal is to find the one you feel the most comfortable with. A good rule of thumb is that brokers either develop their own platforms or use big platforms such as the MetaTrader 4 or the MetaTrader 5. This decision is completely personal and as long as the broker is safe to use, you can decide if you like the platform or not.