Future or spot commodity markets
Spreads from just 0.06pts
Margins from 20%
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Major commodity market news
European Open: #WTI back above $70, #yen remains firm - https://t.co/r45922Q56j https://t.co/vsIjPjv43O
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How to trade commodities with City Index
To trade commodities with City Index, all you have to do is open an account by completing our short, secure online form. You could be up and running on live markets in minutes.
If you think a commodity like gold or oil is going to go up in value, you go long or ‘buy’. If you think a commodity is going to go down in value, you short or ‘sell’ it. Ready to start trading now? Get started with your application.
Discover everything you need to know about commodity markets, such as gold, oil and natural gas, including both hard and soft commodities.
Learn the difference between commodity spot markets and futures contracts – and decide which is best for you.
Learn how to trade precious metals and what they can do to diversify your portfolio.
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Frequently asked questions
How do I calculate how much margin I need to trade a commodity?
To work out how much margin you need to trade a commodity market, you divide the notional value of your position by its margin factor. Say, for example, that you want to open an oil position worth $5000 and oil has a margin factor of 20%. You’d need (20% of $5000) $1000 as margin.
How you calculate the notional value of your trade depends on how you’re trading the commodity. With CFDs, it’s the number of contracts you’re trading multiplied by the value of each individual contract.
Can anyone trade commodities?
Anyone can trade commodities, as long as they meet the requirements to open a City Index account. Commodity trading is leveraged, though, which means it’s riskier than traditional investing. Learn more about the risks of CFD trading.
With City Index, you can trade commodities alongside stocks, indices, forex and more – all on a single platform with one login. All City Index clients get access to our full range of markets, including 25+ commodities.
To get started, open your trading account.
Is commodity trading good for beginners?
Commodity trading can be a good option for beginners, as long as you understand the risks involved and have a solid trading strategy in place. If you’re new to the markets, though, we’d recommend going through the City Index Academy and trying out trading risk-free using our free demo before opening a live account.
You can use your City Index demo to buy and sell our full range of markets, including commodities, with virtual capital. It’s a great way to see which asset classes are a good fit for you without risking any real capital.
Commodity trading explained
What are commodities?
Commodities are natural products that are generally consumed by people, animals or industry such as oil, sugar and wheat. Commodities have been traded for thousands of years and have always had an important economic impact on people and nations throughout history.
Commodity trading is just as important today, with commodities playing a crucial role in global economics. Commodity markets can be easier to understand than other financial markets because prices are influenced by more obvious contributing factors. They reflect the fortunes of industries like the oil business or farming. Prices are informed by supply and demand issues that are easy to grasp.
The majority of commodities traded today can be split into three main areas:
Energy commodities are pumped out of the ground. They have a particularly strong influence over the global economy, and are also in turn influenced by demand from the global economy. Examples include:
- US Crude Oil
- UK Crude Oil
- Natural Gas
Agricultural - ‘Soft Commodities’
Soft commodities are generally agricultural commodities that are grown or bred for human consumption, as opposed to commodities that are mined. Soft commodities are important in futures markets where people speculate on price fluctuations as supply and demand changes. They are also used by the farmers who produce these commodities to lock in the future price of their produce, and by commercial consumers and resellers of these goods. Examples of soft commodities include:
- Orange Juice
- Soy Bean Oil
Metals - ‘Hard Commodities’
Hard commodities are resources that are generally extracted through mining, specifically metals. Metals that are traded can either be precious metals such as gold, silver or platinum, or industrial metals such as aluminium, lead or copper. Examples of hard commodities include:
How are commodities traded?
Commodity trading often takes place on exchanges as futures and options. Exchanges usually become hubs for a few commodities that it specialises in, for example:
Chicago Board of Trade (CBOT)
Commodities that trade on CBOT include gold, corn, silver, wheat and rice
Chicago Mercantile Exchange (CME)
Commodities that trade on the CME include milk, cattle, pork bellies and lean hogs
Known for being the most liquid market place for the trading of West Texas Intermediate Oil futures.
What drives commodity markets?
Commodity markets exist to provide more efficient prices and security for consumers of those commodities. Airlines, for example, want to be able to protect themselves from sudden and unpredictable changes in the oil price, while farmers will be looking for the best price for their products. A food manufacturer will want to ensure that the price it pays for wheat will be steadily consistent.
The growth of interest in commodity trading represents the growth in interest in global trade and delivering an internationally-recognised price for a product.
Commodity markets can be influenced by a range of factors, including:
- Interruptions of supply, such as bad harvests, miners’ strikes or stockpiling
- Seasonal demand, for example from consumers of heating oil and natural gas in the winter, or people buying gold during periods of political uncertainty
- General economic slowdowns, which can impact demand. Oil, for example, is sensitive to this
- It is worth doing more research on a market you are interested in, as each has its own characteristics
Did you know? There are two oil commodity markets, Brent Crude and West Texas Intermediate. These reflect the prices of US and non-US oil. To make things simpler, at City Index we call them US Crude Oil and UK Crude Oil. While the prices of both will be similar, they are not exactly the same.
Trading commodities with City Index
- City Index offers CFD trading on commodities
- You can trade over 25 energy, agricultural and metal commodities as futures markets, as well as a select number of as spot markets.