Why Trading
Commodities
A well-planned commodity investment can be beneficial for your portfolio. It is easy to buy and sell commodity futures and also offers a host of benefits.
Easy to Trade
Diversification
Higher growth
Liquidity
Despite offering various currency pairs ranging from major to exotic, Forex Market also offers traders to trade in various commodities such as energy (oil, natural gas etc), Soft Commodities ( Wheat, Coffee, Sugar etc).
It is hard to believe any sector in the global market that does not get influenced due to price changes in commodities most significantly, Oil or “Black Gold”. These changing prices whether going up or down ultimately lead to create huge investment options. Trading in oil, whether it’s Crude Oil (WTI or US Oil) which is priced in US dollars or Brent Oil (XTI or UK Oil) priced in Pound Sterling, is a bit similar to trade in currencies. Exchange rates of respective currency are responsible for fluctuation in prices, then whether it’s WTI or XTI.
Oil Trading Example
Trading in oil is quite similar to trading in currencies. Oil prices are displayed as the price of one barrel of oil
is US dollars. Most trading platforms consider a pip in crude oil to be $0.01
Buying US Oil, WTI (Crude Oil)
Leverage 1:100
Opening the Position
Let’s take opening price at 65.10
You decide to buy/go long 1 standard lot (1,000 barrels) at 65.10
Closing the Position
Now suppose, after few hours price moves to 66.10
Market Movement: : 66.10-65.10= 100 points
1 Standard Lot 1 Point is $10
Gross Profit on Trade= USD $10*100= USD $1,000
Commodities pairs specifications
| Symbol | Description | Digits | Contract Size | Typical spread | Leverage (up to) |
Swap Long | Swap Short | Trading Hours open (Monday) |
Close (Friday) |
|---|---|---|---|---|---|---|---|---|---|
| COCOA | Cocoa | 2 | 1 | -0.5 | -1.58 | 11:45:00 | 20:29:59 | ||
| COFFEE | Coffee | 2 | 375 | -0.51 | -1.54 | 11:45:00 | 20:29:59 | ||
| COTTON | Cotton | 1 | 500 | -1 | -3.3 | 04:00:00 | 21:19:59 | ||
| SUGAR | Sugar | 2 | 1 | -0.13 | -0.39 | 10:30:00 | 19:59:59 | ||
| WHEAT | Wheat | 3 | 1 |
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