How to trade commodities

Learn how to trade top commodities, including gold and oil, and profit by speculating on the price of the world's most essential raw physical assets

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Understanding what commodity trading is?

Commodity trading involves investing in or trading a commodity and trying to profit from the changing price of the underlying asset. Some of the most commonly traded commodities include energy (such as oil and gas), precious metals (like gold and silver) and agriculture (for example, coffee and wheat).

But before entering the market and opening a commodity trade, it is important to gain a deeper understanding of exactly what commodity trading is.

How to Trade Commodities?

Commodities trading is done through what's known as a Contract for Difference (CFD). This is simply where a trader opens a ‘buy’ position if they think the price will rise, or a ‘sell’ position if they think prices will go down. Axi provides the opportunity to trade commodities online in several different ways: using commodity futures CFDs, cash CFDs and spot CFDs.

Ready to start trading commodities?

Follow our process to start commodity trading today:

  • Understand what commodity trading is and how it works
  • Open a demo and live account
  • Discover the commodity you want to trade
  • Select your trading platform
  • Open a position, monitor and close your first trade

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What commodites can I trade?

Take a quick view of our most popular commodities – including gold, silver, copper and oil – or refer to our product schedule for a full list of commodity assets to trade with Axi.

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Find out more about how to trade our top four commodities: gold, silver, copper and oil.

 

What is the difference between commodity cash CFDs, futures CFDs and spot CFDs?

The main difference between trading cash, futures, and spot commodity CFDs is the pricing model.

Commodity futures CFDs

Contract for difference for coffee graphic

The futures price for a commodity sets a predetermined price for a transaction that takes place at a future date. This "futures price" is based on the commodity's current spot price plus the cost of storage/carry for the period before delivery. The cost of storage/carry includes interest, insurance, and other incidental expenses.

Commodity spot CFDs

The spot price for a commodity is the current quote for immediate purchase, payment and delivery of that commodity. In effect, the trading of the commodity is done "on the spot".

Commodity cash CFDs

A cash commodity is a tangible product that is delivered in exchange for payment. The contract for a cash commodity specifies the exact amount of the commodity to be delivered, delivery date and price. Companies speculate on a specific price for a commodity they plan to use, then enter into contracts for cash commodities.

How much money do you need to start trading commodities?

There are two important things to consider: minimum deposit and initial margin.

Minimum deposit is the amount of funds required to open a trading account. Some brokers have a set amount, but Axi has no minimum deposit requirement.

Initial margin is the amount you need to have available in order to execute and maintain an open a trade. When trading commodities with Axi, initial margin rate requirements generally range between 5-10%.

Commodity trading strategies

Whether you're new to trading or a long-term investor, there are plenty of opportunities in commodities – and these strategies are a great place to start!

Breakout strategy

Breakout aims to capitalise on short-term movements. Traders use this method to find a gain by buying just before a commodity price moves substantially higher, or selling just before the price moves drastically lower. This is best used when market trends are strong and long-lasting.

Fundamental trading

Fundamental trading strategies require more time for research and a greater understanding of how different factors affect commodity prices. Fundamental trading is considered a longer-term approach to trading commodities, analysing quantitative and qualitative data.

Range trading

Range trading is built around a charting mechanism that records support and resistance levels influenced by supply and demand. Traders buy at the support level (when prices are at the bottom of a range) and sell at the resistance level (when prices are at the top of a range).

Commodity trading platforms and tools

Utilise our world-class trading platforms and powerful tools to enhance your trading experience. With an Axi account, traders of all levels have access to top resources to help further improve their skills.

MetaTrader 4

MetaTrader 4 is the smart choice for online traders everywhere who are looking for a trading edge. Simple for beginners and full of advanced functions for professionals, the MT4 platform helps you unlock unlimited trading possibilities.

Learn about MT4

PsyQuation

Built to utilise artificial intelligence and machine learning, PsyQuation is a highly advanced trading analytics platform designed to reduce your trading mistakes and provide powerful performance analytics.

Learn about PsyQuation

AutoChartist

Autochartist continuously scans the market for customised trade opportunities, based on realtime pricing and your specific trade setups, then alerts you to potential trades.

Learn about Autochartist

Discover more markets to trade with Axi

Choose from a variety of global markets to trade with Axi, using ultra competitive spreads & flexible leverage to trade your edge.

Commodity trading FAQs

Leverage allows you to take a position in a particular commodity by paying only a fraction of the full trade value as margin. Depending on your region, Axi offers up to 100:1 leverage for standard trading accounts depending on the commodity asset being traded.

The risk in commodity trading is due to the market’s supply and demand oriented nature. Since a commodity price can be affected by anything from weather patterns to epidemics and natural disasters, market trends have an inherent uncertainty that must be built into your risk management.

Commodity trading can be a good choice for beginners due to its convenience and flexibility. Online commodity trading platforms are simple and intuitive to use. Investors can access resources like live quotes, charts, futures news, research and trading facilities, and even online assistance through AI and automation.

At Axi, we want to ensure all new traders have the essential tools and knowledge to make smart decisions and become profitable traders. Refer to our courses, videos and guides on how to trade commodities.

Trade commodities online with Axi

Sign up for a live trading account or try a free demo trading account to experience a real trading environment.

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