How to Trade Commodities

Commodities are traded on global markets and their prices are influenced by supply and demand dynamics alongside economic trends. Trading commodities can provide diversification, hedge against inflation, and opportunities for profit in both rising and falling markets.

Trading Commodity CFDs with zForex

Begin your journey in commodity trading with zForex. Our seamless platform provides access to CFD commodities including gold, silver, oil, and more. Learn the basics of trading CFD commodities and start trading with competitive spreads and fast execution!

Opening a Trading Account

Opening a trading account with zForex is quick and easy. Complete the registration process below and start trading commodities without any hassle!

• Visit the zForex sign-up page and fill in the form with your details
• Verify your account by using the link in the e-mail you will receive
• Fund your account and earn a 30% trading bonus

Explore the bonus campaigns zForex offers to start your trading experience a step ahead!

CFD Commodity Trading Explained

Commodities often move in the opposite direction of other investments. During times of market tensions or high uncertainty, investors tend to view commodities as a dependable option. This is because commodities are a finite group of unprocessed, natural resources. Their inherent value makes them a good hedge against economic downturns, except in circumstances that cause significant price swings.

Commodity Terminology

Commodity: A basic good used in commerce, such as gold, oil, or wheat.

Spot Price: The current market price at which a commodity can be bought or sold for immediate delivery.

Futures Contract: An agreement to buy or sell a commodity at a predetermined price at a specified time in the future.

Hedging: A strategy used to offset or reduce the risk of price fluctuations in commodities.

Crop Year: The period between one year's harvest and the next year's harvest for a particular crop that differs by commodity.

Example: Trading Silver as a Commodity

We will be examining long and short positions with commodity CFDs now. Let's say that a breakthrough in solar panel technology that heavily relies on silver is announced, leading to expectations that the demand for silver will increase and drive up its price.

Long Position

Based on the news of the solar panel breakthrough, the markets expect that the demand for silver will rise, leading to an increase in its price. You decide to go long on silver by placing a buy order. For instance, you buy 100 ounces of silver at a current price of $25 per ounce.

To manage risk, you set a stop-loss order at $24 to limit potential losses and a take-profit order at $30 to secure your gains. As expected, the increased demand for silver drives the price up. When the price reaches your take-profit level of $30, your position is automatically closed, resulting in a profit of $500 (100 ounces x $5 profit per ounce).

Short Position

In this version, you decide that the market has overreacted and expect a short-term correction where silver prices will drop. Let's go short on silver by placing a sell order. For example, you sell 100 ounces of silver at a current price of $30 per ounce.

To manage risk, you set a stop-loss order at $31 to limit potential losses and a take-profit order at $26 to secure your gains. The market corrects, and silver prices drop. When the price reaches your take-profit level of $26, your position is automatically closed, resulting in a profit of $400 (100 ounces x $4 profit per ounce).

In Summary

Trading commodities with zForex provides a unique opportunity to diversify your portfolio and take advantage of market movements. With our advanced platform, educational resources, and dedicated support, you can trade with confidence and achieve your financial goals.