This page details the individual Commodity markets offered by the Spread Bet brokers, including some points to look out for, such as which months to trade and the importance of initial research into what you’re trading.
Spread Betting Commodities
Commodities are often a favourite arena to trade for many Spread Betting clients as they can be volatile. And volatile trading means there are good profits on offer although, sadly, losses as well.
Commodities are often a favourite arena to trade for many Spread Betting clients as they can be volatile. And volatile trading means there are good profits on offer although, sadly, losses as well.
1. Spread Bet Markets: Hard Commodities
A. Hard Commodities include the Metals
Gold has invariably been a favourite of the speculator, and it’s probably the number one commodity traded via spread bets. As Gold is so popular, most of the business will be done via a Daily Spot market where the spread bet quote is based on the Spot cash price of Gold. Incidentally, a point in Gold is 0.1.
Both Silver and Crude Oil are also offered via daily Spot markets. Other tradable metals are Platinum, Palladium and the industrial metal Copper.
B. Energies are another type of Hard Commodities
Gas, Oil are considered energies since they provide a source of fuel for things to work.
2. Spread Bet Markets: Soft Commodities
Soft commodities include things that are grown such as agricultural, meats and soft.
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Some Notes About Commodities
1. Many Commodities Are Traded With Quarterly Bets
Most commodity markets, apart from, for example, Gold, Silver and Crude Oil, are traded via quarterly bets, and these can vary from commodity to commodity. So before you trade, it’s important to find out both the right month(s) to trade and when they expire – this can be done via your broker’s help desk.
2. Commodities Are Volatile
Commodities can get extremely volatile for many reasons, such as adverse weather, threats to supplies (due to civil wars in commodity-producing countries), storage problems and disease.
Plus, many of them have distinctive trading personalities, so bear this in mind when starting out. For example, if you trade Sugar or Wheat, start with small positions till you get a better idea of the market’s character and how it can move.
3. Some Commodities Are Seasonal
Also, many commodities have quiet and busy seasons. For example, during the winter months, markets such as Corn and Wheat should be fairly subdued. But from Spring onwards, all hell can and often does break loose as the weather plays a more dominant role in the growing and harvest.
Understanding points such as these will often set you apart from the spread better who often jumps into new markets at the deep end. As the saying goes –
‘Time spent in reconnaissance is seldom wasted’
A further point to note about commodities that are harvested, such as Coffee and Wheat, is the ‘old crop’ and ‘new crop’ contracts.
Harvested commodities have a yearly cycle, so it’s possible to see very different prices and volatility levels between the different tradable months. This is because one month might relate to this year’s crop and another to next year’s – hence, old crop and new crop.
What is a Tradable Point?
This is something to watch out for and, indeed, again, highlights the importance of researching exactly what you’re trading and looking for any subtleties and nuances.
For example, never trade any spread bet, including commodities, unless you know exactly what a tradable point is. As you know, spread bets are placed via a stake (in pounds) x points, and a point in Coffee is worth 0.1, a point in heating Oil is 1, and a point in Soybeans is 0.25.
WARNING! – Spread Bet Broker Advice
There are good spread bet brokers, and there are bad ones.
Having a good broker won’t guarantee you profits, but a bad broker will probably lead to losses as a combination of their gamesmanship and suspect software takes its financial toll.
Commodities and the Beginner’s Landscape
For newcomers to spread betting, commodities offer a tangible entry point. Our Beginner’s Guide provides a comprehensive foundation for understanding spread betting, including how commodities fit into the mix. This guide is particularly useful for retail investor accounts looking to diversify their trading portfolio.
“Commodities offer a tangible asset class that can be easier to understand for beginners.”
Practical Examples with Commodities
While commodities offer a different trading experience, the principles of spread betting remain the same. Our Examples page provides real-world scenarios that can be applied to commodities.
- Learn how to manage risk with commodities.
- Understand how to leverage commodities for maximum gains.
Regulatory Aspects of Commodities Trading
Understanding the regulatory framework is crucial when trading commodities. Our Regulation page offers insights into the laws and guidelines that govern this type of trading.
| Regulatory Body | Importance in Commodities Trading |
|---|---|
| FCA | Govererns UK Spread Betting |
| ASIC | Tier 1 Australian CFD Regulator |
| FMA | Oversees tier 3 regulation |
Advantage of Commodities And Spread Betting
Commodities and trading are two popular combinations for UK traders. We listed the core advantage of spread betting to provide a comprehensive look into why UK residences choose this approach including the concepts around it from margin to risk. This is particularly useful for those looking to expand beyond commodities into other financial markets.
Commodities in Financial Spread Betting
Financial spread betting encompasses a range of financial instruments, including commodities. Our Financial Spread Betting guide offers a comprehensive overview, helping traders understand where commodities fit into the broader landscape of spread betting.
“Understanding the role of commodities within financial spread betting can provide traders with additional avenues for diversification.”
