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Online commodities broker
Like any other form of trading, commodity trading involves buying and selling assets. There is an expectation that you can profit from the rise and fall of the price of the asset you are trading. This is done by correctly predicting the direction of value, which is determined by supply and demand in the market in question.
As you probably know, commodities are usually material raw materials used to produce and operate other commodities. Think of industrial and construction commodities such as steel and oil. In addition, the electronics industry makes extensive use of tradable materials such as gold, silver, copper, and lithium.
In addition, online commodities broker offer leverage when trading commodities. The leverage you will be offered will depend on the country in which you reside. For example, in the UK and EU leverage is limited to 1:10 for most commodities and 1:20 for gold.
Literally, the term "commodities" means inventories intended for use in the production of finished goods. This means that both wood for paper production and chemical fibers for the production of fabrics can be used as raw materials.
Commodities include the following two main categories:
Materials available in and extracted from the natural environment. These are mainly mineral fuels, ores and other minerals, and timber. The primary products of crop production (grains, oilseeds, and textile crops) are the result of the application of human labor, and for a long time, they are not initially present in nature, so they are not considered as raw materials.
Mass wastes, mostly secondary (from end-of-life products): scrap of ferrous and basic non-ferrous metals, waste paper, etc.
How to trade commoditised?
Along with global foreign exchange markets, commodity markets offer a variety of opportunities for private traders around the world. "Soft" commodities - sugar, wheat or corn - have been traded for centuries, and they owe their popularity with investors to their quality as a diversification and risk management tool.
Investing in commodities that are traded in contracts is a reliable way to reduce risk, even in times of inflation or economic uncertainty. They protect both the buyer and seller of contracts from strong price movements that can lead to large losses.
Many traders prefer commodity trading, especially CFDs on commodities, because access to leverage means they can trade large positions with a relatively small deposit and, as a result, increase their profits.
However, it's important to remember that leverage increases losses as much as it increases profits, which means that it increases the risk of this type of trading, especially compared to traditional investing.
This is why risk management is so important.
There are several ways to manage risk, and some of the most common:
Effective money management: don't trade with funds you can't afford to lose.
Regulate position size: A general rule of thumb is that a single trade should not risk more than 2% of your account balance. Therefore, if your account balance is $1,000, you should not risk more than $20 per trade. If your account balance increases or decreases, the maximum risk per trade also increases.
Using Stop Loss and Take Profit: These are automatic levels at which a trade will be closed, which means you do not have to close it manually. Stop-loss is designed to ensure that you do not lose more than expected: if the instrument moves too far against you, the trade will be closed. Take Profit is the opposite: the trade will be closed automatically as soon as you reach a certain level of profit.
Follow a clear strategy - Many novice traders decide to invest in commodities, opening a series of random trades and hoping that one of them will work. Even worse, if they lose, they may open ever-larger trades in hopes of recouping their losses with large profits. Instead, you should always follow a strategy that determines how much risk you take, when you open trades and when you close them.
While there are no guarantees, there are a few things you can do to improve your chances of success when trading commodities.
Commodity trading is a pretty tough but fair way to make some money. You need time and dedication to get through it right and not sink. Like anything that involves a lot of effort, this means developing the right strategy. A trading strategy makes the process much easier, so you can better track what you're doing. Otherwise, you will quickly feel overwhelmed by all the available options.
Trading Strategy Range
This strategy involves finding the value of commodities according to what the charts say. Then you have to use a mixture of fundamental research along with technical analysis.
Breakout trading strategy
Breakout trading has a similar basis as a reason to trade. What traders do with this trading strategy is find an undervalued commodity. Then they focus on it.
While fundamental analysis is fairly easy to understand, technical analysis can take years to fully comprehend. Not only that, but there are hundreds of price charts and technical indicators available to traders. By trying to get a firm grasp of just a few basic tools, you will be better able to speculate on the rise of a falling asset.
Resistance and support levels
Resistance and support levels are used in the trading world. In support the level is known as a "price point" - it prevents further declines in value. In resistance the level prevents a further rise in the uptrend. Of course, there is no guarantee that a support or resistance line will not be broken.
What is an online commodities broker?
Commodity Broker - a trade intermediary who facilitates transactions for the purchase and sale of goods between interested parties (clients). As a rule, it concludes transactions in the name of, on behalf of and at the expense of clients. Some brokers may act in their own name, but at the expense of their principals. A T.B. acts on the basis of an agreement concluded with a client.
Remuneration of T.B. is established by agreement of the parties or (for stockbrokers) in accordance with the rates, approved by the exchange committee. Best online broker for commodities may provide additional marketing and advertising services to clients. Big brokerage firms also give credits to sellers and may act as guarantors of deals.
List of best online commodities broker
Choosing a best online commodities broker whose services match your experience and investment goals can make the difference between meeting or not meeting your investment goals. Beginners may want a simple and easy-to-use interface, while others may want lower commissions and higher leverage. Other traders may be looking for more investment options, extended charts or responsive customer service.
IQ Option trading platform is one of the leaders in the segment, offering a huge number of benefits to its clients. This review will help you learn more useful information.
Many potential users ask the question "Is trading binary options legal?". If you choose IQ, the answer is "Yes". Because the company has all the necessary certificates and documents confirming the legality of the work. Such documents allow you to contact the regulatory body, which acts as a third party in the resolution of disputes.
FxPro Group Limited has been working on the global financial market since 2006 and currently provides services in 170 countries of the world. Holding companies have licenses of leading financial regulators: FxPro UK Ltd London (FCA), FxPro Global Markets MENA Ltd (Dubai FSA), FxPro Financial Services Ltd (CySEC and FSCA), FxPro Global Market Ltd (authorized and regulated by SCB).
Dukascopy Bank SA is regulated by FINMA (Swiss Financial Market Supervisory Authority), and also has the status of an investment bank and provides a full range of financial services. It should be noted that it is extremely difficult to obtain such a license from the Swiss regulator.
The main company FXOpen Ltd is registered as tax resident in New Zealand, the official representatives act as subsidiaries, e.g. FXOpen Markets Limited, FXOpen AUPtyLtd, FXOpen Company and others. Dealing services are regulated by ASIC, FCA, FSA, but in general the regulatory policy is not transparent, there is minimal information about this on the website. There is a certificate of quality execution (VerifyMyTrade) and the International Financial Commission (The Financial Commission).
The main features of online commodities brokers
Shares of companies (securities) are issued for sale on the stock exchange, which is an organized market in the form of real or Internet platforms. The sale takes place within the framework of unified requirements with regard to the terms of the transaction and the quality of the goods. At the heart of any bargaining is the counteroffer of the various parties.
Control of demand, supply, exclusion of unforeseen changes, which can affect negatively the well-being of buyers and sellers.
For the sale of shares of companies (as well as any other trades) are characterized by publicity, openness and free pricing. The state does not interfere in the process, which, however, is carried out only within the existing legislation. The main source of profit for stock exchanges is the commission fee from each concluded transaction.
The nuances of working with online commodity brokers, pitfalls and key tricks.
Trading on the stock exchange through a best commodities broker online is a common global practice. This scheme of work is often chosen by foreign companies and organizations for which exchange trading is not the main trading and purchasing tool. At the same time, the share of transactions performed with the assistance of brokers is increasing annually.
A brokerage contract is made between a broker and a person who wants to access a stock exchange (Russian or foreign) to buy or sell stocks, bonds and other financial instruments. The person who enters into a contract with a broker is usually referred to in the contract as a "client" or "investor.
The brokerage contract is important for the client because it gives him the opportunity to appeal to the regulatory authorities, such as the Central Bank of the Russian Federation, to protect his rights. The absence of an agreement makes it difficult, if not impossible, to get your money back.
Commodity brokers are obligatory participants of commodity exchanges and have the right to provide intermediary services on purchase or sale of commodity stocks for their clients. Therefore, in the case of a trade exchange a company has only two options:
to become a member of the exchange and conduct operations on it independently;
to conclude a contract with a trade broker (exchange member) and entrust him to purchase goods for the company on behalf of and at the expense of the broker.
Previously, many people did not want to invest in raw materials because it required significant amounts of time, money and experience. Today, with the advent of round-the-clock news releases, buying and selling raw materials has become the most affordable and easiest way for traders to make money in the market. The geopolitical situation can have an immediate effect on the price of raw materials. Therefore, it is important for traders to follow reliable news sources carefully and calculate the possible price jumps in order to make profitable bets in time.
There are different options for beginners and experienced traders to invest in raw materials. Purchase and sale usually takes place through futures contracts on stock exchanges, where there are standards for the volume and minimum quality of the rough. Although commodity futures contracts are the easiest way to make money on price fluctuations, there are other opportunities to make money in the commodity market, with varying levels of risk and minimum investment amounts.
When dealing with physical assets, investing in commodities can be an interesting idea for novice traders. While other markets such as Forex, indices and even cryptocurrencies may seem strange and abstract, we all understand what a barrel of oil, a pound of sugar or a bar of gold is.
For commodity trading, the IQ option site is ideal.