Commodity Trading

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Commodity Trading

Along with the global currency exchange markets, commodity markets offer various investment opportunities for retail traders worldwide. Soft commodities such as sugar, wheat or corn have been traded for centuries, and investors’ preference for these financial derivatives is attributed to the major role they play in portfolio diversification and risk management.

Why Trade Commodities?

ENERGIES, METALS AND GAS

Trade on Gold, Oil and Energies

LOW MARGIN REQUIREMENTS
Enter the market with only a fraction of the total trade size—up to 100:1 leverage for metals and energy

LOWER TRANSACTION COSTS

We offer tight spreads and fast execution with no requotes or price manipulation.

Trading

What are Commodities?
 

Commodities are primary resources which are frequently used in industry, production, foodstuff and general daily consumption. The commodity markets vary from extremely volatile to being safe havens when trading, this is due to the diverse nature of commodities. Commodities fall into two catagories, either hard or soft.

Soft commodities are goods that are agriculturally linked. For example, sugar, cocoa, livestock etc. are all soft commodities. Soft commodities are significantly more volatile than hard commodities due to their nature of use and conditions of production, such as bad weather destroying crops or killing livestock, global food trends and shortages.

 

Hard commodities are resources that must be extracted and typically also refined. These types of commodities are typically (but not always) less volatile than their soft commodity counterparts. Examples of hard commodities are gold, silver, crude oil, natural gas etc. Precious metals are normally less volatile due to their negative correlation to economic productivity and use as safe haven during economic uncertainty. Energy hard commodities are more volatile because of their level of consumption and should be researched and followed daily because of this.

XAU/USD (Gold vs US Dollar)
 

Gold is the go-to safe-haven investment, meaning that during any periods of financial instability, political crisis or lower interest rate periods, investors are drawn to gold. This results in a generally negative correlation with the US Dollar.

XAG/USD (Silver vs US Dollar)
 

Silver is a safe-haven investment as well, however to a far lesser extent than gold. Silver is also effected by solar panel demand (production component) and by purification and medical requirements due to its antibacterial properties

USOIL (US Light Crude Oil)
 

US Oil futures options. Demand for Oil is one of the best indicators of economic growth, however in recent years the indecision of OPEC and the large oversupply has pushed down the price. OPEC decisions are just as important as market conditions when determining the price of Oil

NGAS (Natural Gas)
 

Natural Gas (NG) futures options. As an alternative to other fossil fuels NG has a high demand and seasonal shifts in prices. Europe’s reliance on NG for winter energy increases the volatility around the Northern Hemisphere winter months

RISK WARNING

CFDs are leveraged products that incur a high level of risk and can result in the loss of all your capital and may therefore not be suitable for all investors. You should not risk more than you are prepared to lose and before deciding to trade, please ensure you understand the risks involved, take the level of your experience into consideration and seek independent advice if necessary. We strictly do not provide trading advice.

020 3371 1538

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Sovereign Investment Group (trading name: SIG Trading) is a UK registered and incorporated company (company number: 11116279).

SIG Trading works in partnership with IC Markets (Partner ID: 27557)

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RISK WARNING

CFDs are leveraged products that incur a high level of risk and can result in the loss of all your capital and may therefore not be suitable for all investors. You should not risk more than you are prepared to lose and before deciding to trade, please ensure you understand the risks involved, take the level of your experience into consideration and seek independent advice if necessary. We strictly do not provide trading advice.

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