The market forces of commodities can have a knock-on effect on other forms of products. Oil is a good example of a commodity that can have a widespread impact on other assets, with the fall in oil prices towards the end of 2014 resulting in energy sector stocks falling in price. It’s for this reason that many traders consider it wise to invest in commodities within their trading portfolio, especially ones that relate to the stock they hold. This strategy allows the investor to keep closer track on potential swings in their stock and respond accordingly, though it should be noted that this strategy may require some level of trading experience. It’s possible to misinterpret how the movement of commodities will impact on stock prices and only time will teach you the correct signs to look out for.
We hope that these tips will be helpful for you as you embark upon your commodities trading journey. To learn more about Commodities, read our What are commodities and How to trade commodities pages.