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CMDTYs Trading Strategies

The world is full of natural resources and ETX Capital gives you the platform to profit from them through commodities trading. From crops to metals, our clients can trade on a large number of varying commodities. If this sounds interesting, here’s some commodities trading information that may help to put you in good stead.

  • 01

    Finding the best commodity for you

    When trading on commodities it’s worth considering that each type have their own unique characteristics and require different trading strategies. The liquidity and sensitivity of price shifts can greatly vary from commodity to commodity. Try to match your trading style with the type of commodities that best respond to your methods.

  • 02

    Find a ‘safe haven’

    During moments of market volatility successful traders will most often ignore high-risk commodities to invest in ones that traditionally provide more stability. Known as ‘safe haven’ products, commodities such as precious metals - especially gold - are considered low-risk investments that will be largely unaffected by conditions that can cause large market swings elsewhere. These are often the most suitable products to invest in until the erratic movement of the markets has eased.

  • 03

    Live in the present

    You might think that it’s less important to have access to the latest information with commodities trading than with stock trading, where quarterly reports and possible takeovers can have a huge affect on the market. Yet commodities markets can be influenced by a wide range of unpredictable events and it pays to have the right information to hand. Agriculture commodities are subject to weather conditions, livestock are at the prey of diseases, while energy prices are political vote winners. These events are often impossible to predict but by ensuring that you have access to any types of news that could affect the commodities you’re trading on, you’ll be positioned to react quickly and effectively to any possible changes in the market.

  • 04

    Inter-related assets: capitalising on the knock-on effect

    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.

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