Commodities

What is commodity trading?

Commodity trading is one way to diversify your investment portfolio by buying and selling raw materials such as oil and natural gas, base and precious metals, and agricultural products including wheat, coffee and sugar.

Traders speculate on the future value of commodities in an attempt to profit from price fluctuations. Note that increased volatility makes trading commodities risky, as their price can suddenly change out of favor of your trade, triggering losses.

Some traders seek to hedge against inflation by trading commodities. Assets in their portfolio may increase in value as commodities rise in value.

Some traders seek to hedge against inflation by trading commodities. Assets in their portfolio may increase in value as commodities rise in value.

• Agricultural commodities. These include food crops (cocoa, cotton, corn, coffee and others), livestock (pigs, cattle) and technical crops (e.g. palm oil and lumber).
• Energy commodities. These include natural gas, crude oil and gasoline, coal and uranium, ethanol and electricity.
• Metal products. This category covers non-ferrous metals (copper, iron ore, zinc, aluminum, nickel, steel, etc.) and precious metals (gold, silver, palladium and platinum).
• Eco products. These include renewable energy certificates, carbon certificates and white certificates (certifying that a certain reduction in energy consumption has been achieved).