Best Commodity Trading Platforms 2022 – Beginners Guide

Commodities are not the first assets we think of when investing. However, they are the basis of economics and operations, especially in the energy or agricultural sector. Commodity trading used to be limited to professional traders because it took a substantial amount of time, money, and experience. Today, there are many more options for commodity trading platforms.

In this guide, we will look at some of the considerations to be successful on a commodity trading platform. This guide will cover all the top commodity trading platforms. We have done a comprehensive analysis on all the top best trading platforms. You will also learn how to invest in commodities by trading commodities, what returns to expect, and what parameters to consider when trading.

What is a commodity?

In the financial world, commodities are assets that can be traded in financial markets. There are various commodities in the market. For example, you can invest in silver, gold, oil, gas, or cotton.

Like stocks, cryptocurrencies, or stock indices, commodities have a market price that is largely determined by the laws of supply and demand. Specifically, when the demand for a commodity increase while supply remains constant, the price rises. Conversely, if supply is constant and demand decreases, the price also decreases. It is sometimes the unstable balance between supply and demand that determines the market price. Sometimes there are certain fluctuations.

For commodity trading, those assets can be traded physically or via CFDs. CFDs are derivatives that faithfully reproduce the price of real assets. When trading CFDs, you do not own those assets. This is a contract entered into with a broker on pre-determined terms.

How does commodity trading work?

Commodity trading can be executed in two ways-

  • Physical asset trading
  • Trading CFDs

Specifically, capital gains or losses from trading physical assets such as CFDs are directly related to price movements. However, if you are trading a physical asset, it means you need to be able to store that asset. Merchandise is more difficult to store than promotions or gift certificates. You can also find brokers that can hold your commodities, but doing so comes at a cost. For commodity trading, we recommend trading CFDs systematically.

Futures can be used to trade CFDs. These are contracts with predefined terms and conditions. Investors pay the down payment on the subscription date. Traders get a capital gain if the price of a commodity rises between subscription and expiration. Otherwise, you will lose money.

In any case, to trade products, you need to invest through a intermediary called a broker. There are many online solutions for trading commodities. With futures contracts, the stock market is also an intermediary that makes investment possible.

How to choose the best commodity trading platforms?

When choosing an online trading platform, you should consider the following:

  • Investment Type: A good broker for active traders, strategies such as day trading or swing trading may not be suitable for investors looking for a longer stay. Read our guide to the Best brokering service providers.
  • Cost: Different brokers have different commissions and commission rates. If you are an active intraday trader, you can earn more by minimizing your cost per trade. Doing multiple tasks in one day can add up costs quickly. If you are investing and holding for the long term, the cost per transaction may not be that important.
  • Regulatory: We recommend that you ensure that your online broker is regulated. Regulatory bodies in different jurisdictions around the world ensure that brokers follow and comply with the law. Broker rules are essential and ensure you do business with brokers who act in their best interests, provide financial protection and do good business.
  • Trading Platforms: A good broker offers solid trading software. Does the platform provide all types of ordering and charting capabilities? Many trading platforms are available in web, desktop, and mobile versions.
  • Research: The best brokers give traders access to research tools to better understand the market. Investigation tools vary from broker to broker.
  • Tools: Business tools are essential to business success. Make sure you have what you need for the platform you are trading on.
  • Minimum Deposit: The minimum deposit matters a lot while choosing the trading platform. Some offer a minimum deposit of $10 or $0. You want to find a broker that meets your unique needs.
  • Withdrawals: Some brokers do not charge withdrawal fees while others charge withdrawal fees. This is important when making daily transactions and withdrawing funds frequently.

Best Commodity Trading Platforms 2022

The first step in investing in commodities is to open an account with an authorized trading platform. We have done an extensive study on the best Commodity Trading Platforms. We have prepared the list of best commodity trading platforms-

  1. eToro
  2. Libertex
  3. AvaTrade
  4. Plus500
  5. Capital.com
  6. FinmaxFX
  7. Interactive Brokers
  8. TD Ameritrade

Best Commodity Trading Platforms 2022 Reviewed

1. eToro

eToro is the best social trading broker of 2022 with an excellent commodity trading platform. There are proprietary platforms, web platforms, and dedicated social commerce areas. This broker has excellent research tools including market commentary, social sentiment, and an economic calendar. eToro is recommended for experienced investors as its educational and research tools are limited.

The eToro broker has had over 12 million clients worldwide since its inception in 2007. eToro brokers are particularly famous for their social trading, which doubles their position as top traders and is also distinguished by their commodities trading capabilities. eToro also allows you to trade cryptocurrencies, stock indices, or stocks.

2. Libertex

Libertex Review (2022) Is Libertex a Scam or Legit Broker ☑️

Libertex is a popular online CFD and one of the best Forex broker with first-class licenses. It offers an exclusive web-based trading platform that requires no downloads. Libertex gives you access to the complete MetaTrader suite for the best online trading experience. Libertex is one of the best brokers for trading commodities offering $0 spreads. The competitive pricing structure and beginner-friendly platform make Libertex suitable for traders of all skill levels.

What sets Libertex brokers apart is their wide range of financial assets. If you want to take on the challenge of trading, the platform offers some very interesting diversification strategies. From stock indices to stocks, ETFs or cryptocurrencies, there is no shortage of investment opportunities. You can also trade Libertex and Forex. The platform is also present in 27 countries around the world.

3. AvaTrade

AvaTrade Review 2022, Safety, Platforms and Fees | FX Empire

AvaTrade offers commission-free online commodity trading via CFDs. The broker has slightly higher spreads than some of its competitors, but given the quality of the trading platform, this is more than justifiable. AvaTrade was founded in 2006 and is one of the best trading platforms. Many assets are available in CFDs such as stocks, bonds, virtual currencies, and even foreign exchange or stock indices. Commodities can also be traded on the platform in the form of CFDs.

AvaTrade not only offers its charting software but also gives all account holders access to MetaTrader 5. AvaTrade allows you to trade popular commodities like gold with leverage of up to 200:1. However, the scope of CFD proposals is more limited. Better than other brokers, you’ll find popular products here like wheat and sugar, but not orange juice, or rice.

4. Plus500

Plus500 Review

Plus500 was established in 2008 and is an online broker regulated by SySEC and FCA in Europe and other international regulators. This online broker has seen strong growth since its inception, especially in Europe. Plus500 provides a simple and easy-to-use web-based trading platform for inexperienced traders. However, the most advanced traders quickly reach the limits of the platform.

This broker has proprietary platforms, desktop and web platforms. Plus500 is considered one of the best commodity trading platforms and it offers several trading tools. However, the platform is a challenge for beginners. The platform offers trading of 22 different commodities, including farm animals such as forage cattle and lean pigs. One of the great things about Plus500 is that you can trade gold, silver, wheat, and more with leverage of up to 150:1. This high leverage ratio makes Plus500 ideal for large bets in the commodities market.

5. Capital.com

Online Trading with Smart Investment App | Capital.com

Capital.com offers crude oil futures and CFDs on more than a dozen other hard and soft commodities. Brokers have incredibly low trading margins, starting at 14 pips for oil contracts. Additionally, all transactions with Capital.com are commission-free and the broker charges virtually no account fees. This trading platform features the use of artificial intelligence. AI algorithms automatically analyze trades to identify patterns for gains and losses. You will then be offered suggestions on how to stay in the business longer or focus on a specific product to increase your profitability.

It is the first choice for operators looking for a superior trading platform and customer support. Capital.com offers web, mobile, and desktop platforms. All are easy to use, well designed, and offer two-factor authentication. This broker has great research tools including trading ideas and underlying asset data.

6. FinmaxFX

FinmaxFX commodity trading platform

FinmaxFX is one of the best trading platforms that offer dozens of commodities. You should be concerned about liquidity, but it is also possible to find cheaper prices on the open market than when trading CFDs directly with a broker.

This broker offers a variety of futures contracts with relatively high leverage. It offers the leverage up to 100:1 on popular agricultural products. All other metals and energy products are capped at 100:1, but gold can be used with leverage of 200:1.

7. Interactive Brokers

Interactive Brokers

Interactive Broker is an American online broker regulated by the US SEC and CFTC. In Europe, it is regulated by the UK FCA. There are other international regulations. Interactive Brokers is a popular brokerage firm that supports products in the form of financial derivatives. This includes both futures and options in various commodity markets.

Interactive Brokers is known for providing premium and competitive services to professional traders. However, it is still perfectly suitable for people. Interactive Brokers TWS trading platform is powerful and very comprehensive, but its complexity and lack of intuition can confuse beginners.

8. TD Ameritrade

TD Ameritrade

TD Ameritrade is the premier US broker-dealer with an easy-to-use platform. Competitive pricing structures and exchanges exist. It is one of the best options for traders of all levels, including advanced futures investors. TD Ameritrade has a great trading platform that focuses on learning tools. Unparalleled experiences with superior market data and business insights.

On this platform you can access commodity derivatives as future and forward contracts. This is a more sophisticated way to trade commodities as it offers long/short positions, very high leverage, and liquidity. In terms of tradable markets, TD Ameritrade handles dozens of commodities. It offers both hard commodities and soft commodities.

Commodity trading strategies

Commodity trading is suitable for several rather long-term investment strategies. It is up to you to choose the one that best suits your profile. Following are the top commodity trading strategies-

Commodity day trading

Intraday trading is a trading technique that opens and closes positions in the center of the same day. So it’s a short trade. This method is particularly suitable for trading commodities due to the existing leverage. This leverage will amplify the effectiveness of the market. However, because of the intensive work of the day, it is important to prepare quickly and seize opportunities each day.

Commodity swing trading

Swing trading has a wider speculative scope: medium term. The goal is to focus on the variables that will hold the most weight in the medium to long term. When using long-term trading such as swing trading, it is important to consistently read more macroeconomic variables. If you mainly trade in agricultural products, you should pay special attention to the climatic conditions of the world’s largest producers for each product. Swing trading traders often use technical analysis to graphically predict the price movement of a particular asset.

Scalping on commodities

Scalping is a short-term approach to this trading day. It’s all about trading and going back and forth between taking a position and closing it. With scalping, you act on the microscopic movements of the market. In this context, macroeconomic variables of commodity trading are of little interest. This technique can be used for many assets such as buying stocks, cryptocurrencies, stock indices, or CFDs. Like day trading, scalping is highly leverage-compatible, so it also increases short-term market volatility.

How to start commodity trading?

In this section, you will learn how to start trading commodities through the online commodity trading platform. It is so simple to open a trading platform. Read our complete guide to how to invest in Commodities or for a brief overview follow these steps to start commodity trading-

Step 1: Choose a Commodity Broker

The first step in investing in commodities is to open an account with an authorized broker. In an extensive study of the best commodity trading platforms, we found that the names eToro, capital.com, and Plus500 are the most reliable trading platform. Once you select the platform you can move ahead to open the trading account.

Step 2: Open an account with the commodity trading platform

We have chosen eToro for commodity trading. We will guide you step by step through the most competitive and most suitable eToro platform for trading commodities. To open the account first visit the official page and fill the application form. You need to provide your name, address, and phone number to open the trading account.

Register for best Commodity Trading platforms

Step 3: Account Verification

All brokers regulated by regulators are required to verify user accounts according to the Know Your Client (KYC) protocol. When registering, you will be asked to answer a series of questions so that the broker knows your investment habits. After you create your account, you will need to verify your account using two documents.

Step 4: Deposit the funds

Once the verification is completed you can also deposit funds to your account using the blue “Deposit” button at the bottom of the sidebar. You can then deposit money using a variety of payment methods including debit or credit card, PayPal, bank transfer, Skrill, wire transfer, and other e-wallets. Once you have selected the desired amount and payment method, simply click the blue “Submit” button.

Step 5: Open a commodity trading position with CFDs

To enter the commodity market, you have two options. The first is to directly search for the name or type of commodities in the search bar at the top of the page. You can then search by typing “gold” or “silver” in the search bar.

The second option is to use the Markets tab in the left sidebar. Then you can select “commodities” at the top of the page. You should go to the next page. Opening a position in the product is very easy. Just click on the product and then “invest”.

If you are a beginner from UK you can read our previous guide to learn everything about how to start investing for income.

Trading Commodities on eToro

Step 6: Monitor the account and close the position

If you hold a position as an eToro broker, you can view it through the “Portfolio” tab. In the portfolio, you can find an overview of the various positions taken in the market. Whether technical or fundamental, it is very easy to use when an indicator calls to close a position. Just click next to the cogwheel for that asset and click “Close”.  You can then select the location or all locations to close.

Tips to follow to get good at trading commodities

General but specific advice on purchasing commodities can help you optimize profitability in your market.

Understand the variables that affect the commodities

It’s basic supply and demand. It is important to correctly map the variables that affect these two components. Know your market. When trading gold, it is important to understand the demand (jewelers, institutions, speculators…). Similarly, when trading oil, understanding geopolitics and issues is critical to predicting price movements.

Investment diversification

You can only trade commodities but still, use a diversification strategy. Then it would be a matter of choosing a product whose price is not linked. For example, if you trade soybeans and livestock, the two commodities are related and changes in the price of soybeans affect the price of livestock. This will not diversify your investment. When trading gold and soybeans, the price relationship is much lower and the investment is more diverse.

Beware of leverage

This advice is even more applicable to new investors. You can gain a lot from leverage, but you can also lose everything. So, be careful if you are new to trading.

Use “Take Profit” and “Stop Loss”

This point follows the previous point. Because of the high leverage, setting the relevant Stop Loss and Take Profit levels is very important for trading. This is the automatic resale threshold for that asset. When the price of an asset goes down, the Stop Loss level comes into play. What matters when going up is the level of earnings. These are the minimum and maximum resale thresholds. If the asset price is lower or higher than this, the asset is automatically sold.

Master technical analysis tool

It is a tool that can be used for many assets, including commodities. As we have seen, they allow us to identify evolutionary trends in prices. There are many indicators, but using them all can backfire, so it’s a good idea to focus on three or four tools. The most used are Bollinger Bands or Moving Averages.

Conclusion

While most assets on the platform can be traded via CFDs as well as physical assets, commodities are different as a significant portion of their trading is via CFDs or other types of contracts. Most traditional trading methods (intraday trading, swing trading, using trading robots, etc.) are compatible with commodity trading. Finally, remember that commodity trading is still very specific, especially in terms of the risks involved. Geopolitical or climatic risks are much greater than other forms of investment.

eToro is one of the best commodity trading platforms to consider in 2022, in our opinion. You will enjoy commission-free access to over 45 commodities marketplaces. The registered broker also provides Copy Trading, leverage, and a wide range of payment options.

Frequently Asked Questions

Is commodity trading for beginners?

Yes, it is entirely possible to trade commodities as a beginner. However, many variables need to be understood, so it is advisable to get proper training before investing in these products.

Is gold a safe investment in times of crisis?

Yes, gold is the haven asset in time of crisis. Investment in metals during the health crisis is safe. Consumer demand collapsed while speculative demand offset this decline in the market. Gold prices aren’t even lower than they were before the health crisis.

What is the short and long position in trading?

For CFD trading, the difference is very significant. When we talk about long positions, we mean buying and betting on the increase in the value and price of that asset. Conversely, in a short position, you bet on a fall in price. We are also talking about short positions.

Is it better to trade commodities or CFDs physically?

For other assets, such as stocks, we are tempted to say that the two products are slightly different. The balance between physically owning an asset or its CFDs must be made by considering one parameter: storage. Physical commerce sometimes needs to support the storage of very large products.

CFDs, is this the only way to invest in commodities?

No, you can trade physically, but you also need a large storage capacity. This method is far from optimal. Different asset classes allow the trading of commodities such as ETFs, and ETCs.