Commodity trading involves the purchase and sale of various goods, such as oil, gas, gold, and silver. Manage risk and broaden your investment portfolio by engaging in commodity trading on the MT5 platform.
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Commodity trading involves the purchase and sale of predetermined amounts of assets, such as Crude Oil and Gold, with energy and metals typically dominating the market. The fluctuation in commodity prices is often viewed as a reflection of the overall economic well-being of industries that supply and demand these assets.
At HedgeHood, you have the opportunity to trade CFDs on a diverse range of global commodities, including gold, silver, and oil, through a reliable broker based in Australia. Enjoy the flexibility of entering and exiting trades nearly 24/5 across most commodity markets.
Learn to trade Commodities
At HedgeHood, we provide the option to trade commodity CFDs on our MT5 platforms. This type of trading enables you to speculate on fluctuating commodity prices without owning the actual physical asset being traded. In essence, a CFD is an agreement between the trader and the broker.
For instance, if you initiated a long (buy) CFD trade on Gold at a value of $1,505 and closed the trade when the price increased to $1,525, your profit would be $20. Conversely, if the price dropped to $1,500, you would incur a loss of $5. Simply put, you either pay or receive the difference between the opening and closing prices of the traded commodity.
There are traces of commodities trading as far back as ancient China and 4500 BC where the Sumerians (modern day Iraq) used jugs filled with clay tokens that were shaped to represent the animal or crop they had in their possession. This evolved over time until 1611 when the Amsterdam Stock Exchange was created. It was the world’s first stock exchange and was originally a market for commodity exchange.
The most significant development in commodities trading occurred in 1848 when the Chicago Board of Trade (CBOT) was set up. Its regulated structure provided the exchange of futures and options contracts. Commodities exchanges are now located worldwide with some specialising in multiple commodities or a lone material. Major commodity markets include the Chicago Mercantile Exchange (CME), New York Mercantile Exchange (NYMEX), London Metal Exchange (LME), the Multi Commodity Exchange of India Ltd (MCX) and the Australian Stock Exchange (ASE).
Commodities trading was previously limited to professional traders as it required a substantial amount of time, resources and expertise. Technology and the introduction of additional commodities trading products have changed this. Individuals can now trade commodities using advanced online trading platforms such as MetaTrader 4 and 5. The ways to trade commodities have also expanded to include derivative products such as options, futures contracts, contract for difference (CFDs) and exchange traded funds (ETFs).
A commodity is a tangible good that can be traded or exchanged for products of comparable value. They consist of hard commodities and soft commodities. Hard commodities are natural resources that are mined or extracted such as metals and energy resources while soft commodities are agricultural products or livestock.
Precious metals are rare and remain valuable due to their infinite lifespan and the absence of the prospect of oversupply. The most traded metals are gold, silver, platinum and palladium. Popular metals such as gold and silver can be traded against major currencies in a similar manner to forex trading.
Includes oil, natural gas and other petroleum based fuel products. Crude oil can be refined into petrol, chemicals, lubricant and other products making it the most traded energy source. Brent Crude and West Texas Intermediate (WTI) are the two major types used to benchmark global oil prices.
Relates to major crops and livestock which are in high demand. This includes wheat, rice, corn, coffee, sugar, cotton, oats, soybeans, live cattle, eggs and more. They play a pivotal role in the economy, especially in developing countries which rely heavily on agricultural exports for their economic growth and development.
One of the most interesting characteristics of the commodities market are the factors which impact pricing. Directly related to supply and demand, these include adverse weather conditions such as natural disasters and severe climate changes.
The ability to access commodities using online trading platforms has allowed individual traders to benefit from them. Commodities are often utilised for portfolio diversification as they are generally negatively correlated with stock prices. They are also considered to be an excellent hedging tool against inflation as commodity prices rise when inflation is accelerating. Similarly, many traders invest in commodities to hedge against geopolitical uncertainties such as wars, political events and trade agreements.
Metatrader 5 (MT5)
MT5 is the favourite choice for commodities traders around the globe. HedgeHood’ MT5 is packed with extras to ensure you’re equipped with all the tools you need to make better informed trading decisions. Tight Raw Pricing, fast execution and superior charts are the building blocks for our MT5 solutions.
Trade WTI
Opening Price
$48.51 × 0.1 lot = $4,851
Closing Price At $47.51 × 0.1 lot = $4,751Gross Profit on Trade $4,851 – $4,751 = $100
Closing Price At $50.51 × 0.1 lot = $5,051Gross Loss on Trade $4,951 – $5,051 = -$100
The WTI price is $47.51, and you choose to sell 0.1 lot, resulting in a total value of $4,751 USD.
Four days later, if the WTI price has risen to $4,851 and you decide to realize your profit by selling 0.1 lot WTI, the total value becomes $4,851, and the gross profit is $100. However, if the WTI price has increased to $47.51, with a total value of $4,751, the short-selling trade incurs a loss of $100.
Starting from 0.0 pip- Trade
| Standard account |
RAW Account |
||||
|---|---|---|---|---|---|
| Symbol | PRODUCT DESCRIPTION | MIN | AVG | MIN | AVG |
| XTIUSD | West Texas Intermediate Crude Oil | 0.05 | 0.05 | 0.05 | 0.0 |
| WTI | Future Oil | 0.03 | 0.03 | 0.03 | 0.03 |
| XBRUSD | Brent Crude Oil Cash | 0.05 | 0.05 | 0.05 | 0.05 |
| XNGUSD | Natural Gas | 0.027 | 0.004 | 0.027 | 0.004 |
| COFFEE | US Coffee Futures | 2.2 | 2.2 | 2.2 | 2.2 |
| CORN | Corn / USD Cash | 2.1 | 2.1 | 2.1 | 2.1 |
| COCOA | Cocoa / USD Cash | 2.5 | 2.5 | 2.5 | 2.5 |
| SOYBEANS | Soybean / USD Cash | 2.1 | 2.1 | 2.1 | 2.1 |
| WHEAT | Wheat / USD Cash | 2.1 | 2.1 | 2.1 | 2.1 |
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