Offering a huge array of lucrative trading opportunities within binary options, commodities trading is very popular among both serious and brand new traders. However, there are often specific techniques to be learnt in order to achieve the most success from commodities trading, and consistently within strategy is an absolute must.
Stern have an expert team constantly on-hand to answer any questions you may have, and provide support and assistance with commodities trading if you need it. Stern is a great place to begin commodities trading if you haven’t done so already, and provides the perfect platform to get started.
So, if you want to find out a bit more about commodities trading and what it’s all about, read on to discover everything important you need to know.
What Is Commodities Trading?
In simple terms, commodities are materials used to create a sustainable world – a basic ‘product’ that’s able to be both bought and sold. Often regarded as the vital building blocks of our global economy, commodities are generally split into three different categories: metals, gas, oil (hard), and (soft) agricultural produce; livestock.
Hard commodities are products gained from mining, and include iron, gold, silver and copper. Soft commodities are goods that can be grown such as rice, wheat, sugar, soy beans.
Allowing traders to form predictions on and execute trades on products such as gold, silver and copper, commodities trading is often exciting and intriguing for many traders. However, before jumping straight in to commodities trading in binary options, it’s vitally important that you do your research beforehand.
As with any form of trading, launching in with no clear strategy or concept of what you’re going to do can be extremely detrimental, and individual traders will often have different preferences with regard to their entire trading routine. Below, you’ll find all the major pros and cons associated with commodities trading, and you’ll be able to form an educated opinion about whether commodities trading is really for you.
- Not hit by inflation – If the price and demand of a particular good rises, commodity prices generally skyrocket. This is because the cost of commodities needed to produce these products will rise in unison meaning that, in fact, commodities trading may actually benefit from inflation.
- Exposure to greater economic growth – commodities are continuously benefiting from economic growth across different markets, with prices steadily increasing. For example, the consumption of energy across Asia has been steadily rising at around 4% every year since 1990, with China now regarded as the biggest consumer of energy worldwide.
- More diverse portfolio opportunities – as trading in commodities isn’t considered to be a ‘traditional’ investment like stocks, adding commodity trades will create a multi-asset portfolio that will significantly increase its diversity.
- As with any form of binary options trading, there are some risks and potential negatives you need to consider before moving forward.
- Extremely volatile – perhaps the most well-known disadvantage of commodities trading is its huge volatility, due to a high degree of variation. Generally, commodities are twice as volatile as stocks and are considered to carry more risks for the trader.
- Less familiar – as trading in commodities is entirely different from either bonds or stocks, it may perhaps be slightly overwhelming and confusing for brand new traders. Whilst new traders are still completely able to profit, commodities may not be quite as familiar without expert help.
- Generates no income – definitely a fact to consider, commodities trading isn’t able to produce any income for the trader. This further increases its differences when compared with other assets.
If you didn’t already know something about binary options commodities trading, hopefully this has given you a brief yet concise insight into what it’s all about. As mentioned, all forms of trading will have some disadvantages associated with it. It just requires you to weigh up your options and decide whether it’s right for the type of trading strategy you want to implement.
But, if you choose to trade with Stern, you’re guaranteed to receive second-to-none customer service from their expert team. Consistently available to provide advice and assistance no matter what your questions are, Stern will be the perfect destination for you to begin your journey in commodities trading.