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Why do people trade? The answer goes beyond the idea of winning and losing money. You can ask the same question for yourself – Why do I get into trading? If you’ve got that sense that you want to improve yourself by trading or conquering an unknown field, that’s a good start.
Here we go to understand some general concepts in trading and commodities trading in particular. You want to see if trading commodities is fairly a good option as against other forms of trading.
Let’s do first with the term “trading”. By the term, we mean the action of participating in a trade. In other words, this is the action of exchanging one item with another. Thus, when we tackle the concept of commodity trading, we are dealing with some commodities and exchanging them with other items.
In the present setup of global commodity trading, the phrase “other items” refers to money. Somebody’s going to buy commodities and another is going to sell them. Once you are in trading commodities, you will be the buyer and you are going to buy from someone or some kind of financial entity.
You are going to make an investment in a commodity and hope your invested money will come back to you with a higher value. The increase in value can only happen if the said commodity increases in price over a predetermined period of time. If the commodity decreases in value, you will lose a part or even all of your invested money.
For people who invest in stocks, they hope that the stocks that they invest in will increase in value. For currency traders, they expect that the currency they invest in will increase in value against another currency. This is how these systems work.
Commodity trading is seen to be getting more popular. The simplest reason that we can find for this trend is that it is easier to do compared to other forms of trading.
There are no deep analyses to do like one does in stock trading. There are usually no minute-by-minute checks required, although some commodities become volatile in price during unusual events like catastrophic events or major political events happening locally or worldwide. But besides those times, a commodity trader doesn’t have to worry about quick price changes in the market.
As for agricultural commodity, which is one of the various options that you can use in commodity trading, prices are dependent on weather conditions, and because weather doesn’t have that unanticipated effects most of the time, you can usually easily predict what it’s going to be in the next months or so. There’ll be no such surprises attending unlike the other forms of trading, which is very advantageous to commodity traders.
What are the options for commodity trading? There are many options you can choose from. You can trade using only one or many commodities at the same time. They are actually raw materials used in making products. Examples of raw materials are oil, silver and gold.
Here’s a 4-category list for your reference:
Other ways of categorization are employed. An example is a two-division categorization:
Now people are asking: Is commodity trading safe? This question has been answered in the affirmative several times. In particular, an Indian expert, with an indirect response to the question, said that it is the most viable alternative to other trading forms. According to her:
There is also an understanding that when stock prices go up, commodity prices go down. Stock market players are therefore encouraged to incorporate commodities in their portfolio. When stock prices start falling, they can find a safe haven in their commodity investments and continue investing. Wise farmers grow different crops.
For everyone – long-time traders and beginners who are just taking the first step in their trading life – there’s really no designated time for commodity trading. Every day is a commodity trading day. It’s because commodities are sold and bought EVERYDAY. Even in those times when commodities have to take the beatings because of unexpected, undesirable events, the raw materials for making products continue to be bought and sold – and NOT A DAY IS AN EXCEPTION.
Should you invest in gold when the price is low? Definitely yes! It’s because that commodity is going to pick up somewhere near the future. Jewelry using gold will not stop using it. Currencies will forever be in existent and many of them use gold.
Same for wheat! People will not stop eating bread and continue to use wheat products for other purposes.
So, when should you do trading commodities? It is NOW.
You need a guide to walk you through the process. First, visit Trading Toplist.com (tradingtoplists.com). We have lists of people and entities called brokers for trading commodities.
Look over those listings. These lists contain businesses operating in the US, Europe and elsewhere. Check the commodities trading company list based on your location and language. If you’re a European, you can go for a European broker. If you’re an African, feel free to choose an African broker. But no one is limited based on descent or area of location. An African may opt for a broker whose base of operation is in the US.
Now these commodities trading firms are not one and the same in terms of how they operate. They have different approaches to trading and different businesses linkages. Know how each operates and how they can benefit you.
Some of the brokers in the lists offer one or all of the following:
Trading Toplist.com’s goal is to lead traders to the right partners who can best help them. When you are done choosing your broker, do confer with Trading Toplist regarding your choice. We will show you the pros and cons of your choice.
Here we put more details on how commodity trading works and how you can start smoothly. Generally, there are three main steps:
Determine the amount of money you can invest:
Know how much money you are willing to invest. Remember that there are risks involved and mistakes can turn into large losses. On the other hand, commodities are aid to be able to reduce overall risks for people with diversified portfolio. Know how much you are willing to risk through commodity trading.
Open an account:
After choosing your broker, you can now open an account with them. It is the broker that will allow you to deposit your money that they will invest in securities. Commodity is a type of “securities”.
Take note that this is not the same with investing in physical commodities. For instance, you bought gold and store it in your own property. This investment did not enter the securities market at all. But this type is not realistic for many investors, as managing physical commodities is usually difficult for them. This can become more cumbersome when it comes to perishable goods such as wheat or oil. There are also shipping and storage costs that go along with physical investment.
Deposit your money:
Be careful with your first deposit. There’s really no need to put in a large sum of money at first, because you are still unfamiliar with this market. The better way is to build your position over time as this can lower the risk.
After depositing money into the account, it’s time to find someone who can help you determine the right commodity to invest. Understanding the commodities market is a herculean task that requires expertise and knowledge. Here are some ways you can invest in the commodities market:
This is for people who have already been trading for quite a time now. The first advice is to keep your asset allocations balanced. It is too risky for your finances to put all your money in one investment. Diversify. Put your money in different commodities. Consider commodity-related investments as well.
However, there is a limit set for commodity trading. The advice is to put only 5-10% of your money into commodity investments.
Periodic rebalancing of your portfolio is also advised. Do this at least twice a year. At each point, determine which of your shares/stocks have gained money and which ones are making you lose money. Buy and sell accordingly.
It’s easy to start:
Starting to trade is a very easy process. Just scroll up this page and check the list. You may research on your own about the broker you think will suit your preferences.
Brokers in this list have been reviewed carefully by our editorial team. You can easily check what each broker requires like minimum deposits, identification, personal accounts, etc.
Check for additional services that these brokers provide. Some brokers offer 24/7 support, while others offer platforms in different languages, tutorials, guides and demo accounts. These features are considered helpful to be a successful commodities trader.
It is our mission to help beginners make the right choice. Our brokers are trustworthy and licensed. We have checked them manually. If they have not been investigated carefully, they will not land in this list and they have no business staying in our site.
If you want to trade right away, we allow that. But if you’re one who needs to check details carefully, we will help you do that. We have available reviews on these brokers. You can check current and past clients to get more details. Check our separate pages featuring reviews of our brokers.
Don’t get anything wrong. There’s no competition among the brokers in the list. They are equally good, but only offering different services and offering different options. They are different in their own way. How you perceive each depends on your needs. You might see one broker offering better options. That’s because of the specific needs that you have.
Some brokers have better offerings for newcomers – things like demo accounts or low deposits. More experienced traders may not be happy with the same trader. So it all depends on your needs. Always give premium importance on your needs, and base on those, choose a broker.
We reiterate that these brokers are licensed. That means you can check with them their certification and eligibility. Check their place of operations as we can’t do this for you. For your convenience, we can give you the countries where they are operating, so they will be easy for you to determine the right agencies to ask your queries to. For example, if we tell you that the broker is operating in the US, you can check with the BBB or other related agencies tasked to verify brokers’ licenses. We will be happy to be of assistance to you every step of the way.
The majority of those included in the list are registered in EU countries. Take note of that. This gives them the full right to operate in all of Europe. It might be necessary then that you check the members of the European Union first and which particular state is in question. It is important that you also check if there are particular provisions that are only applicable to that state. For any inquiries on this matter, you can check with our representatives.
When you are dealing with an EU broker, this is an advantage to you. This is because EU brokers are considered to be some of the safest in the world. Safety is of utmost importance in the European Union. Financial authorities in the EU are connected with one another in the whole union. That’s a good sign for the security of your money and that advantage is applicable for traders residing in other territories like the US, Australia, Middle East, Asia, South America, etc.
Signing up with more than one broker is possible. That is much very welcome. If you have the intention to do so, do check with us, as you might need guidance on that. We will try to see if the combination of brokers you chose will be advantageous to you. You can check our demos for combined-broker approaches. The advantage for this approach is that doing so will be an easy way to find the broker that fulfills your own personal criteria.
Commodity trading can be your hobby or the main source of your income. Whatever commodity trading ultimately means to you, take note of the following advantages:
Check these minor drawbacks:
We’ve done the preliminaries on what you can do. Here we want to give some pieces of advice for you to enjoy commodity trading, set your goals, and find fulfillment for yourself and probably, for all your loved ones. In all, this section summarizes what we’ve already presented:
You have many choices for commodity trading. Think of raw materials, these are the ones that you can use to trade commodities. So, think of gold, silver, oil, soybeans, rice, etc. If you feel an affinity to any one of these raw materials, it is probably good to trade with that.
When choosing a broker, do make sure that you perform extra checks or background investigation. Tradingtoplists.com welcomes all inquiries related to such matters.
Last year, Sudan expected that it would have a deficit on oil and crude supplies. Its debts caused the shortage....Read more