As a rule, commodity trading online is not particularly suited to beginner traders with limited funds because of the fact that traders need to have access to a margin of over $1000 and a basic idea of how to trade commodities. Investors who wish to engage in commodity trading online are also usually expected to know how to trade commodities and have a strong trading background due to the fact that some knowledge on fundamental and technical analysis is required in order to make informed trading decisions.
However, since binary options brokers introduced commodity options, traders who aren’t otherwise comfortable on how to trade commodities can stand to make profit with much less effort than previously required. This is not to say that traders still don’t stand to lose funds due to commodities’ usual levels of volatility, but it is safe to say that commodity trading online is easier primarily because traders aren’t limited by high levels of required margin when trading with binary options brokers.
Trading commodities is similar to trading any other asset on a binary options platform, making the task easier for beginners who don’t have a strong knowledge of how to trade commodities. The index value of most commodities is set in U.S dollars since they are most commonly traded with that currency. Let’s use a popular commodity as an example: XAU (gold)/USD. The price of Gold is being quoted with the U.S dollar as reference.
A trader speculates that the rate of Gold will rise above the strike rate after 30 minutes and therefore places a CALL option. A correct prediction means the trade is In The Money – and profit is made on top of the initial investment amount.
This page contains a list of the most popularly traded commodity assets as well as detailed information on each commodity, showing novice traders how to trade commodities efficiently.