Commodities are physical products that are having their worth and are sold in the open market. The products which we use in our day to day life are classified as commodities and they can be traded in the financial market.

There are various ways to trade commodities such as commodity derivatives that are known as futures, options, forwards, CFDs and more. Traders can choose according to their compatibility among these options and earn profits from the market.

Commodity Categories

Commodities are mainly divided into four main categories. The classifications are done on the basis of their use, industry, and other factors. Therefore, the categories are as follows:

Metals

All precious metals or semi-precious metals are included in this category of commodities. For example, gold, silver, platinum, copper, and many other metals.

Energy

The products used to generate or produce energy are known as energy products. For example, crude oil, natural gas, gasoline, and other energy products.

Agriculture

Agricultural produce or farm produces are mentioned in this category of commodities. This category includes products like wheat, rice, corn, coffee, and others.

Livestock

Animals that are used to extract any food material or used as food are known as livestock. The examples of this category are cattle, hen, goat, and many more.

Commodity Trading Strategies

Among various strategies, traders need to figure out the best strategies that can bring maximum profits. The best trading strategies that are highly profitable are shortlisted by us for traders. The trading strategies are:

Breakouts

Breakouts can also be said as short term movements in the price of the commodities. Traders need to be active in the market before a breakout is about to arrive. The latest news of the market can help in recognising a breakout of the market.

Generally, breakouts occur close to the resistance and the support line. But the support and resistance lines are not a strong indicator of breakouts. Traders need to consider other sources also if they are investing in the market. Because sometimes the market makes new trades and does not follow the old one.

Range Trading

For range trading, traders need to study price charts using many indicators and make a proper analysis of the same. Along with other indicators, also study the support and the resistance line for better prediction of the prices.

Factors such as demand and supply also affect the prices. So, keep an eye on the other factors also along with studying price charts. Make an analysis after considering all the market factors such as news, supply and demand, and many other factors. After considering all this, traders can make a good analysis.

Fundamental Trading

Fundamental trading is one of the best trading strategies that involve studying both fundamental and technical indicators. The fundamental factors are the market news, economic, and other similar factors.

On the other hand, the technical factors are studying the price chart and using indicators and much more. Studying both types of indicators at the same time can increase your chances of getting success in commodity trading. After getting success, your potential of trading will also increase automatically based on past performance.

Pros of Commodity Trading

There are several advantages of trading commodities and traders should know all these benefits. The pros of commodity trading are:

• It adds diversification to the portfolio of a trader.

• This market moves in an adverse direction as compared to the stock market.

• It is a good option to indulge in seasonal trading and earning good profits.

• Traders have an extremely wide range of tradable options to choose from.

• There are various ways to enter a position and make money.

Top Brokers

Traders need a good broker so that they can trade in the market in a better way. You have to choose from a wide range of brokers. We have shortlisted a few brokers among the top brokers for your convenience. The brokers are: NordFX Review

These are the best brokers which are regulated and offering the best trading features. Traders can even start with a demo trading account to have market exposure. They get easy access to educational materials, analytical tools, and others while trading with these brokers. Therefore, for easy trading traders can go with one of these brokers.

The Bottom Line

Commodity trading is a profitable option for traders. They can earn good returns as well as diversify their portfolio. Study the market and choose a better trading strategy to invest in the market.

Determine a trading goal and style and then choose a trading strategy that fits your requirements. While choosing a broker also, be careful and select the right one that is fulfilling your needs.