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The Essential Guide
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Author
Marko Csokasi
Risk Warning: Your Capital is at Risk.
This commodity trading guide explores the basics of trading before you put your money on the line.
If you are already familiar with the basics, you can jump straight ahead to our list of regulated brokers in compared side-by-side.
By the time you finish reading this page, you will know how to make an informed decision on what you want to trade based on the type of asset and instrument to suit your needs.
You’ll also have an idea about different ways to trade your chosen instrument, like CFDs, stocks, or options.
Contents
- What Do You Want To Trade?
- Ways To Trade Commodities
- How To Choose A Commodity Trading Platform
- Regulated Online Brokers
- FAQs
Also, we simplify what margins and leverages are in trading and how this information can help you choose a regulated online trading platform with the right account type, fee structure, and trading features.
Recommended Online Commodity Brokers in
Here are some of the top online commodity brokers available to residents of .
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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74%-89% of retail investor accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.
If you’re unfamiliar with what to look for when choosing a broker, you might want to see our seven factors to consider before choosing a broker.
What Do You Want To Trade?
When you decide that you want to trade commodities with a broker, there are two primary factors to become familiar with. These are:
- The type of instrument you want to trade
- The type of commodity categories you want to trade
The type of instrument you choose will depend on whether you want to take physical ownership of an asset (eg, bullion) or trade on its price movements — as well as the contract commitments you’re willing to undertake
As for the type of commodity, you need to research the asset classes offered by your potential brokers. Some may offer precious metals and agricultural commodities, others may offer energy commodities, or, some can have all three!
Ways To Trade Commodities
There are several ways to trade commodities and your choice of trading instrument type is largely determined by your answer to:
- Do you want ownership of the commodity?
- Do you want to trade physically or online?
- Do you want to commit to a trade or have the choice to withdraw until a given time?
Here are 7 different ways to trade commodities with the above points taken into consideration, along with storage costs, ownership, contract expiry, and leverage.
IMPORTANT: CFDs are not available in the USA due to local regulation, and regulated brokers do not accept US citizens or US residents as clients.
| Trading Method | Ownership | Management Costs | Security Costs | Expiry Date | Mgmt Cost | Leverage |
|---|---|---|---|---|---|---|
| Bullion | ✅ | ✅ | ✅ | ❌ | ❌ | ❌ |
| CFDs | ❌ | ❌ | ❌ | ❌ | ❌ | ✅ |
| Futures | ❌ | ❌ | ❌ | ✅ | ❌ | ✅ |
| Options | ✅* | ❌ | ❌ | ✅ | ❌ | ✅ |
| ETFs/Mutual Funds | ✅ | ✅ | ✅ | ❌ | ✅ | ❌ |
| Shares | ✅ | ❌ | ❌ | ❌ | ❌ | ❌ |
*If executed
When you trade commodities as financial derivatives instruments, they’re officially classed as ‘securities’. See which US states are most dependent on securities and other investment-related industries.
What Are Margins & Leverage?
When they start, traders are often confused about the difference between leverage and margins, so here is a simple explanation.
Margin in trading is expressed as a percentage and defines the fraction of the full trading amount that a trader needs to provide to open a position. Margin trades allow a trader to put up a defined chunk of money to execute a larger trade.
Example of Margin:
A broker’s ‘margin requirement’ on a $1000 gold CFD trade is at 5%. The trader would need to deposit 5% of $1000 to open the trade, which comes to $50.
Leverage in trading is expressed as a ratio and is determined by the margin value. It shows the trade’s value in relation to the deposit amount.
Example of Leverage:
A 5% margin requirement on a $1000 would mean a $50 real-money deposit. This would give the trader a leverage of 1:20, meaning, the trade amount is 20x more than the initial money put forward.
Please note, this is an example – not a recommendation.
How To Choose A Commodity Trading Platform
When choosing an online broker, our golden checklist includes seven things to consider:
- ☑︎ Regulators: Brokers are regulated by organizations to protect consumers in . Regulators also determine the countries where the broker is allowed to operate. The more established the regulator, the stricter the guidelines are for a broker. The FCA and SEC are good examples of tough regulators.
- ☑︎ Account Type: Brokers offer different account tiers: most commonly ‘standard’ and ‘professional’ accounts. Standard accounts have simpler verification processes, while professional accounts require more trading experience and capital.
- ☑︎ Instruments and Products: Brokers offer different ways to speculate on trading instruments and different categories of products. Check to see that the broker offers what you want to trade.
- ☑︎ Fees: Broker fee structures vary. Some charge deposit and withdrawal fees, while others don’t. Inactivity fees are also common, and different payment methods may be cheaper to use than others.
- ☑︎ Leverage and Margin: If you want to open a higher value trade with a significantly lower deposit, you’ll need a broker with low margin requirements and high leverages.
- ☑︎ Platform Features: The quality of a trading platform is determined by its ease of use and the trading tools provided. Look for features like charting features, technical analysis tools, platform design, and educational resources that match your level of experience.
- ☑︎ Mobile: Does the platform offer a mobile app or in-browser mobile trading? Look for how rich the mobile experience is compared to the desktop platform.
Regulated Online Brokers
We listed our recommended online commodity brokers at the beginning of this guide. Now, we go a little deeper to compare them while keeping in mind the above checklist.
IMPORTANT: CFDs are not available in the USA due to local regulation, and regulated brokers do not accept US citizens or US residents as clients.
Please Note: Availability subject to regulations. Cryptocurrency CFDs are not available to UK retail traders.
Plus500 Has Hundreds Of CFDs for All Trading Levels
Regulated by 7 organizations with over 2,000 trading instruments available, Plus500 offers a free demo account for traders wanting to try out the platform.
Support is available via live chat and e-mail in more than 60 countries.
- Regulators: FCA, ASIC, CySec, FSA, MAS, FMA, FSCA
- Account Types: Real Money and Professional
- Instruments and Products: CFDs on Indices, Commodities, Forex, Cryptocurrencies (availability subject to regulations), Shares, Options, and ETFs
- Fees: Overnight, currency conversion, inactivity, guaranteed stop orders (See details in our Plus500 Review)
- Maximum Leverage: Up to 1:30
- Top Platform Features: Position management with advanced filters, a platform available in over 32 languages
- Mobile: Android + iOS apps
Start Trading Now atPlus500
Please Note: Availability subject to regulations. Cryptocurrency CFDs are not available to UK retail traders.
Forex.com Lets You Learn To Trade On The Go
Forex.com has been active for over 20 years in 140+ countries.
They offer detailed educational resources for all trading levels and 24/5 support via e-mail, live chat, and phone for all traders.
- Regulators: FCA, MiFID, ASIC, SFC, CIMA, IIROC, FSA, CFTC, NFA
- Account Types: Standard, Commission, Direct Market Access (DMA), and Professional
- Instruments and Products: Forex, Spot Gold & Silver, Futures, Options, CFDs on Indices, Shares, Commodities, Cryptocurrencies* (except Canada)
- Fees: Commissions on Shares CFDs, Fees on currency conversions, overnight, inactivity, rollovers, same-day withdrawal, dividend adjustments, shorting (See details in our Forex.com Review)
- Maximum Leverage: Variable (visit Forex.com for details)
- Top Platform Features: MetaTrader 4 (MT4) compatible, trading tutorials, advanced technical indicators
- Mobile: Android + iOS apps
Start Trading Now atForex.com
Please Note: Availability subject to regulations. Cryptocurrency CFDs are not available to UK retail traders.
Fortrade Has An Interactive Platform Tutorial
More than 300 instruments traded as CFDs, including precious metals, energy, and agricultural commodities.
Fortrade offers traders a practical interactive tutorial to get started on the platform.
- Regulators: FCA, ASIC, CySec, NBRB, CIPF, IIROC
- Account Types: Standard, Professional, and Islamic
- Instruments and Products: CFDs on Indices, Forex, Shares, Commodities, ETFs, and US Treasuries
- Fees: Wire transfer withdrawal fee, overnight funding fee, dormancy fee (See details in our Fortrade Review)
- Maximum Leverage: Variable (visit Fortrade for details)
- Top Platform Features: MetaTrader 4 (MT4) compatible, interactive startup tutorial
- Mobile: Android + iOS apps
Start Trading Now atFortrade
AvaTrade Offers Generous Leverages And 10+ Cryptocurrency CFDs
AvaTrade offers a variety of CFDs, forex pairs, and options with a choice of six desktop trading platforms and two mobile applications.
This broker offers enough variety that’s feature-packed for an advanced trader and simple enough for all trading levels.
- Regulators: FSA, ASIC, FFAJ, FSCA, ADGM, BVIFSC, ISA, UKNF, IIROC
- Account Types: Retail and Professional
- Instruments and Products: Forex, Options, CFDs on Indices, Shares, Commodities, Cryptocurrencies, ETFs, and Bonds
- Fees: Inactivity fee and overnight fee (See details in our AvaTrade Review)
- Maximum Leverage: Up to 1:30 (1:400 for traders outside the EU, except Australian traders)
- Top Platform Features: AvaTrade Go and AvaOptions specialist mobile apps, choice of six desktop platforms, easy-to-use analytics, eBooks, and educational video series
- Mobile: Android + iOS apps
Start Trading Now atAvaTrade
eToro Is A Mobile-Centered Social Trading Platform
eToro is known as the ‘social trading platform’ since traders can track the performance of other traders and copy them directly.
Traders have access to several categories of CFDs with a user-friendly mobile application on iOS and Android.
- Regulators: FCA, ASIC, CySec, FinCEN
- Account Types: Standard, Professional, and Islamic
- Instruments and Products: CFDs on ETFs, Stocks, Indices, Commodities, Cryptocurrencies*, and Forex
- Fees: Inactivity fee and overnight fee, withdrawal fee, cryptocurrency fees, conversion fee, wallet fee (See details in our eToro Review)
- Maximum Leverage: Up to 1:30 (higher for Professional Accounts)
- Top Platform Features: Social trading to duplicate trades, social trading news feed, interactive analytics, and market sentiment tools
- Mobile: Android + iOS apps
Start Trading Now ateToro
Please Note: Availability subject to regulations. Cryptocurrency CFDs are not available to UK retail traders.
Markets.com Lets You Personalize Your Platform
Markets.com offers five choices of trading platforms, including Marketsx exclusively for real stock trading.
The broker accepts a range of payment methods like PayPal and Skrill.
- Regulators: CySec, FSCA, FCA, ASIC, FSC
- Account Types: Retail and Professional
- Instruments and Products: Stocks, CFDs on Bonds, Commodities, Cryptocurrencies*, Forex, Indices, ETFs, Blends, and Shares
- Fees: Overnight fee, rollover fee, currency conversion fee (See our Markets.com Review for details)
- Maximum Leverage: 1:30 (1:300 for Professional accounts)
- Top Platform Features: Close to 100 color-coded technical analysis indicators, very low minimum withdrawals, and social trading sentiments
- Mobile: Android + iOS apps
Start Trading Now atMarkets.com
Please Note: Availability subject to regulations. Cryptocurrency CFDs are not available to UK retail traders.
City Index Is A Mobile Award Winner That Offers Spreadbetting
With a detailed ‘Getting Started Guide’ and an advanced trading platform with ample tutorials, City Index caters to all levels of traders. They offer CFDs across eight different asset classes.
- Regulators: FCA, ASIC, MAS, MiFID
- Account Types: Standard and Professional
- Instruments and Products: Spreadbetting, CFDs on Forex, Cryptocurrencies*, Shares, Indices, Commodities, Bonds, Interest Rates, and Options
- Fees: Equity commission, currency conversion, overnight, inactivity, same-day withdrawals, guaranteed stop orders, CFD borrowing for shorting (See details in our City Index Review)
- Maximum Leverage: 1:200 in UK, 1:30 in Australia; 1:50 in Singapore (1:400 for Professional accounts)
- Top Platform Features: Mobile chart and technical analysis with over 60 indicators, MT4 and AT Pro compatible, and live webinars
- Mobile: Android + iOS apps
Start Trading Now atCity Index
Please Note: Availability subject to regulations. Cryptocurrency CFDs are not available to UK retail traders.
easyMarkets Lets You Cancel and Reverse Trades
easyMarkets offers CFDs, Vanilla Options, Forwards, and other derivatives on forex, commodities, indices, cryptocurrencies, and shares. They offer a free 7-day demo account that becomes permanent with a funded account.
Support is available via email, phone, fax and live chat in more than 150 countries.
- Regulators: ASIC, CySec, FSA, BVIFSC, and FSA Seychelles.
- Account Types: Retail and professional
- Instruments and Products: CFDs on Indices, Commodities, Forex, Cryptocurrencies, Shares
- Fees: None (See details in our easyMarkets Review)
- Maximum Leverage: Up to 1:30
- Top Platform Features: 3 ways to trade on mobile apps, dealCancelation, Forward deals
- Mobile: Android + iOS apps, MT4 mobile
Start Trading Now ateasyMarkets
FXCM Has Custom Baskets And Multiple Platforms
FXCM offers CFDs , baskets, and spreadbetting on forex, indices, commodities, cryptos*, and stocks.
Traders try out the FXCM platform with a free demo account that comes with £50,000 play money.
Support is available via phone, SMS, live chat, and e-mail 14 languages.
- Regulators: FCA, ASIC, FSCA, BaFIN, ACP, and CONSOB
- Account Types: Retail, active trader, and professional
- Instruments and Products: CFDs and spreadbetting on Indices, Commodities, Forex, Cryptocurrencies*, Shares, and baskets
- Fees: Overnight fee, inactivity fee, wire withdrawal fee, currency conversion fee, and negative balance fee (See details in our FXCM Review)
- Maximum Leverage: Up to 1:30
- Top Platform Features: Customizable trading platform with add-on apps, NinjaTrader, streamlined mobile app
- Mobile: Android + iOS apps, MT4
Start Trading Now atFXCM
Please Note: Availability subject to regulations. Cryptocurrency CFDs are not available to UK retail traders.
HYCM Boasts Over 40 Years Experience With Both MetaTrader Platforms
HYCM offers over 200 forex and CFD instruments trading on forex, indices, commodities, stocks, ETFs, and cryptocurrencies. Registered clients can use a free demo account to practice trades.
Support is available via email, phone, fax, and live chat in 12 languages.
- Regulators: FCA, BaFIN, CySec, CIMA, DFSA
- Account Types: Fixed, Classic, Raw, and a demo account
- Instruments and Products: CFDs on Indices, Commodities, Forex, Cryptocurrencies*, Shares, and ETFs
- Fees: Commissions on Raw accounts, fees on some withdrawal methods, overnight fee, guaranteed stop orders have wider spreads (See details in our HYCM Review)
- Maximum Leverage: Up to 1:30 (major forex)
- Top Platform Features: Offers MetaTrader 4 & 5, fast execution
- Mobile: Android + iOS apps
Start Trading Now atHYCM
Please Note: Availability subject to regulations. Cryptocurrency CFDs are not available to UK retail traders.
Pepperstone Is One Of The World’s Largest Forex Brokers
Pepperstone is regulated by 7 organizations with over 180 trading instruments available. Traders can get a free demo account to try out the platform for 30 days.
Support is available via phone, live chat, and e-mail in languages.
- Regulators: FCA, ASIC, CySEC, BaFIN, CMA, DFSA, SCB
- Account Types: Standard, Razor, and Islamic
- Instruments and Products: CFDs on Indices, Commodities, Forex, Cryptocurrencies*, Shares
- Fees: Overnight fee, markup on raw spreads, commissions on Razor account (See details in our Pepperstone Review)
- Maximum Leverage: Up to 1:30 for other retail accounts
- Top Platform Features: cTrader, MT4, MT5, cAlgo integration, Facebook and Google sign-in, Autochartist, Smart Trader tools
- Mobile: Android + iOS apps
Start Trading Now atPepperstone
Please Note: Availability subject to regulations. Cryptocurrency CFDs are not available to UK retail traders.
XM.com Features No Re-Quotes And No Rejections
XM has more than 3.5 million clients in almost 200 countries with access to trading 1,000+ instruments. Traders can have up to 5 unlimited demo accounts.
Support is available via email, phone, call back, and live chat in 19 languages.
- Regulators: CySEC, IFSC, FCA, ASIC, DFSA, ACPR, AFM, BaFIN, CNMV, CONSOB, FI, FIN-FSA, UKNF, HNB
- Account Types: Standard, Micro, and XM Zero
- Instruments and Products: CFDs on Equity Indices, Commodities, Forex, and Shares
- Fees: Overnight fee and inactivity fee (See details in our XM Review)
- Maximum Leverage: Up to 1:30
- Top Platform Features: XM Trader and MetaTrader 4 & 5, personal account managers, free daily forex webinars
- Mobile: Browser or Android + iOS apps
Start Trading Now atXM.com
XTB Is A European Broker Offering Cash Back On Trading Volume
XTB offers traders 1,500+ trading instruments, as well as a free 4-week demo account with 100,000 in play money for traders wanting to try out the platform.
Support is available via live chat, phone, and email in more than 100 countries.
- Regulators: FCA, CySEC, ASIC, FSCA, BVIFSC
- Account Types: Retail and Pro
- Instruments and Products: CFDs on Indices, Commodities, Forex, Cryptocurrencies*, Shares, and ETFs
- Fees: Inactivity, Deposit, Withdrawal, Penalty interest, Italian CFDs (See details in our XTB Review)
- Maximum Leverage: Up to 1:30, depending on product and country
- Top Platform Features: XStation 5, market sentiment heat maps, trader’s calculator, market order depth in 17 languages
- Mobile: Android + iOS apps
Start Trading Now atXTB
Please Note: Availability subject to regulations. Cryptocurrency CFDs are not available to UK retail traders.
Robinhood Has Streamlined Stocks and Cryptos For US Traders
Robinhood is a US-only broker that offers trading on thousands of international stocks, over 1,900 ETFs, and cryptocurrencies.
Support is available via email and social media.
- Regulators: SIPCS, FINRA, SEC
- Account Types: Instant, Gold, and Cash
- Instruments and Products: Shares (including fractional shares), ETFs, Options, Gold, and Cryptocurrencies
- Fees: Regulatory fee, trading fee, fees on foreign stocks and transfers, Gold account monthly fee
- Maximum Leverage: None
- Top Platform Features: Simple platform, primarily on mobile.
- Mobile: Android + iOS apps
Start Trading Now atRobinhood
Libertex Features One Platform For All Devices
Headquartered in Cyprus, Libertex offers traders 200+ trading instruments available in 27 countries, as well as a free demo account with no expiry for traders wanting to try out the platform.
Support is available via live chat, phone, and ticket in 4 languages.
- Regulators: CySEC, CIF
- Account Types: Standard and professional
- Instruments and Products: CFDs on Indices, Commodities, Forex, Shares, and ETFs
- Fees: Overnight fee and transaction fee
- Maximum Leverage: Up to 1:30 (1:600 for pro accounts)
- Top Platform Features: One platform for all devices, MetaTrader 4, instant withdrawals, no spreads
- Mobile: Browser-based
Start Trading Now atLibertex
CMC Markets for Traders from the UK and Australia
CMC Markets is regulated by 5 organizations with more than 10,000 trading instruments. There’s a free demo account to try the fully-featured, customizable trading platform on both mobile and desktop.
Support is available via live chat and e-mail, 24/5.
- Regulators: FCA, BaFin, FSCS, ASIC, MAS, IIROC
- Account Types: Retail, Professional, Real Shares (AU + selected countries only)
- Instruments and Products: CFDs on Commodities, Cryptocurrencies*, Shares, Share Baskets, Indices, Treasuries, Forex, Real Shares (AU + selected countries only)
- Fees: Spreads, overnight, currency conversion, inactivity, guaranteed stop orders, rollover, inactivity (See full fee schedhule in our CMC Markets Review)
- Maximum Leverage: Up to 1:30 (Retail), up to 1:500 (Professional)
- Top Platform Features: Highly customizable, tiled platform design with complex analytics, filter asset browsing, and more.
- Mobile: Android + iOS apps, MT4
Start Trading Now atCMC Markets
Please Note: Availability subject to regulations. Cryptocurrency CFDs are not available to UK retail traders.
ETX Capital With Transparent Spreads & MT4
ETX Capital offers 5,000+ trading instruments and is regulated by four international regulatory bodies. The free demo account has no expiry and traders get access to a decent range of technical analysis tools.
You can reach customer support 24/5 via live chat, email, and phone.
- Regulators: FCA, FSCA, CySec, MiFID II
- Account Types: Retail MT4, Retail In-House, Professional
- Instruments and Products: Spread betting, CFDs on Forex, Indices, Shares, Commodities, Bonds, Cryptpcurrencies*, and Interest Rates
- Fees: Spreads, overnight, inactivity, withdrawal (See all fees in this ETX Capital Review)
- Maximum Leverage: 1:30 (Retail)
- Top Platform Features: Good range of technical analysis tools, discounted spreads on in-house platform, multiple trading dashboard layouts.
- Mobile: Android + iOS apps, MT4
Start Trading Now atETX Capital
Please Note: Availability subject to regulations. Cryptocurrency CFDs are not available to UK retail traders.
*Subject to Availablity
FAQs
How do commodity brokers make money?
Some commodity brokers charge a commission on trades, although most ‘no-commission’ brokers make money on a traded product’s spread. A spread or ‘pip’ is the difference between the price markers of opening a short position and a long position. Spreads and pips can be fixed or variable, but mostly they’re the latter.
Which broker is best for commodity trading?
The best broker for commodity trading depends on your individual needs and preferences as a trader. Things that will shape your decision include what you want to trade, how you want to trade it, and which brokers are regulated in your country of residence.
Other factors to consider are margins and leverages, platform features and device compatibility, and whether you can afford the fees charged by the broker.
What is the minimum amount required for commodity trading?
The minimum amount to trade commodities is determined by the minimum deposit requirement of a commodity broker. Fortrade is a broker with a minimum deposit requirement of just $1 while other brokers like eToro and FXCM set a minimum deposit of $50.
Traders can get started with other regulated brokers like Plus500 and Forex.com with a $100 initial deposit.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74%-89% of retail investor accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.
