| Commodities are often a favourite arena to trade for many Spread Betting clients as they can be volatile. And volatile trading means there are good profits on offer although, sadly, losses as well.
Most commodity markets, apart from for example Gold, Silver and Crude Oil, are traded via quarterly bets and these can vary from commodity to commodity. So before you trade it's important to find out both the right month(s) to trade and when they expire - this can be done via your broker's help desk.
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Range of Commodity markets
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Metals
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Energy
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Agricultural
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Meats
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Softs
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Misc.
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| Gold |
Crude oil (NY) |
Soybeans |
Pork Bellies |
Cocoa (NY) |
Cotton |
| Silver |
Crude (London) |
Soybean Oil |
Lean Hogs |
Coffee (NY) |
Lumber |
| Palladium |
Gasoline |
Soybean Meal |
Live Cattle |
Sugar (#11) |
Frozen OJ |
| Platinum |
Natural Gas |
Corn |
Feeder Cattle |
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Wheat |
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Oats |
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Points to consider when trading commodity spread bets
They can be extremely volatile
Commodities can get extremely volatile for many reasons such as adverse weather, threat to supplies (due to civil wars in commodity producing countries), storage problems and disease.
Plus many of them have distinctive trading personalities so bear this in mind when starting out. For example, if you trade Sugar or Wheat start with small positions till you get a better idea of the market's character and how it can move.
Also many commodities have quiet and busy seasons. For example, during the winter months markets such as Corn and Wheat should be fairly subdued. But from Spring onwards all hell can and often does break loose as the weather plays a more dominant role in the growing and harvest.
Understanding points such as these will often set you apart from the spread better who often jumps into a new markets at the deep end. As the saying goes -
'Time spent in reconnaissance is seldom wasted'
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Stockmarket/Trading Providers
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Old crop and new crop
A further point to note about commodities that are harvested, such as Coffee and Wheat, is the 'old crop' and 'new crop' contracts.
Harvested commodities have a yearly cycle and so it's possible to see very different prices and volatility levels between the different tradable months. This is because one month might relate to this year's crop and another to next year's - hence old crop and new crop.
Important - What is a tradable point
This is something to watch out for and indeed again highlights the importance of researching exactly what you're trading and looking for any subtleties and nuances.
For example, never trade any spread bet, including commodities, unless you know exactly what a tradable point is. As you know spread bets are placed via a stake (in pounds) x point, and a point in Coffee is worth 0.1, a point in heating Oil is 1 and a point in Soybeans is 0.25.
Commodities include the Metals
Gold has invariably been a favourite of the speculator, and it's probably the number one commodity traded via spread bets. As Gold is so popular most of the business will be done via a Daily Spot market where the spread bet quote is based off the Spot cash price of Gold. Incidentally a point in Gold is 0.1.
Both Silver and Crude Oil are also offered via daily Spot markets. Other tradable metals are Platinum, Palladium and the industrial metal Copper.
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