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Your Guide to Commodity Trading in 2023

Commodity trading is one of the most diversified yet rewarding types of trading. For traders who aspire to leverage their profits and diversify their portfolios, commodity trading can be the best option in 2023.

As a trader, "whether novice or skillful", you need to understand all about commodity trading before delving into this well.

So, we will guide you all the way to set off for your commodity trading journey. We will be covering:

  • What is Commodity Trading?

  • What factors should you consider when trading commodities?

  • The top 5 commodities to trade in 2023.

  • What benefits can you gain from trading commodities?

What is Commodity Trading?

Purchasing and selling goods that can be interchangeable with other goods of the same type. Some of these goods form the basics of the global economy, such as oil, gold, and coal, and other might be less important but still weigh on the economic level. Traders can buy and sell these goods on the spot or as futures and options. Commodities can help traders diversify their trading portfolio, especially since they possess an inflation-beating nature.

Key Takeaways:

-Commodities are essential goods that the global economy relies on, such as oil, metals, coffee, sugar, etc.

-They outperform stocks in times of market volatility and are an inflation-beating kind of trading.

-For investors, they can be a brilliant way to diversify investors' portfolios beyond traditional securities.

What Factors should you consider when Trading Commodities?

Although commodities can provide high value to your trading portfolio, you should still consider certain factors before trading. When making up your mind to trade in commodities, consider the following:

  • Liquidity: is it easy to purchase and sell this commodity you intend to trade with? Is there a high supply and demand for it? How well can you sell that entity, and the profit margin might you earn?

  • Consider the geopolitical status of the country you buy from: for instance, is there a war going on in the area or government you intend to buy from? Are there any economic sanctions enforced on that country?

  • Which kind of trading method do you want to use? For instance, do you want to use CFDs, futures or standard trading methods?

Once you answer all the above questions, you can start trading the chosen commodities. Beware that commodity trading is rather speculative, so you should be equipped with the proper knowledge and tools to make fruitful decisions.

The Top 5 Commodities to Trade in 2023

There are many commodities to trade out there, but not all can yield the same profits. Here are the most profitable commodities to sell in 2023 based on price changes over the last year:

1) Crude Oil

It is one of the fossil fuels found in nature. Crude oil is not only a source of energy but also can be used in many industries, such as:

  • Petrochemicals.

  • Production of textiles.

  • Production of fertilizers.

  • Production of steel.

  • Lubricants.

  • Plastics.

Crude oil prices are determined by the supply and demand factor, which depends on the geopolitical and economic status of the global economy.

2) Gold

Gold is one of the most traded commodities and can never run out of demand. Although it is sold regularly, it is relatively rare, which raises its competitiveness in order (around 170,000 worldwide).

3) Natural Gas

It's one of the most used fossil fuels worldwide and is used as an energy source and a fuel source. Again, supply and demand control the prices of this type of commodity, as it is a kind of rare material, thus more expensive to start than crude oil. Other conditions determine the prices of natural gas, such as weather conditions. In colder weather, the demand for natural gas surges higher than average.

4) Copper

Copper has many manufacturing applications as it is a reputable source of conducting heat and electricity. These applications can be:

  • Piping

  • Roof tiles.

  • Industrial machinery.

  • Electrical wires.

Though it's widely available, supply and demand for this metal are still high.

5) Coffee

It is one of the most fluctuating agricultural commodities as it is widely consumed and produced simultaneously. Brazil, Vietnam, Colombia, Indonesia, and Ethiopia are the world's major coffee producers. Some factors might affect the price of coffee, such as:

  • Weather conditions.

  • Geopolitical and economic conditions in the producing countries.

  • Oil prices (affect the transportation costs)

  • The greenback rates.

What benefits can you gain from trading commodities?

  • A diversified medium of trading allows room for traders to choose what suits their portfolio. You can trade in traditional selling and buying things, future contracts or even CFDs.

  • Commodity prices depend on supply and demand, you can predict when they will rise or fall, and hence you can purchase or sell.

  • In uncertain conditions (such as inflation, recession etc.), they can retain their values, thus making them a safer investment for any investor.

  • This is a brilliant way to diversify your portfolio as a trader.

A Quick Recap:

Remember that trading commodities are somewhat speculative; therefore, you might put your fund at risk. They can be volatile overnight, and you might lose your capital, so you must learn the best trading practices to prevent such a loss.

Trade with a trusted and experienced broker such as 9BULLS FX to gain more profits and get into the game. You will have access to educational courses and tools that will enable you to learn and thrive throughout your trading journey.


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