What is Commodities Trading?
Commodities are traded in the primary economic sector, rather than in the manufactured product space. Hard commodities are mined such as gold, silver and crude oil or extracted from drilling in the case of natural gas.
Khwezi Trade offers its clients the opportunity to trade the commodities market through a variety of CFD instruments, without having to physically take ownership of the asset. CFDs are traded on margin which can translate in potentially higher returns as well as increased risk.
CFDs on Commodities
CFDs are considered an efficient way to trade commodities due to leverage. A trader can use less capital to gain greater exposure to an underlying instrument. CFDs are a derivative product that allows traders to speculate on the price movements of the underlying instrument without taking actual ownership of the product itself.
Gold and silver are historically recognised as a store of value and have been used as a means of currency since around 600 BC.
Gold and Silver CFD traders can now participate in the commodity market to take advantage of the price movement of precious metals like gold and silver. Trade gold and silver with Khwezi Trade by using our state-of-the-art trading platform and experience stable spreads. Commodities such as gold and silver are measured in Troy ounces against the US Dollar.
The oil industry is one of the largest, low-cost providers of energy throughout the world providing millions of jobs. The transportation sector accounts for the largest share of oil consumption.
Trade oil CFDs, namely Brent Crude oil (BRE/USD) and West Texas Intermediate oil (WTI/USD) on Khwezi Trade’s popular MetaTrader 5 platform with the benefit of not taking ownership of the physical asset. Receive our Flexi Analysis with trade ideas twice a day and take advantage of the movement in the price of oil.
Factors that influence Commodities Trading
- Supply and Demand
- Currency valuation
- Geopolitical factors
At Khwezi Trade you can trade Commodities CFDs with leverage of 1:100 with a starting balance of R500.
The price of commodities
The price of a commodity is significantly influenced by a number of factors, the most important of which are supply and demand. When demand for a commodity increases, the price goes up; when the demand decreases, the price goes down. The value of a commodity also depends on its availability – if there is more of it available, the price will be lower, and if it is scarce, the price will be higher.
The price of commodities is also influenced by currency valuation. Commodities are usually priced in US dollars, so when the dollar strengthens, the prices of commodities tend to fall, and when the dollar weakens, commodity prices usually rise.
Inflation is another important factor that can influence the price of commodities. When inflation is high, the prices of commodities tend to rise, because it costs more to produce them. When inflation is low, the prices of commodities tend to fall, because it costs less to produce them.
Geopolitical factors can also influence the price of commodities. For example, if there is a war in a country where a particular commodity is produced, the price of that commodity may rise, because it becomes more difficult to produce it.
How to trade Commodities CFDs with Khwezi Trade
When commodity trading with Khwezi Trade, you speculate on the price movements of the underlying instrument without taking actual ownership of the product itself.
To trade a commodity, you will need a cfd trading account. Once you have opened an account, you can fund it using a variety of methods, including credit and debit cards, bank transfer.
Once your account is funded, you can start trading Commodities CFDs. To do this, you will need to use a trading platform. Khwezi Trade offers the MetaTrader 5 platform, which is one of the most popular trading platforms in the world. It is available for desktop, web, and mobile.
When you trade Commodities CFDs with Khwezi Trade, you will need to use a margin. Margin is the amount of money that you need to put down in order to open a position. For example, if you want to buy 1 lot of Gold CFDs it is equivalent to 100 ounces and you will need to put down 1% in margin.
The margin requirement for Commodities CFDs may vary depending on the instrument that you are trading and the leverage that you are using. The higher the leverage, the less the margin requirement.
Leverage is a tool that allows you commodity trading with more exposure than the money you have in your account allows. Leverage can be used to increase your profits, but it can also increase your losses.
The amount of leverage that you can use when commodity trading with Khwezi Trade depends on the instrument that you are trading. For example, the maximum leverage for Gold CFDs is 1:400, which means that you can trade with R400 for every R1 that you have in your account.
The Benefits of Commodities Trading with Khwezi Trade
There are many benefits to commodities trading with Khwezi Trade. A commodity is traded in US dollars, so you don’t need to worry about currency conversion when you trade with us.
The Risks of Commodity Trading on the MT5 platform
There are also risks associated with commodities trading with Khwezi Trade.
Commodities CFDs are a leveraged product, which means that your losses can also be magnified. You can lose more money than you have in your account.
Commodities CFDs are a volatile product, which means that prices can move quickly and violently. This can lead to sudden and unexpected losses.
For profit and loss control on the Khwezi Trade trading platform, you can easily define Stops and Limits to request positions’ closure at a specific rate. There is a high risk to lose money when participating in commodity trading and you should consider if this is appropriate for you to invest in.