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Advice - Commodities

What are Commodities?
Commodities are bulk goods such as grains, metals, livestock, oil, cotton, coffee, sugar and cocoa. They can be sold either on the spot market for immediate delivery or on the commodities exchanges for later delivery. Trade on the exchanges is in the form of futures contracts. Commodities are often viewed as a hedge against inflation because their price rises with the consumer price index.

Commodities are just as simple to buy as stocks and shares
How can Commodities form a part of an investment strategy?
Commodities can be bought and sold, just like property, bonds or stocks and shares. Commodities are not the first thing that many people would think of when aiming to increase their returns but their unusual nature actually makes them extremely profitable. Commodities are almost as simple to buy and sell as shares, once you know what to do. Their outlook can be discussed on the Bulletin Boards.

Which Commodities are most popular?
As ever, the commodities you choose to trade in will depend on how you buy them and your personal investment style.

What makes Commodities worth considering?
Commodities are finite in number. Supply is fixed, which means that when demand goes up so does the price that people are willing to pay. Commodities are tangible and demand is ever-present. People will always need to eat and house themselves, and commodities are required to build goods and vehicles. Commodities are traditionally a great hedge against inflation. Because they are always required the price of the commodity rises swiftly when inflation rises. That means that when the economy does well commodities can soar. When the economy falters the tangible nature of commodities means their prices remain stable.

Commodities are a great hedge against inflation.
How can I trade in Commodities?
There are many ways to buy or sell commodities, with the most popular being futures contracts, CFDs or Spread Betting. Of these spread betting is the easiest for someone who is new to trading. There are a number of spread betting companies that let you buy or sell commodities and precious metals like gold and sliver. TradIndex has no commission and that lets you try "virtual" trading before you risk any money.

Where can I find out more?
To find out more the best way is to open a SpreadBet account and start trading with virtual money until you are confident you can make good money.
There are excellent books on trading commodities and special metals, like An Introduction to the Commodities, Energy and Transport Markets published by Reuters, or Profitable Candlestick Trading by Wiley Press.

The best books on commodities can be found by asking in any of the big high street bookshops like Waterstones and BlackWells. The cheapest way to buy books on commodities is usually the online bookshops like






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