Commodities are the raw materials that keep the world running-from the coffee in your cup to the gold in your jewelry. They’ve been traded for centuries, dating back to the Silk Road days, and today they remain a major part of the global economy. At their core, commodity prices boil down to one simple rule: supply and demand.
When demand is high and supply is low, prices soar. When the opposite happens, prices drop-it’s as simple as that!
The two types of commodities
Commodities come in two main flavors:
- Hard commodities – These are natural resources that are mined or extracted, like oil, gold, and metals.
- Soft commodities – These include agricultural products like wheat, coffee, and sugar.
Some of the most popular commodities in the trading world include oil (especially WTI and Brent crude) and gold-which has been a go-to for traders whenever the economy feels shaky.
How to get better at commodities trading
Want to sharpen your skills? Here are a few key steps:
- Understand What Moves Prices
Economic trends, political events, and even natural disasters can shake up commodity prices. For example, a major storm might disrupt oil production, sending prices skyrocketing. Keeping an eye on global news can give you an edge.
- Use Market Analysis
Traders rely on two main types of analysis:- Fundamental analysis (looking at supply, demand, and economic conditions)
- Technical analysis (using historical price data to spot patterns)
- Follow the Trends
Commodities move in trends-either up (bullish) or down (bearish). Spotting these trends early can help you make well-timed trades.
How to trade commodities on Deriv
You don’t need to own barrels of oil or bars of gold to trade commodities. Instead, you can trade them using CFDs (Contracts for Difference) or options on Deriv. Here’s how:
CFD trading on Deriv
Trade commodities on platforms like Deriv MT5, Deriv cTrader, and Deriv X with CFDs, which allow you to:
- Go long (buy) if you think prices will rise
- Go short (sell) if you expect prices to fall
Your position stays open as long as you like giving you more control over your trading strategy.
Options trading on Deriv
If you prefer structured risk, try digital options on metals using Rise/Fall, Higher/Lower, or Touch/No Touch contracts. These allow you to predict price movements within a set timeframe.
- Rise/Fall – Predict if the price will end up higher or lower than when you entered.
- Higher/Lower – Set a target price (barrier) and predict if the market will finish above or below it.
- Touch/No Touch – Guess if the market will hit a specific price during the contract period.
With options, you’ll know your potential profit or loss before you enter trade-making risk management easier.
Ready to start trading commodities?
Commodities trading is exciting because prices react to real-world events, offering both opportunities and risks. The key to success? Keep learning, stay adaptable, and trade smart.
- Test the waters risk-free with a Deriv demo account! You’ll get $10,000 in virtual funds to practice before diving into real trading.
- Sign up today and start exploring the commodities market!
Quiz
Which commodity is often referred to as "black gold"?
FAQs
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