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As the essential components behind just about every other product imaginable, commodities are as vital as they are volatile. Find out how these invaluable natural resources fit into the wider trading world.
|Commodities explained||Drivers of the markets||Exchanges and pricing||Ways to trade|
|Introducing commoditiesCommodity terminologyCommodity speculationCommodity futuresWho trades commodities?||What drives commodity markets?Inflation and commodity pricesTrading commoditiesCommodity price indices||Where are commodities traded?Contract sizeContango and backwardation||CFDsFutures|
By trading commodity Contracts for Difference (CFDs) with IG, you can gain exposure to the markets at a fraction of the cost of owning a quantity of the underlying commodities.
The idea is that you agree to exchange the difference in value of a particular commodity between the time you open your position and the time you close it. This means that you can trade no matter which direction you think the commodity is going to move. To find out more, please visit our CFD trading module.
CFDs are a leveraged product and can result in losses that exceed your initial deposit.
Futures contracts enable two parties to exchange the difference in value of a commodity – or other asset – at a specified future date, for a price agreed today.
Investors use commodity futures either as a hedging tool, or to speculate on the price movement of the underlying asset. Futures contracts dictate the quality and quantity of the underlying asset; these measures are standardised so that they can be traded on a futures exchange. Some futures contracts may call for physical delivery of the asset, while others are settled in cash.