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Commodity definition
A commodity is a basic physical good used in production, consumption, or trade. In financial markets, commodities include crude oil, natural gas, gold, silver, wheat, coffee, and sugar.
Most commodities are fungible, meaning one unit of a given grade is interchangeable with another of the same grade. That standardisation lets them trade through futures, options, exchange-traded funds, and CFDs.
A commodity's price moves on supply and demand, weather, geopolitical risk, inventory data, production levels, currency moves, and the wider economy. Most traders take exposure through a derivative such as a futures contract or a CFD rather than holding the physical good, so they react to shortages and demand shifts without ever taking delivery.
Commodity Example
You want exposure to crude oil prices, so you open a position on WTI crude oil through an oil CFD.
If WTI rises from USD 78 to USD 82 a barrel, you profit on the move.
USD 82 - USD 78 = USD 4 per barrel
If WTI falls instead, you lose on the position.
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The information provided on this website is of a general nature only and does not constitute personal financial advice. Before acting on any information on this website, you should consider the suitability of the information in relation to your objectives, financial situation and needs. Investing in CFDs and FX Margin Contracts carries significant risks and is not suitable for all investors. You may lose more than your initial deposit. You do not own, or have, any interest in the underlying asset. We recommend that you seek independent advice and ensure you fully understand the risks involved before trading. It is important that you read and consider the disclosure document before you acquire any product listed on the website. The information and advertisements offered on this website are not intended for use by any person in any country or jurisdiction where such use would be contrary to local laws and regulations. The Products and Services offered on this website are not intended for residents of the United States, Malaysia and Thailand.
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