Best Brokers For Commodity Trading in 2021

If you are thinking about trading commodities and need a commodity broker to place trades with, then look no further!

WeCompareOnlineBrokers.com have created this quick guide on commodities trading to help educate you on some of the basics. We have also listed some reputable & regulated tier-1 commodity brokers that can assist you with your commodity trading.

Want to start trading commodities? Read on to find out more and to see our top-rated commodity brokers.

Recommended Online Commodity Brokers:

Broker     Official Site   Max. Leverage Regulations Min. Deposit    Spreads From Review
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200:1 $0 0.14 (Fixed)
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500:1 $100 From 0 pips
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500:1     $200 From 0.1 pips
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400:1 $100 From 0.9 pips
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400:1   $100 From 0.5 pips
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Risk Warning: Commodity CFD trading is not suitable for all investors. CFDs are leveraged trading products and carry a high level of risk. You do not own or have rights in the underlying assets. Please note, the information on this website is for general informational purposes and does not consider your personal objectives, financial situation or needs. We encourage you to seek independent advice.

What is Commodity Trading?

Commodity trading is when a trader speculates on (buys or sells) the price movement of a commodity asset, like Gold or Coffee, in the hope of making a profit.

Commodities can be traded direct on the futures market exchange, utilising futures contracts, or they can be traded indirectly through the share market, using ETFs, or a mutual fund. They can also be traded via a CFD trading platform and this is what this page is all about, commodity CFD trading.

There are two main classifications for commodities; soft commodities and hard commodities. Soft commodities or “softs” are agricultural products, such as coffee, corn, sugar, wheat, soybean and livestock, to name a few. Hard commodities are natural resources that need to be mined and/or extracted. Some examples of hard commodities are copper, gold, silver, rubber and oil.

Put simply, soft commodities are ones that are grown and hard commodities are ones that are mined from the earth.

The top 5 commodities traded are: Crude oil, Coffee, Natural Gas, Gold and Brent Crude oil.

Commodity Trading Example

The best way to show how commodities trading works is to provide an example.

  • You believe that the price of Gold is overpriced and will fall in value over the coming few weeks.
  • Having logged into your CFD account, you open a trade ticket and decide to SELL 5 x Gold CFDs.
  • You open the SELL trade @ $1,800.
  • In a week’s time, the price of Gold has fallen to USD $1,700. Well done, you have speculated correctly!
  • You close the trade at $1,700.
  • You have made $500 ($100 price movement x 5 CFD units of Gold).

What is a Commodity Broker?

A commodity broker acts as a ‘middle man‘ or intermediary between you, a commodity trader, and the world’s commodity markets. In terms of a CFD commodity broker, they will provide you with:

  • The trading platform for you to trade on
  • Live commodity price feeds
  • 24/5 customer support & trade desk support
  • Free charting package/s
  • Educational tools, like webinars, trading signals, market announcements etc.
  • A low-cost trading alternative to traditional commodities trading.

Finding a great commodity broker to trade CFDs with is not a simple task. Not only are there so many brokers to choose from, but we all have different trading requirements, so a broker that works for one trader may not work for another.

We have compared and selected the best 5 commodities brokers and these can be found in the table above. All five are fully regulated & reputable CFD brokers, all offer competitive pricing (low spreads), they all have excellent and easy trading platforms to use, they offer high leverage and most importantly, they are trustworthy.

Top 9 Factors to Consider When Comparing Commodity Brokers

Finding the right commodity broker is critical to your potential success as a trader. Everyone has different tastes and so defining what makes a great commodities broker is very personal. That said, here are a couple of important factors to consider when looking for a top broker.

1. Established

Choosing a broker with a minimum 2-3 years of operating will go a long way to ensuring you trade with a legitimate commodities broker. Find one with a clean record and one that has many positive reviews.

2. Regulation

Always avoid unregulated brokers, regardless of how attractive their account opening offer is. Trading with an unregulated broker means your money is at risk. Always trade with a well-regulated broker, like the ones listed in the table above.

3. Excellent Customer Support

Good customer support is critical in online trading as you will need them from time-to-time! Look for a broker that offers 24/5 support across phone, live chat and email, and one that offers multilingual support if English is not your first language.

4. Funding & Withdrawal Methods

The very best commodity brokers will provide several quick and easy funding & withdrawal methods.

5. Spreads & Commissions

Trading costs are one of the most critical features of trading to consider. Always check how much a broker charges before you start trading with them. Look for a low-cost option that is well regulated, like BlackBull Markets.

6. Trading Platform Features

Look for some cool free features like a decent charting package, automated-trading, free technical indicators, multi-chart support, and a simple, clean trading interface.

7. Range of Instruments

Trade with a broker that offers all the instruments you need – commodities, FX, indices, stocks etc. – look for a broker that offers them all.

8. Leverage

Trade with a broker that offers responsible leverage that you are comfortable with. Don’t trade with leverage higher than 1:500 would be our advice but the final decision is yours.

9. Mobile App

Trading on the go is critical these days so find a commodities broker that offers a world-class iPhone & Android trading app.

Different Ways To Trade Commodities

There are a couple of different ways to invest in or trade commodities. The best way to find out which trading product is suitable for you, is to answer the following;

  • Do you want to take ownership of the commodity?
  • Or, do you just want to trade the commodity without owning it?

If you answered YES to the first question, you will need to find a commodity futures broker. With this style of investing, you are buying a commodity through an exchange like the CME or CBOT. When buying a commodity off an exchange though a futures broker, you will need to pay the full amount of the asset upfront.

If you answered NO to question one but YES to question two, then you are looking for a derivative broker to trade with. A derivatives broker is one that offers CFD trading and the like, and you are only speculating on the price movement of a commodity – at no stage do you own it. With this style of trading, you only need to pay a small % of the full value of the trade as you are trading using margin.