FXEM - EMPIRE MARKETS - Commodities

Trading on soft and hard commodities is a popular investment strategy that has been used for centuries. Soft commodities refer to agricultural products that are grown, such as coffee, sugar, and wheat, while hard commodities refer to natural resources that are mined, such as gold, silver, and oil. Both types of commodities are traded on global markets, and their prices are influenced by various factors such as supply and demand, weather conditions, and geopolitical events.

Investors can trade on soft and hard commodities through several methods, including CFDs, futures, options, and exchange- traded funds (ETFs).

Example of Commodity Trading

Commodity CFDs trading on orange juice is a popular way for traders to speculate on the price movements of this agricultural commodity. Here is an example:

Trader A believes that the price of orange juice will increase due to a forecasted shortage in supply. They open a long position on orange juice CFDs.

Trader B has a different opinion and thinks that the price of orange juice will decrease due to an oversupply. They open a short position on orange juice CFDs.

Over the next few days, the price of orange juice does indeed increase, as predicted by Trader A. This means that their long position on orange juice CFDs is profitable.

Trader B's short position, on the other hand, is now seeing a negative return as the price of orange juice has gone against their prediction.

Both traders can close their positions at any time to lock in their profits or minimize their losses.

Commodity CFDs trading on orange juice enables traders to profit from price movements in this agricultural commodity without having to physically own and store oranges. It also allows for easy entry and exit from positions, making it a popular choice for traders looking to take advantage of short-term price movements. The same can be said about CFDs on crude oil, natural gas, soya beans and hundreds of other commodities.

Trading on soft and hard commodities can be a lucrative investment strategy and it's essential for investors to conduct thorough research and analysis.