Online commodity trading involves the exchange of commodities on the Internet and is an exciting recent development in the world of commodity trading. In the past it was often not possible for traders to undertake a wide range of exchanges without employing a knowledgeable floor broker or at least paying for the services of a commodity trading advisor. Now, the sheer amount of information available through commodity trading software makes it feasible for almost any member of the public to enter the commodity markets. This accessibility and ease of use, however, comes with both benefits and drawbacks.
Important: Your capital may be at risk. CFD services are suitable for experienced traders only.
Trading commodities online has, in the words of some, become a ‘one-stop shop’ for amateur traders. Users can have access to programs providing detailed analyses of the latest trends in chosen commodities and real-time quotes. The amount of invaluable research provided through these programs enables traders to make decisions that they never would have previously been able to make without the constant presence of a broker. However, although commodity trading software has gone to great lengths to make this information approachable to commodity trading outsiders, the complex graphs, charts and lists could very easily overwhelm many amateurs who do not know how to interpret them correctly. To overcome this hurdle, there are many tutorials and manuals online that show how to best interpret the information provided.
An additional benefit of commodity online trading is the low commissions that most brokers working on the Internet require. Discount commodity brokers are numerous and can charge as little as $10 or £10 per exchange. Commissions increase with the complexity of the action. For example, the commission from an exchange combining futures and options trading would be a less modest sum.
Nevertheless, as stated above, online commodity brokers, while cheaper, do not generally provide personalized advice that could mean the difference between a large profit and a large loss. In trading commodities online one would have to weigh up the consequences of paying more for a commission or paying more for a loss.
Depending on the level of the trader, there are different accounts that available to the online trader. Standard accounts generally include more or less the entirety of information that would be on the floor of a contract market. These accounts are designed for traders with a background or grounding in the workings of commodity trading. Furthermore, users of standard accounts would be expected to start trading in hefty sums, generally $10,000 or more at a time. Other possible accounts include mini accounts, for those who wish to begin trading with smaller amounts of capital, such as $200. The information provided in mini accounts is somewhat less detailed but the account itself would cost less.
There is a large amount of commodity trading software available for purchase and it is often difficult to distinguish between different programs. Software is often specialised towards certain commodities so the amateur trader should have chosen commodities in mind when decided in software to purchase. For example, Megasol Technologies offers the Corniche Banking system, which specialises in currency exchange.