Trading Commodities on eToro

💡 Trading commodities on eToro have never been easier, but it’s important to understand the basics before diving in. In this article, we’ll walk you through the world of commodity trading, discuss the pros and cons, and provide essential tips to succeed in 2023. So, buckle up and let’s get started! 🚀

🪙 What is a commodity?

Commodities are basic products or goods, often thought to be raw materials or inputs for the production of goods and services. The most common types of commodities are oil, natural gas, agricultural commodities such as coffee, cotton or wheat etc. Previously commodities were traded on a physical market; nowadays of course that is not always feasible and commodities are traded on exchanges like other financial instruments. For some investors on eToro this type of asset can be an important tool of portfolio diversification. Prices of commodities are affected by the basic interaction of supply and demand, economic growth, consumer and manufacturing trends.

☕Why trade commodities?

There are many reasons as to why one would choose to trade commodities on eToro. Prices of these assets tend to be quite volatile and that leaves an opportunity to make some success for those having the knowledge and skills to do so. Because you can open both short and long positions on eToro you can potentially benefit from price movements in both downward and upward directions. eToro also allows you to trade these with leverage and this has a potential to amplify your success; beware however, that leverage can increase your losses as easily as gains and should be used with caution. Volatility can likewise be detrimental to your trading, so do not forget to implement the appropriate risk management techniques.

🌾 Types of Commodities on eToro

Commodities available on eToro are generally classified into three main types:

🛢️ Energy Commodities

These include oil, natural gas, and crude oil futures. Energy commodities are vital for various industries and often have a significant impact on the global economy.

🌽 Agricultural Commodities

Also known as “soft” commodities, these are raw materials like sugar, wheat, cocoa, and cotton. Agricultural commodities are grown on farms and used in food and textile industries, among others.

⚒️ Metals

Metals such as gold, silver, and nickel play a crucial role in construction, electronics, and other industries. Many investors consider metals a safe haven during market turbulence due to their tangible value.

📈 How to Trade Commodities on eToro

Trading commodities on eToro is a breeze thanks to their user-friendly platform. Here are some popular ways to trade commodities:

📊 CFDs (Contract for Difference)

CFDs allow you to speculate on price fluctuations without owning the underlying asset. Leverage is available for commodity trading, but remember that it can amplify losses as well as gains.

📚 ETFs (Exchange-Traded Funds)

ETFs track the performance of a basket of commodities or other assets. They’re an excellent way to diversify your portfolio and reduce risk.

📆 Futures Contracts

Futures contracts obligate the buyer to purchase or sell a specific asset at a predetermined price on a future date. They offer additional flexibility and risk management opportunities for commodity traders.

🛡️ Risk Management Techniques for Commodity Trading

Commodity trading can be volatile, making it essential to implement risk management strategies. Here are some useful techniques:

⚖️ Stop-Loss and Take-Profit Levels

Stop-loss orders help limit potential losses by automatically closing a trade when the asset reaches a specific price. Conversely, take-profit orders lock in success when the desired price level is reached. eToro also provides a trailing stop-loss option for added flexibility.

🌈 Diversification

Spreading your investments across different asset classes can help mitigate risk. By including commodities in your eToro portfolio, you can take advantage of their low correlation with other trading instruments like stocks and ETFs.

🔍 Trade Size Management

Selecting the optimal trade size can significantly impact risk management. Allocating a large portion of your capital to a single trade may expose you to excessive risk. Remember that trading and investing always involve the risk of losing your capital. Familiarize yourself with the associated risks and how to manage them effectively.

🎉 Conclusion

By now, you should have a solid understanding of commodity trading on eToro. Keep in mind that investing always carries the risk of capital loss, so approach your trades with care and enjoy the eToro platform! Good luck!

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GENERAL RISK WARNING

• ▸eToro is a multi-asset platform that offers: Stocks, Crypto assets, and CFDs.
• ▸CFDs are complicated and can make you lose money quickly because of leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. Think about if you understand how CFDs work and if you can afford to take the risk of losing your money.
• ▸Past performance is not an indication of future results. Trading history presented is less than 5 complete years and may not suffice as basis for investment decision.
• ▸Copy Trading does not amount to investment advice. The value of your investments may go up or down. Your capital is at risk.
• ▸Cryptoasset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
• ▸eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity-specific information about eToro.

Be warned!

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Author & Expert Trader - Financial Analyst :

My name is Bart Bregman and I am a full-time professional trader with nine years of experience. I specialize in shorter-term trading using technical analysis, and I have extensive experience with Stocks, CFDs, Options, and Crypto trading. I believe that there is no such thing as a bad trade. I'm currently traveling the world as a digital nomad trader. You can follow my journey on Instagram at https://www.instagram.com/bart_bregman/