You can trade Commodities at ETX in two ways, as a spread bet or as a CFD. Our guide to trading Commodities will help you decide on which asset to trade, how to trade it and how to monitor your position once you’ve opened it.
Get started with Commodities trading
- Decide on a Commodity you feel comfortable trading - Check out our list of Commodity markets you can trade with ETX and pick a market you feel you understand and that offers a level of risk you’re happy with. Select a market that you have a good understanding of, one that presents trading opportunities that you can evaluate with market research and analysis before placing your first trade.
- Choose the type of trade that is right for you - You can decide to trade Commodities as a spread bet or as a CFD, choosing the right type of trade, one that suits your trading strategy, is important.
- Determine which direction to enter the market - Once you have done your research and market analysis, taking into consideration market trends and the current price direction, decide whether you want to Buy or Sell.
- Placing your Commodity trade - Once you’ve chosen the asset you’d like to trade as well as the trade type and direction, it is crucial that you monitor your trade and protect against market volatility by using smart risk management tools such as stop losses and limit orders. We also offer free Guaranteed Stops* on a selected number of our most popular markets, including Brent Crude and Gold, to help you fix your risk. Select a trade size that is realistic and that doesn’t over-leverage your account, it is important to always have enough margin to cover your position.
- Monitoring and close your trade - Depending on the time frame of your trading strategy, you should stay up to date with global financial news specific to the asset you’re trading in order to react to market moving events that could impact your position.
Deciding on a Commodity to trade
It is important that you research the Commodity that you’d like to trade; perhaps you have a background that gives you insight into the market or you read widely on the news, analysis and research around a particular asset.
Especially if you are newer to online trading, understanding how and why market prices move is crucial to long term success so make sure you fully understand your chosen market before opening a position.
It can also help to reflect on how your chosen market fits into your overall trading strategy, for example a market like oil which is subject to tensions in the Middle East may be far more volatile than something comparatively stable such as gold. Factor in your risk appetite when deciding what to trade.
Choosing the right trade type for your strategy
You can trade any of the available Commodities at ETX as either a spread bet or a CFD and there are different benefits to both approaches. In the UK spread betting profits are free from Capital Gains Tax* while CFD profits are not.
There is also a difference in how markets are priced for each account type, spread betting markets are quoted in points whereas CFD markets are quoted in lots or contracts.
Remember that both types of accounts allow you to trade on leverage so while you can take larger positions than you would otherwise be able to open with a relatively small amount of capital, trading on leverage can magnify both your profits and your losses.
|Profits are free from Capital Gains Tax.*
||Profits are liable for Capital Gains Tax.*
|No Stamp Duty
||No Stamp Duty
||No expiry on cash CFDs
|Price per point
||Contract per point
|Losses cannot be offset for tax.
||Losses can be offset for tax
* Tax laws are subject to change and depend on individual circumstances. Tax law may differ in a jurisdiction other than the UK.
Decide whether to Buy (go long) or Sell (go short)
Whether you decide to trade the Commodities market with a spread bet or CFD account, you’ll be able to both Buy and Sell, allowing you to profit from falling as well as rising prices.
Taking advantage of market volatility is a key part of any successful trading strategy and your research and analysis of the market you have chosen, as well as the wider goals of your overall trading strategy, should help inform your decision to go long or short.
Placing your trade
Once you have decided on the direction of your trade, it is important that you protect yourself from excess market volatility in case the market moves against you. You can do this with a number of smart risk management tools available from ETX.
A standard stop loss will allow you to set a limit on the maximum loss you are willing to accept on your trade at the time of opening your position. Remember that a standard stop loss does not protect against market gapping.
For greater protection and to guarantee the price at which your position is automatically closed out, regardless of gapping or market volatility, choose a Guaranteed Stop Loss Order.
Unlike with some other providers, when you trade with ETX, you can attach a free Guaranteed Stop Loss to your order on many of our most popular Commodities markets including Brent Crude Oil and Gold.
Our free Guaranteed Stops allow you to fix your risk and avoid the impact of market gapping or slippage on the Stop price you have set on your trade. You can lock in your exact risk level that you feel most comfortable with and trade with greater peace of mind.
Monitoring your position and exiting the market
Once your position is open it is important that you monitor it closely, especially if you have chosen a volatile market.
Our powerful, award-winning TraderPro platform comes with dynamic risk management features and advanced charting tools allowing you to manage your position intuitively and track market movement and price volatility accurately.
Download our advanced iOS or Android app for even more control and monitor your position on the go, or react to trading opportunities whenever and wherever you want.
*Free Guaranteed Stops are only free at certain times, on some markets for retail clients only - click here for more information