Commodities Spread Betting

Commodities are the same goods no matter where they were produced. This means there is no variety in the commodity between countries. Commodities are Gold, oil, wheat, corn, silver, coffee, and sugar.

Commodities are classified into groups, hard and soft commodities. Hard commodities such as Gold, silver, and oil, are extracted. Soft commodities, such as rice and corn, are grown and not extracted.

These are commodities because they are all the same in every country. One ounce of Gold is the same no matter where it comes from. Oil is the same regardless of which country locates and drills it.

How Spread Betting Commodities Works

Commodities spread betting works the same as spread betting. A spread betting firm will offer a spread on different commodities. The trader will research different spreads and make a wager or stake.

In commodities spread betting, most wagers have a minimum stake size. The minimum stake size is normally £1 per tick or point movement. A tick is used as the wager since commodities are quoted in 0.1.

Spread bets on commodities can include daily bets and futures. A daily bet is when a trader bets every day on a given spread. The trader closes the daily bet at the end of the day every day.

The Futures Bet in Commodities

Another type of bet used with commodities and is called a future bet. A futures has an expiry date or a date in which the bet will expire.

The futures commodity spread predicts the future price by a date. This spread says the price will reach the amount by a specified date.

The difference of commodity futures contracts is their expiry dates. These dates don't run the traditional quarterly schedule of futures.

Commodities futures expire a month early because traders hedge. This extra time gives the trader time to settle any hedge bets. This helps traders protect their capital and assets whilst trading.

Betting firms require an amount of margin in traders' accounts. This is due in part because the commodities market is volatile. The firm wants to ensure there is enough money to cover any losses.

The commodity market is volatile because of worldwide events. Weather causes severe crop devastation which influences crop prices. War and declining economy can affect prices on oil and Gold.

Commodities spread betting is really not for the novice trader. Betting firms have resources to help, but is often not enough. It takes a lot of knowledge to understand price fluctuations.

Technical analysis is important to bet effectively on commodities. As such, commodities betting is reserved for experienced traders. This means intermediate and advanced traders will have more success.

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