How to Spread Bet With Commodities
Spread betting with commodities can be very profitable and also very exciting. Many people are often concerned about the risks involved with trading commodities due to the high leverage involved and many know a few war stories about people who have apparently lost their shirts in the past trading pork bellies.
However, this is really a misconception and spread betting commodities is not really any more risky than trading any other asset class. Spread betting commodities actually caries numerous advantages over traditional trading in that traders can place bets in amounts per point and can do so at much lower risk. Trading the actual futures markets involves trading a full contract or multiple contracts and this requires a much larger account size and carries more risk than spread betting, where many commodities can be spread bet from as little as 50p per point.
The Advantages of Trading With Commodities
Commodities are actually very good markets to spread bet as they tend to trend very well. Because they are also their own asset class, they are less correlated with other asset classes such as stocks, so can give increased diversification, increased profit potential and lower overall risk when added to a portfolio.
Additionally, commodities can be traded from the long or the short side with ease, so spread bettors can profit from rising commodity prices by buying (going long) or can profit from declining markets by selling (going short).
The Different Market Sectors
At LS Trader we trade a wide range of commodity markets from all of the sectors, which are grains, softs, agriculture, energies and metals.
For example, in the grains sector we trade Corn, Oats, Wheat and the Soybeans markets, as well as Rough Rice. In the soft markets we trade Cotton, Sugar, Coffee and Orange Juice. The metals we trade are Gold, Silver, Copper and Palladium. Agriculture markets are Feeder Cattle, Lean Hogs and Lumber, and finally, the energy markets are Crude Oil, Heating Oil, Natural Gas, No leaded gas and Brent Crude.
As you can see above, this is a wide range of markets, many of which are not correlated to the others, so trading them gives excellent diversification and good profit potential. Commodity markets also tend to trend well and are less susceptible to price shocks. It’s no accident that many of the most successful traders and money managers over time have traded commodities.
Trading commodities is actually very simple once you know what you are doing and have a system for trading them with a complete set of rules. At LS Trader we show you exactly how to trade these markets and all the information you need to trade commodities is contained in our extensive trading manual within the members area.
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