5 Best Brokers for Commodities & Futures Trading [year]
Best Futures Brokers For Commodity Trading
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Our team of experts work to continually re-evaluate the reviews and information we provide on all the top Forex / CFD brokerages featured here. Our research focuses heavily on the broker’s custody of client deposits and the breadth of its client offering. Safety is evaluated by quality and length of the broker's track record, plus the scope of regulatory standing. Major factors in determining the quality of a broker’s offer include the cost of trading, the range of instruments available to trade, and general ease of use regarding execution and market information.
Huzefa Hamid
Commodity trading may not be as widespread as equity, index, or Forex trading, but it continues to gain traction. It serves as an excellent portfolio diversification tool, providing hedging opportunities, and remains a favorite alternative to currency trading. Want to start trading commodities? See our top-rated brokers.
The ratings shown on DailyForex.com are determined by hours of research from our editorial team into over 10 factors, including account fees, deposit/withdrawal options, regulatory status, tradable assets, and more.
The ratings shown on DailyForex.com are determined by hours of research from our editorial team into over 10 factors, including account fees, deposit/withdrawal options, regulatory status, tradable assets, and more.
The ratings shown on DailyForex.com are determined by hours of research from our editorial team into over 10 factors, including account fees, deposit/withdrawal options, regulatory status, tradable assets, and more.
The ratings shown on DailyForex.com are determined by hours of research from our editorial team into over 10 factors, including account fees, deposit/withdrawal options, regulatory status, tradable assets, and more.
Solid broker for scalping and hedging
Institutional-style trading opportunities for retail traders
The ratings shown on DailyForex.com are determined by hours of research from our editorial team into over 10 factors, including account fees, deposit/withdrawal options, regulatory status, tradable assets, and more.
High level regulation in multiple jurisdictions
Impressive range of tradeable assets including vanilla options and gold options
FP Markets embarked on a vision to create market-leading Forex trading conditions in 2005 and grew into a dominant Australian-based multi-asset broker. It provides commodity traders with just seven assets but maximum leverage of 1:500. Adding to its appeal is the no dealing desk (NDD) execution model and an execution speed below 40 milliseconds. FP Markets has no restrictions on trading strategies. The minimum spread of 0.0 pips combines with a competitive commission structure of just $6.00 per round lot add to its excellent trading environment. Full support for automated trading via the MT4 and MT5 trading platforms plus VPS hosting allows FP Markets to top our commodity brokers list.
Pros
Choice of trading platforms and auxiliary trading tools
Very competitive cost structure and excellent asset selection
Low minimum deposit requirement and leverage of up to 1:500
Best all-around broker with high floating leverage and fast execution
FXTM remains one of the best CFD commodity brokers due to excellent execution statistics, confirmed by Big Four accountancy PricewaterhouseCoopers Limited (PwC). In less than ten years, more than 2,000,000 traders opened accounts at FXTM, which is one of the most experienced brokers for emerging and frontier markets. For a minimum deposit of just $10, clients have access to maximum leverage of 1:2000. The superior technology powering the core trading environment at FXTM improves the trading profitability of the eight available commodities and all other assets. The 30% deposit bonus up to $250 provides all clients with an excellent boost.
Pros
Excellent commission-based Forex pricing environment and transparency
Upgraded MT4/MT5 trading platforms plus proprietary mobile trading app
Quality market research and educational content for beginner traders
Proprietary copy trading platform, low minimum deposit, and high leverage
Cons
Limited choice of cryptocurrencies and commodities
Founded in 2009, EightCap is a leading global forex broker with a competitive MT4 platform. Based in Australia, EightCap is regulated through the Australian Securities and Investments Commission (ASIC), as well as through the Vanuatu Financial Services Commission (VFSC). EightCap offers one of the lowest forex fees in comparison to most forex brokers. This is especially true for clients that choose to open a Raw account. With this account, USD/EUR account fees are low with a $3.5 commission; yielding an average spread during peak trading hours of 0.1 pips. EightCap’s trading portfolio is limited but includes CFDs such as cryptocurrencies, commodities, and shares, as well as forex trading with 47 currency pairs.
Pros
Low minimum deposit and high leverage of up to 1:500
Competitive cost structure
Excellent technology infrastructure and seasoned management team
Best ECN trading environment, with scalping and hedging
BlackBull Markets was founded in 2014 in New Zealand. Like many antipodean Forex brokers, BlackBull Markets is an ECN broker, offering raw spreads and commissions. They are regulated in New Zealand by the Financial Services Providers Register (FSPR) and offer a maximum leverage on some Forex currency pairs as high as 500 to 1. In addition to their global headquarters in New Zealand, BlackBull Markets also has presences in the form of branch offices in New York and Malaysia. BlackBull Markets offers a relatively tight range of tradable assets: 27 Forex currency pairs and crosses, gold, silver, crude oil, natural gas, and 6 major equity indices. That should be sufficient for those traders with more focused strategies not requiring wide diversification.
BlackBull Markets Pros & Cons
Pros
ECN/NDD execution model with deep liquidity
Institution-grade pricing for retail traders via proprietary price aggregation
Highly regulated, choice of fixed or floating spreads
AvaTrade, trusted by more than 300,000 traders since 2006, provides clients with 24 commodities, making it one of the leading commodity trading brokers via CFDs. The commission-free trading environment meets slightly above average but acceptable spreads. The 24/7 customer support in 14 languages makes this multi-asset broker an excellent choice for new traders. The spun-out SharpTrader trading academy remains one of the best educational tools on the market. It adds tremendous value to the core trading environment with more than 40 lessons and over 200 videos. AvaTrade has regulatory oversight in seven jurisdictions and established a reputation for trust and transparency.
Pros
High-quality educational offering via SharpTrader
Excellent choice of trading platforms catering to various trading needs
Broad asset selection and cross-asset diversification opportunities
Well-regulated and trusted broker with oversight from a central bank
Commodities fall into two distinct sub-categories: hard and soft commodities. The former includes everything that is mined or extracted, for example, oil and gold. Several sub-categories exist and structure the sector. Some of the most traded ones include industrial metals, precious metals, and energy. The latter consists of items that are grown or harvested and generally used for personal consumption. Wheat, corn, soy, sugar, cattle, and orange juice remain heavily traded across global exchanges.
A commodity broker is an individual or company that places trades on exchanges on behalf of clients.
Depending on the investment or trading strategy, the needs of clients and required services will differ.
Types of Online Commodity Brokers:
Floor Broker (FB) - A floor broker is an independent member of an exchange and can act as a broker for other members if they need assistance in processing their order flow.
Futures Commission Merchant (FCM) - An FCM solicits orders for clients and receives a commission for services rendered.
Introducing Broker (IB) - An IB has a direct relationship with the client and can offer trading advice.
Commodity Trading Advisor (CTA) - The three types of CTAs consist of technical, fundamental, and quantitative. They can act as an asset manager within the firm and trade portfolios based on their expertise.
Commodity Pool Operator (CPO) - A CPO solicits investments from companies and accredited investors for trading on exchanges using various strategies, products, and leverage.
Associated Person (AP) - An AP is an employee of a broker, floor broker, FCM, CTA, or CPO.
Futures Trading
A futures contract is a legally binding agreement to buy or sell the specified volume of the underlying asset by the delivery date. Commodity futures rank among the most actively traded futures contracts, followed by currencies. Commodity producers and consumers can benefit from futures trading. Commodity producers can lock in prices if they believe the asset will deteriorate in value and guarantee a sale while receiving necessary profits before delivery to ensure ongoing operations. This is vital in the commodity sector, notably soft commodities. Commodity consumers can hedge exposure to price action while ensuring they have the necessary raw materials without worrying about sourcing them elsewhere. Traders can use futures contracts to speculate on price action of commodities.
How to Start Commodity Trading
Before traders decide to start commodity trading, they should invest in their education. While understanding the forces of supply and demand, the primary driver for price action in commodity trading, traders must consider factors out of their control. They include the weather and geopolitical events, which may significantly impact existing trends and provide a catalyst for price action.
Commodity trading has two sub-categories, soft and hard commodities. The former refers to anything grown and raised, while the latter to anything extracted or mined. Traders must decide what to trade, as each commodity has unique characteristics. Global population growth ensures rising demand for commodities and commodity trading, which dates to 4,500 BC in Sumer (now modern-day Iraq).
Since the US Dollar is the quote currency for all commodities, traders should factor in a consideration of US monetary policy, which usually has an inverse relationship to commodities. Finally, opening and funding a trading account is a necessary final step before starting commodity trading.
Pros and Cons of Commodity Trading
Traders should understand the pros and cons of commodity trading before opening an account and starting to trade commodities.
The pros of commodity trading are:
High liquidity, making it ideal for demanding short-term strategies
Diversification opportunities in an asset class guaranteed to expand
Portfolio hedging opportunities, including against economic and geopolitical risks
Inflation hedging opportunities, notably gold and silver
Transparent markets with high regulation
The cons of commodity trading are:
High volatility, which makes commodity trading challenging for beginners
No passive income opportunities, as commodities do not pay dividends or interest
Exposure to geopolitical tension requires in-depth knowledge of non-financial topics
Commodity trading reacts to unpredictable weather patterns
Lower average returns versus higher average volatility
Asset concentration in ETFs
Commodities Available for Trading
The two main classifications are hard commodities and soft commodities, but each consists of sub-categories. The most traded ones are precious metals and energies, which are offered by all top commodity brokers. There are 57 core futures contracts traded globally, with multiple options contracts on each.
Factors to Consider When Choosing Brokers for Trading Commodities
Established & Reliable Brokers
World-Leading Brokers - Taking it one step further are world-leading brokers with established operating subsidiaries in primary markets.
Commissions & Fees - I recommend raw spreads with a competitive commission of no more than $7 per lot plus a volume-based rebate program.
Funding & Withdrawal Methods - The best commodity brokers will provide multiple funding and withdrawal methods.
Responsive Customer Support
Broad Trader Resources Offering - This separates the best brokers from the merely good ones. For example, automated trading solutions, including VPS hosting.
Regulation - Traders should avoid unregulated brokers.
A commodity broker facilitates orders on behalf of clients. Some also provide trading recommendations and other related services.
Are commodities riskier than stocks?
The risks are similar and directly related to the knowledge of traders. Therefore, no asset is more or less risky than another one.
Which are the top 5 commodities?
The top 5 commodities are crude oil, coffee, natural gas, gold, and Brent crude.
Which broker is best for commodity trading?
The best broker for commodity trading will offer broad asset choices, a competitive cost structure, high leverage, an excellent trading platform and transparency.
How do commodity brokers make money?
Commodity brokers derive most of their revenues from commissions.
What is a commodity trading brokerage?
A commodity trading brokerage buys and sells commodities on behalf of clients in the commodities market. It is the middleman between traders and exchanges, earning a commission per transaction.
How do I find a commodity broker?
Commodity exchanges have a list of licensed commodity brokers. Traders also have countless online resources to locate the best commodity brokers for their requirements. Our above list includes a few leading brokers offering commodity trading to clients with competitive trading conditions.
What is the best way to trade commodities?
There is no right or wrong trading approach, which depends entirely on the individual. Traders should ensure they deploy an appropriate risk management protocol since commodity trading involves leverage and volatility.
Is commodity trading good for beginners?
Commodity trading is not well-suited for beginners due to its complexity and high volatility. It has more variables than other assets and includes unpredictable parameters, including weather patterns and geopolitical developments, which require experience to navigate profitably.
Where do I start trading futures?
Traders must start with a comprehensive education covering all required parameters that move price action. Deciding which commodities to trade and how to do so must precede the commodity broker selection to ensure the required trading instruments are available.
Which futures trading platform is best?
The choice depends on the individual traders, but it must offer the desired commodities, competitive trading fees, and ideally supports algorithmic trading. MT4 and cTrader rank among the most used retail choices, where the former is available at most brokers.
Is futures trading profitable?
Futures trading is as profitable as other assets and 100% dependent on traders, their understanding of commodity markets, and their strategies.
I’m a trader and manage my own capital. I trade the major Forex pairs, some Futures contracts, and I rely entirely on Technical Analysis to place my trades. Today, I am also a Senior Analyst for DailyForex.com.
I began trading the markets in the early 1990s, at the age of sixteen. I had a few hundred British pounds saved up (I grew up in England), with which I was able to open a small account with some help from my Dad. I started my trading journey by buying UK equities that I had read about in the business sections of newspapers. The 1990s were a bull market, so naturally, I made money.
I was fortunate enough in my early twenties to have a friend that recommended a Technical Analysis course run by a British trader who emphasized raw chart analysis without indicators. Having this first-principles approach to charts influences how I trade to this day.
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