5 Best Commodity Trading Brokers in 2021

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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.

1
FP Markets
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.
ECN-style trading
Daily market research and Autochartist access
2
AvaTrade
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
3
Markets.com
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.
Marketsi strategy builder helps traders trade smarter
Competitive trade execution with low slippage
4
Eightcap
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.
Globally trusted, award-winning broker offering free education
Lightning fast, reliable execution on over 200 markets
5
Pepperstone
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.
Best ECN execution on the MT4 platform
Excellent implementation of cTrader and Smart Trader Tools

Top Commodity Trading Brokers

FP Markets ECN trading with leverage up to 1:500.
AvaTrade Highly regulated, choice of fixed or floating spreads.
Markets.com Excellent educational offerings.
Eightcap Competitive pricing + excellent daily videos.
Pepperstone Great ECN execution on MT4 platform.

FP Markets
5.0/5 in this category
In Summary
ECN trading with leverage up to 1:500

fpmarkets is an Australian brokerage which launched in 2005. Headquartered in Sydney, Australia’s financial capitol, they have carved out a solid niche for themselves as the best Forex / CFD broker enjoying ASIC regulation. Australian regulators are much more relaxed about leverage than their counterparts in the U.S.A., U.K., and the E.U. and so fpmarkets can offer a maximum leverage as high as 500 to 1.

For most traders, the standout unique selling point of this broker lies in the incredibly wide range of tradable assets offered, providing an opportunity to trade over ten thousand individual stocks and shares. These go beyond the typical U.S.A. and U.K. companies and include a good selection of publicly traded shares on the Hong Kong and Sydney exchanges, as you might expect from an Australasian-facing broker like fpmarkets. Also, over 60 Forex pairs and crosses, 11 equity indices, the major commodities, and 5 cryptocurrencies including Bitcoin are also on the menu here.

Unique Features

Regulation

CySEC, ASIC

Minimum Deposit

$100

Type of Platform

MetaTrader 4, MetaTrader 5, Web-based, IRESS

They offer an unusual hybrid ECN/STP execution model which means that their clients can choose between ECN style of execution giving a very high level of speed, and a “straight through processing” execution style which allows for more “natural” spreads.

Traders can scalp and hedge at this broker, whose fast ECN execution speed makes it a natural home for scalpers. Clients may choose between the MetaTrader 4 and MetaTrader 5 platforms, and shares can be traded through the IRESS trading platform which includes access to level 2 exchange data.

FP Markets Pros & Cons

Advantages

  • 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

  • Well-regulated and trustworthy

Disadvantages

  • Availability of Iress geographically restricted

FP Markets is an Australian multi-asset broker with more than $1 billion in daily trading volume, serving clients from 80+ countries. Founded in 2005 in Australia, FP Markets grew into a trusted brand over the past 15+ years with more than 100 employees. The upgraded MT4/MT5 trading platforms, via the Trader Tools consisting of twelve plug-ins, present clients with a competitive edge. We have conducted an in-depth review of this CFD broker to provide traders with a complete overview of the trading environment at FP Markets.

AvaTrade
5.0/5 in this category
In Summary
Highly regulated, choice of fixed or floating spreads

AvaTrade was founded in 2006 in Dublin, Ireland. They are one of the largest and most famous Forex / CFD brokers in the world and became well-known for offering their clients a choice of fixed or floating spread cost of trading models. They enjoy an extremely high and strong level of regulation, making them a favorite for traders who are extremely nervous about the security of their deposit, which in Ireland can be protected by a strong investor deposit protection provision. AvaTrade is directly regulated in Ireland (and by extension, the European Union), Australia, Japan, South Africa, and the British Virgin Islands. Outside the European Union, Ava’s maximum leverage offered runs as high as 400 to 1.

Unique Features

Minimum Deposit

$100

Type of Platform

MetaTrader 4, MetaTrader 5, Proprietary platform, Web-based

In addition to their longevity and safe reputation, clients know that through AvaTrade they have access to a broad range of asset classes through which diversification can be achieved successfully: AvaTrade offers trading in over 55 different Forex currency pairs, 17 commodities, 20 equity indices, 14 cryptocurrencies, plus 66 individual stocks and shares. Even better, and unusually, 2 bonds and 6 ETFs are also on the menu. The diversity offered here stands out.

Whether you are located within the European Union or not, all branches of AvaTrade will offer you negative balance protection, above and beyond what is mandated by the law. This means that under no circumstances will any client of AvaTrade ever be held liable by the firm for an amount larger than their deposit.

 

AvaTrade Pros & Cons

Advantages

  • Well-regulated globally, with the Bank of Ireland, the primary regulator

  • Low minimum deposit and in-depth educational tools

  • Wide asset choice across seven sectors

  • Superior mobile trading platform

Disadvantages

  • Low leverage for retail traders

  • High quarterly inactivity fee

  • Unacceptable cost for AvaProtect

Markets.com
5.0/5 in this category
In Summary
Excellent educational offerings

Markets.com, part of UK-publicly listed and FTSE 250 constituent Playtech PLC, offers traders one of the most trusted, secure, and competitive brokers. It operates four subsidiaries regulated in the UK, Cyprus, Australia, and the British Virgin Islands, with the latter two presenting the best trading conditions. Markets.com serves traders via Marketsx and investors through Marketsi. Besides its proprietary trading platform, Markets.com deploys the MT4 and MT5 trading platforms. Traders also have access to fourteen quality trading tools, consisting of sentiment, technical, and fundamental indicators. They provide clients of Markets.com with a notable competitive advantage.

Unique Features

Regulation

CySEC, FCA, ASIC, FSCA

Minimum Deposit

$100

Another benefit at Markets.com remains its asset selection. Forex traders have a choice of 67 currency pairs and 25 cryptocurrency pairs. Equity traders get access to 2,027 equity CFDs, 60 ETFs, and 40 index CFDs. Completing the selection are 28 commodities, 23 in-house created blends (in-house thematic portfolios), and four bonds. Markets.com also provides Forex traders with one of the best commission-free cost structures starting from 0.6 pips on the EUR/USD currency pair. It translates into $6.00 per lot or $12 per round lot. Equity traders pay a fixed commission of $10 or a currency equivalent per side for a total cost of $20 per trade. Other noteworthy advantages include the personalized financial live-stream service XRay, its Investment Strategy Builder, its outstanding order execution statistics, and its transparency.

 

Markets Pros & Cons

Advantages

  • Very Competitive Forex Fees

  • Very Wide Choice of Assets

  • Choice of Trading Platforms

  • Excellent Customer Support

Disadvantages

  • Commodities and Indices Fees Higher than Forex Fees

Eightcap
4.5/5 in this category
In Summary
Competitive pricing + excellent daily videos

Unique Features

Minimum Deposit

$100

Type of Platform

MetaTrader 4, MetaTrader 5

Eightcap Pros & Cons

Advantages

  • Low minimum deposit and high leverage of up to 1:500

  • Competitive ECN cost structure

  • Excellent technology infrastructure and seasoned management team

  • Daily research and quality educational content

Disadvantages

  • Limited asset selection

Pepperstone
4.5/5 in this category
In Summary
Great ECN execution on MT4 platform


Pepperstone, founded in 2010 and headquartered and regulated in Australia, the U.K., and Dubai, is possibly the most well-known ECN Forex broker in the world. ASIC’s deft regulatory touch combined with local expertise made Australia a haven for broker startups heavy on technology and offering extra-speedy frictionless execution and extremely high maximum leverage. Pepperstone offer geographically eligible clients a maximum leverage as high as 500 to 1, which is enough for anybody’s trading needs.

Unique Features

Regulation

FCA, ASIC, DFSA

Minimum Deposit

$1

Type of Platform

MetaTrader 4, MetaTrader 5, cTrader

As an ECN broker, Pepperstone offer raw spreads and low commissions. Taken together, Pepperstone’s “Razor” account gives one of the lowest and most competitive cost of trading in Forex that you will find anywhere.

In addition to their global headquarters in Australia, Pepperstone also have presences in London, England, where they enjoy full regulation by the Financial Conduct Authority (FCA), and in Dubai, where they are regulated by the Dubai Financial Services Authority (DFSA).

Pepperstone is renowned for its advanced technology tools such as Smart Trader Tools and cTrader Automate. cTrader is one of the more popular trading platforms out there but is not offered by a majority of brokers, so Pepperstone can be a good choice if you want to trade with an ECN brokerage through the cTrader trading platform.

Pepperstone Pros & Cons

Advantages

  • Low minimum deposit and high leverage

  • Choice of trading platforms and social trading alternatives

  • Comprehensive MT4/MT5 upgrade package and VPS hosting

  • Active trader program and competitive cost structure

Disadvantages

  • Limited asset selection

Types of Commodity Brokers

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. Wheatcorn, soy, sugarcattle, and orange juice remain heavily traded across global exchanges. The highest consumption of hard commodities is in industry, while personal consumption is the demand driver behind agricultural commodities. The financial sector uses precious metals for value storage and as a hedging tool. All present excellent trading possibilities and online commodity brokers cater to the rise in demand.

A commodity broker is an individual or company that places trades on exchanges on behalf of clients. They own a seat at commodity exchanges, have traders on the floor for open-outcry pit trading, and the majority provide an online trading platform. Options and futures trading are the two primary order types. The former offers traders the right, but not an obligation, to buy the commodity. The latter is an obligation to purchase and deliver on the agreed upon date. The three main classifications of commodity brokers are introducing brokers (IBs), futures commission merchants (FCMs) and individuals as associated persons (APs). Commodity trading takes place on distinct commodity exchanges, and the London Metal Exchange (LME) has the most choices of futures contracts in metal trading. Other notable ones include the Chicago Mercantile Exchange (CME), Dutch Climax, the Dubai Mercantile Exchange (DME), the Zhengzhou Commodity Exchange (ZCE), and the Tokyo Commodity Exchange (TOCOM). Commodities remain quoted in US dollars, but the trend is slowly changing. Some are priced in alternative currencies, while a push to price all of them in currency baskets gains traction, especially from BRICS and ASEAN countries, together with other emerging and frontier markets.

Depending on the investment or trading strategy, the needs of clients and required services will differ. Several types of commodity brokers cater to the growing needs of market participants. They form the backbone of the commodity trading sector. Some maintain a floor presence in commodity exchanges, and almost all became online commodity brokers to satisfy the needs of simple order placement and fast execution times. Trading with the right commodity broker can increase the profitability of traders. It also ensures access to the required assets and trading tools.

Types of Commodity Brokers:

  1. 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. After receiving an order, a floor broker proceeds to the corresponding trading post. The order placement takes place against other brokers and the specialist in the traded asset. Following a filled order, the floor broker confirms it with the client. A floor broker is not the same as a floor trader, who trades accounts on behalf of the firm that employs them or for individual purposes.
  2. Futures Commission Merchant (FCM) - An FCM solicits orders for clients and receives a commission for services rendered. An FCM also carries the responsibility of collecting the required margin from traders. One of the most important obligations is the delivery of assets per the agreed contract. Each FCM must maintain registration with the relevant supervising authority.
  3. Introducing Broker (IB) - An IB has a direct relationship with the client and can offer trading advice. All other tasks, like trade execution and back-office management, are delegated to affiliated brokers. Most IBs usually have a working relationship with an FCM, either as an independent partner or a direct operating subsidiary of the FCM. Traders can get superior customer service and trading tools, the primary goal of IBs, which often have local representation.
  4. Commodity Trading Advisor (CTA) - The three types of CTAs consist of technical, fundamental, and quantitative. Financial firms, like hedge funds, HFTs, banks, mutual funds, or individual traders, hire CTAs to provide investment advice and trading-related services. They can act as an asset manager within the firm and trade portfolios based on their expertise.
  5. Commodity Pool Operator (CPO) - A CPO solicits investments from companies and accredited investors for trading on exchanges using various strategies, products and leverage. CPOs often work together with CTAs, either as an independent operation or part of funds including hedge funds, private equity funds, mutual funds and exchange-traded funds.
  6. Associated Person (AP) - An AP is an employee of a broker, floor broker, FCM, CTA, or CPO. The responsibility of an AP is the facilitation and supervision of sales. APs have an insight of order flow unavailable to the public and cannot personally benefit from the available information. Administrative employees of companies are not considered APs.

Types of 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. Industrial metals and agriculture also enjoy increasing demand from traders seeking to diversify. There are 57 core futures contracts traded globally, with multiple options contracts on each. The quote currency for most of them is the US dollar, with few exceptions. The commodity market enjoys a close relationship or inverse relationship to the Forex market. The Canadian dollar, Australian dollar, New Zealand dollar, Swiss franc, Brazilian real, and South African rand are known as commodity currencies, and commodity trading brokers offer advice on how markets remain interconnected. Traders must understand the relationship between commodities and currency pairs. It is as defining to a strategy as supply, demand, and the weather.

Factors to Consider When Choosing Brokers for Trading Commodities

Trading with the right commodity broker is as important as a trading strategy. While each trader must define what a top commodity broker must offer, I recommend the below aspects as a requirement to ensure a competitive and secure trading environment.

  1. Established & Reliable Brokers - A minimum of five years of operational experience and a clean regulatory track record will provide traders with sufficient evidence of a well-managed commodity broker.
  2. World-Leading Brokers - Taking it one step further are world-leading brokers with established operating subsidiaries in primary markets. They generally provide a superior asset selection, trading platforms, value-added services, and 24/7 multilingual customer service.
  3. Commissions & Fees - This remains one of the most defining aspects of trading. I recommend raw spreads with a competitive commission of no more than $7 per lot plus a volume-based rebate program.
  4. Funding & Withdrawal Methods - The best commodity brokers will provide multiple funding and withdrawal methods, including a low-cost online payment processor. Traders should avoid those who support bank wires and credit cards only.
  5. Customer Support - Most clients never require customer support, especially after the account opening at well-established brokers. Since emergencies can occur, traders should ensure 24/5 customer support with swift access and quick response times.
  6. Broad Trader Resources Offering - This separates the best brokers from the good ones. I recommend selecting an online commodity broker with full support for automated trading solutions, including VPS hosting. In-depth research and market commentary showing the broker's commitment to a competitive trading environment and other trading tools that provide fundamental insights should equally be available.
  7. Regulation - Traders should avoid unregulated brokers, regardless of how attractive an offer to sign up exists. It carries unnecessary and avoidable risks.
  8. Account Type - Many brokers provide an identical account type to all clients without enticing more significant deposits for superior services. Traders should read the fine print on each account type, if multiple options exist, and select the one that suits their trading style.
  9. Instruments & Products - Asset selection fulfills an essential role in a well-diversified portfolio. Traders must assess the product portfolio to determine if it suits their trading requirements.
  10. Leverage & Margin - This will have a direct impact on the profitability of portfolios. I recommend selecting an online broker with a competitive leverage offering. It offers flexibility, but traders must implement strict risk management rules.
  11. Platform Features - Various trading platforms support different functionalities. Automated trading, excellent charts, technical indicators plus drawing tools, intuitive order placement, multi-chart support, and a clean user-interface are requirements traders should seek.
  12. Mobile App - Traders who prefer to check their portfolios on the move should ensure the mobile app provides the desired features.

FAQs

What does a commodity broker do?

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.

Huzefa Hamid

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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