The demand for commodities is the key driving factor of why commodity trading is becoming so popular. The value of the commodities such as precious metals, oil, natural gas, etc. goes up and down depending on the supply of the commodities and demand for them. Among different types of commodities such as energy commodities, precious metals, and soft commodities, the most common commodity trading occurs in the sector of metals and energies. SwissAllianceFX is a reputed financial provider that understands the needs of commodity traders and provides all the guidance to its clients so that they can become successful in commodity trading.
Trading CFDs on Precious Metals:
At SwissAllianceFX commodity trading occurs on a Contract for Difference (CFD) basis that means the buyers and sellers engage in the trading on the price difference of the commodity, instead of trading on the actual commodity. Therefore, the investors need to predict the rise and fall of the price of the commodity considering the situation of the market. Gold is the most commonly traded commodity among precious metals. When you are trading CFDs on gold, you have to predict the correct market direction. In order to make a profit, you have to buy gold when there is a chance price increase of the gold and sell when the price can fall. Therefore, not the investors of gold who make a profit from the market movement but the traders who continuously buy and sell gold depending on the market movement. However, you do not require to buy gold, instead, you need to take a longer or shorter position depending on the price rise and fall respectively.
Learn Influencing Factors with SwissAllianceFX:
SwissAllianceFX helps the trader to learn what factors can affect the price of the commodities. In the case of gold, there are several factors that influence the price movement such as-
- Demand and Supply: The supply of gold and the constant demand for gold hugely determine the price. Therefore, in order to understand the supply, you need to keep an eye on jewelry production and manufacturing incidents.
- Market Sentiment: Political instability and global uncertainty are the market sentiments that affect the supply market of gold, and the price can significantly increase.
- Market Volatility: The investment in gold is the right decision when the commodity market is unpredictable and volatile.
- Currency Value: The value of powerful currencies such as the US dollar can significantly influence the gold value.
Trading CFDs on Energy:
The fundamental of trading CFDs on energy is very similar to the trading CFDs on metals. This means, as a trader if you predict the price of the energy commodities such as oil will increase, you should take a long position and in the reverse case, you should take a short position. If you can predict the direction of the market correctly, you can make a handsome profit. There are also several factors that affect the price of oil such as demand and supply, world crises, future supply, and natural or man-made disasters. SwissAllianceFX provides great flexibility in this trading and above all, you can not ignore this financial agency because of its award-winning guidance.