Best Broker for Commodity Trading

Best Brokers for Commodity Trading

1. Plus500
2. Pepperstone
3. eToro
4. AvaTrade
5. Tickmill
6. IG
7. InteractiveBrokers

Commodity trading has existed for thousands of years, with goods such as crops and livestock forming the very first stock exchange.

Today, commodity trading involves financial products such as futures contracts and derivatives.

The practice, as old as civilization itself, has come a long way in recent years. As well as the upgrade from trading wheat and goats, traders have also done away with clay tablets to keep track of imports and exports.

In the 21st century, trading firms or individuals use commodity brokers to buy or sell contracts on their behalf.

As brokers earn a commission on every trade they make, earning money for their clients is their main goal. But how do you choose a broker?

In this guide, we will delve into the subject of commodity trading and take a look at how you can choose the best commodity broker for all your trading needs.

What Is The Best Online Broker For Commodities?

If you are someone who is starting out in commodity trading, there are many brokers at your fingertips.

With plenty of choices also comes a tricky decision, as you must choose the best commodity broker to meet your needs.

To help you make an informed choice, we have rounded up some of the top brokers in the world. In this section, we will introduce a range of brokers — also listing their advantages and disadvantages when it comes to trading.

With our commodity brokers list, you can choose the best broker for you.

Plus500 was founded in Israel in 2008; therefore, while it is regulated, it has yet to survive a recession.

The educational resources are not as good as other forex brokers, and the platforms lack when it comes to research and analysis.

It is user-friendly and easy to set up an account, however.

Beginners are always advised to start with a demo account since trading CFDs is a risky activity, Plus500 is not suitable for pure beginners.

Pepperstone is an Australian-based forex broker established in 2010 that shines as a premier brokerage destination for commodity trading enthusiasts, offering a seamless blend of cutting-edge technology and unparalleled market access.

With a robust platform tailored for commodity traders, Pepperstone empowers investors with lightning-fast execution, comprehensive market insights, and a diverse range of commodities spanning energy, metals, and agricultural products.

Pepperstone has a proprietary platform (cTrader and TradingView) and provides access to MT4 and MT5, where you can trade 61 forex pairs and more than 1,000 CFDs, including ETF CFDs, on either web, desktop or mobile.

In addition, it is well-regulated by ASIC, FCA, DFSA, CySEC, BaFIN, SCB and CMA.

Backed by a commitment to transparency and reliability, Pepperstone emerges as the trusted ally for navigating the dynamic world of commodity trading with confidence and precision.

To find out more, read our Pepperstone review.

Founded in 2007, eToro is a worldwide investment company that provides traders and investors with access to more than 3,000 financial assets, including stocks, currencies, cryptocurrencies, and of course, commodities.

For beginners looking to start trading in commodities, eToro offers ready-made investment portfolios that group assets into categories. Having a broker gather commodities into a portfolio can make it much easier to begin trading.

You can benefit from 0% fees with eToro when opening a long, non-leveraged position on a stock or ETF. That means no management fees, rollover fees, ticket fees or additional broker fees. When your goal is to make money, not having to spend cash on fees is an enticing advantage.

While you can benefit from 0% fees, there is a $5 fee for withdrawals. What’s more, FX fees apply on non-USD deposits and withdrawals.

If you are planning to be more of a casual trader, eToro may not be the ideal broker for you. If you do not log into your account for over one year, eToro will begin charging an inactivity fee. At $10 a month, this penalty would eat into your available balance until you log in again.

eToro is the world’s largest community of traders and investors, allowing you to connect with more than 30 million like-minded shareholders. Thanks to a social media-style News Feed, you can interact, share ideas and network with fellow traders.

This broker is known for being easy to use, especially for beginners, but more experienced traders may be at a disadvantage. The eToro platform is not as advanced or customizable as some other brokers, so it may not be suitable if you are looking to have more control over your trading strategies.

76% of retail investor accounts lose money when trading CFDs with eToro. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take two mins to learn more.

IG is a great share trading platform for beginners thanks to its user-friendly interface and extensive educational resources.

Pros of IG include a wide range of trading instruments and markets, as well as the ability to access multiple account types and trading platforms. The platform also offers a demo account for beginners to practise trading strategies before investing real money.

However, IG isn’t the cheapest share trading platform, with relatively high trading fees and a minimum deposit requirement of £250 when paying by credit/debit card or PayPal.

In terms of additional fees, IG charges a commission fee for share trading, starting from £8 per trade. There’s also a custody fee of 0.25% per year for holdings of £250 or more.

Overall, IG is a solid choice for beginners looking for a user-friendly platform with extensive educational resources, but investors should be aware of its fees and minimum deposit requirements.

AvaTrade is frequently considered one of the best brokers for commodity trading for several reasons that cater to the needs of both novice and experienced traders.

AvaTrade offers traders the opportunity to trade a variety of commodities, including precious metals like gold and silver, energy commodities like oil and natural gas, and agricultural products like coffee and sugar.

This diversity allows traders to choose commodities that best fit their trading strategy and market interests.

Commodities at AvaTrade are primarily traded as CFDs (Contracts for Difference). This means traders can speculate on the price movements of commodities without actually owning the physical product. CFD trading provides the flexibility to profit from both rising and falling markets.

AvaTrade provides access to several trading platforms, including MetaTrader 4 and 5, and their proprietary mobile app, AvaTradeGo. These platforms are equipped with advanced tools and features necessary for effective commodity trading, such as real-time charts, technical analysis tools, and automated trading capabilities.

AvaTrade is regulated in several jurisdictions around the world. This regulatory oversight provides a secure trading environment and adds a level of trust and credibility to the broker.

Tickmill is one of the premier brokers for commodity trading, renowned for its reliability, transparency, and comprehensive offerings in the financial markets.

As a leading broker, Tickmill offers competitive pricing and favorable trading conditions for commodity traders. Whether traders are interested in precious metals like gold and silver, energy commodities like crude oil and natural gas, or agricultural products like wheat and soybeans, Tickmill provides access to various commodity markets.

Traders benefit from Tickmill's cutting-edge trading platform, which features advanced charting tools, real-time market data, and efficient order execution. The platform's intuitive interface allows traders to analyze commodity markets, monitor price movements, and effortlessly execute trades, ensuring a seamless trading experience.

Tickmill's commitment to regulatory compliance and client security further reinforces its position as one of the best brokers for commodity trading. Regulated by reputable authorities such as the Financial Conduct Authority (FCA), CySEC, and FSA, Tickmill upholds stringent standards of integrity and transparency, safeguarding client funds and maintaining the integrity of its trading platform.

Tickmill is a top choice for commodity traders seeking reliable access to global commodity markets. With competitive pricing, advanced trading technology, regulatory compliance, and a diverse range of commodities, Tickmill empowers traders to navigate commodity markets confidently and precisely, positioning itself as one of the best brokers for commodity trading.

Based in the US, an online brokerage firm Interactive Brokers was founded in 1978.

It provides electronic trading platforms for individuals and organizations — allowing them to trade assets such as stocks, options, futures, forex, funds and bonds.

Its extensive range of tradable assets has seen Interactive Brokers grow to be one of the world’s largest online brokers.

InteractiveBrokers offers some of the lowest trading fees, with no account maintenance fees.

To open an account, you must deposit a minimum of $10,000. This condition may be a barrier to new traders who wish to start with low-commitment trading.

Interactive Brokers uses the Trader Workstation (TWS) platform, which is highly advanced and customizable to meet your needs. With TWS, you can create your own trading strategies and automate your trades.

Trader Workstation can be too advanced for beginner traders. While it can be a brilliant tool, it can take time to get used to and may be overwhelming for new traders.

Trading with Interactive Brokers also gives you access to training materials, such as webinars and tutorials to learn more about trading. Interactive Brokers even have a training academy where you can gain knowledge of the markets and improve your trading skills.

InteractiveBrokers does provide 24/7 customer support, but this is limited to get in touch via email and phone. Unlike other traders, Interactive Brokers does not offer live chat or online help.

What Is a Commodity?

Simply put, a commodity is a basic good or raw material, such as metals or agricultural products, that is traded in large quantities.

They are goods that have been mined, grown, reared or processed. These natural resources are then used to create a more complex good.

Physical commodities include:

• Oil
• Gold
• Copper
• Aluminium
• Sugar
• Wheat
• Corn
• Soybeans

Commodities are the building blocks that make up the global economy. The difference between commodities and other goods is that they’re standardized and interchangeable.

This means that two equivalent units of the same commodity will be pretty much identical, no matter where they’re produced.

For example, an ounce of gold from Brazil will be the same as an ounce of gold from an Australian mine.

Why Trade in Commodities?

Commodities have been traded for thousands of years. These were, in the past, traded physically.

Now, however, they are traded on exchanges, such as the London Metal Exchange and Chicago Mercantile Exchange.

To trade commodities, investors need to have an account with a trading platform that offers commodity markets.

There are numerous advantages to trading in commodities. While the market can be very volatile, this can be an advantage as it allows for plenty of opportunities for buying and selling commodities.

In addition, there is very rarely a significant reduction in the demand for the product. The product will always have periods of lower demand, but demand will increase in the future at some point. Traders know this, and so many will buy commodities when demand is low and sell when high.

In addition, it is possible to use leverage to control a large amount of money with just a small deposit. This is an advantage because it can magnify gains. However, leverage can also increase losses.

What’s more, commodity markets are open for a large part of the week. This means that traders are not restricted and can be active on their own schedule.

Commodities tend to have a low correlation to traditional asset classes, like stocks/bonds. Therefore, this allows investors to diversify their investments to protect their funds.

It is important to note that inflation tends to lose the purchasing power of traditional currencies.

However, commodities can protect investors against inflation because their price rise during periods of high inflation.

What to Look for When Choosing the Best Commodity Broker

There are several things to look for when it comes to finding a good commodities broker. These include:

Fees

These extra costs vary between the best online commodities brokers.

When choosing a broker for commodities, you should ensure you understand how their fees work.

The type and level of fees vary between each broker, but they typically fall into two categories:

• Commissions
• Margins

Commissions are a type of fee charged by the broker for executing a trade on behalf of a client. The commission rate tends to be a percentage of the total transaction value and varies based on the size of the trade and the type of commodity being traded.

On the other hand, the term ‘margins’ refers to the amount of money that the client is required to deposit with the broker to be able to trade. You can picture margins as collateral that secures the trade.

As commodity markets can fluctuate, the broker may require additional margin if there is a significant change in the commodity value.

As well as commission and margin fees, brokers for commodities may charge other fees such as:

• Account maintenance fees – A charge for managing your investments
• Wire transfer fees – Charge for sending money domestically and internationally
• Account inactivity fees – A charge that applies to accounts that have not been used for a set period of time

Before opening an account with a broker, you should research their fees and decide whether you are willing to accept them or if there are other commodity trading brokers better suited to you.

Access to Support

This is not 24/7 with some brokers.

As a new trader, you will likely be learning about the trading industry as you go.

Some commodity trading brokers have great educational materials and even seminars you can attend to quickly get to grips with how to make investments.

Even with these resources on hand, you may still need expert help from time to time.

The level of support that brokers provide varies, with different contact options and opening hours across the board.

You may find that some brokers offer customer support via email and phone but not live chat, and some may not be available 24/7. When choosing a broker, you should think about the level of support you want to have access to.

Open to Commodities

Ensure your chosen broker trades in commodities.

Many brokers enable the trading of commodities such as oil, gold, copper, wheat, sugar and much more.

The main categories of commodities are:

• Metals
• Energy
• Agriculture
• Livestock and meat
• Soft, such as cotton and cocoa

When selecting a commodities brokerage firm, you should check that they facilitate the trading of your chosen commodity.

Trades in UK Currency

Some brokers may facilitate trades in just one currency, such as US dollars. As the world’s largest economy, it is easy to see why the US currency is such a big player in the trading industry.

While you can still make trades in dollars, you may find that the currency exchange rate from USD to GBP puts you at a disadvantage.

To make the most from your investments, opt for a commodities brokerage firm that trades in UK currency.

Minimum Deposit

Extra fees can add up.

The minimum deposit required to open an account with a broker varies across the industry.

You will find that some brokers have no minimum deposit requirement, and others require an initial payment of several thousand pounds.

The most suitable level of minimum deposit for you will depend on your personal choice. If you are new to trading and do not want to pay a lot of capital upfront, choosing a broker with a low — or no — minimum deposit is wise.

Frequently Asked Questions

Final Thoughts

Above are the best brokers and options for the best commodity brokers. By following our advice and conducting further research into brokers, you can find the best option for you.

The commodity market is volatile, but there are plenty of opportunities with the commodities.

WikiJob does not provide tax, investment or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor, and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.