About the Commodities Market
Commodities are raw materials that can be bought or sold as physical assets. Like currencies, commodities such as energies and metals are widely available to trade on the financial markets via Contracts for Difference.
Commodities are some of the most liquid assets you can trade and offer unique portfolio diversification opportunities.
Commodities Trading Example
Opening the Position
Opening price of the COCOA against the US Dollar is 2100
You decide to sell 1 standard lot (the equivalent of 1) at 2100.
Margin required to open the position is USD $2100/1 = USD $2100.
Closing the Position
Closing price of the COCOA against the US Dollar is 2500
One day later the COCOA price moves to 2500, you decide to take your profit by closing your buying position.
Market movement = 2500.00 – 2100.00 = 400
1 pip of COCOA (per 1 lot) = $10
Gross profit on Trade = USD $10*400 = USD $4,000