Best Commodity Brokers
Here you will find our best commodity brokers, based on thousands of hours of extensive research, testing and analysis across hundreds of online brokers. Upon conclusion of each of our broker reviews, the trading brokers team has assigned each commodities broker with a rating, and displayed our best commodity brokers on this page.
Top 5 Commodity Brokers
FCA, CFTC, NFA, BaFin, FINMA, ASIC, FMA, MAS, FSA, FSCA, DFSA, JFSA, METI, MAFF
Min $250 Deposit
1974
1:200
How did we choose our best commodity brokers?
Some of the most important factors that contribute towards a good broker for commodities trading have been considered including the regulatory authority, trading platforms, trading instruments, trading tools, fees, spreads, execution speeds, account types, deposit/withdrawal options, leverage, minimum deposit requirement, educational resources, customer support and more.
Having the best commodity brokers based on our findings listed in one place can help traders save time when identifying the best commodity brokerages according to their own individual trading needs.
Each of the brokers we have chosen have undergone and passed our stringent commodity broker reviews with flying colours, based on what the trading brokers team consider to be amongst some of the most important considerations. These brokers are well-established within the online brokerage industry, providing top commodity trading services to traders across the globe.
Following on from our best commodity brokers, we will now look at what commodities trading is and some of the most important factors to consider when looking for a commodities broker.
What are commodities?
Commodities are naturally occurring materials or goods that are collected and processed for use in human activity – such as oil, sugar and precious metals. They form the basis of our economy, because the raw materials are needed for the production of food, energy and clothing.
Commodities are often mass-produced and standardised for quality and quantity, which means they’re priced the same regardless of who produced them.
Commodities are different from other types of goods in that they are standardized and interchangeable with goods of the same type. Commodities can be divided into several categories: agricultural, energy, metals, and environmental.
Examples of commodities include steel, oil, and rice. Steel is a metal commodity used in a wide variety of industries including in the construction of highways and buildings. A typical energy commodity is crude oil, which is primarily used to create RBOB gasoline but also has applications far outside energy production. Rice is used in many ways like the manufacture of breakfast cereals. Like most agricultural commodities, rice is also consumed directly.
Commodities are bought and sold on exchanges, like stocks. Well-known exchanges include the Chicago Mercantile Exchange (CME), New York Mercantile Exchange (NYMEX) and London Metal Exchange (LME).
What is commodities trading?
Generally, commodities are extracted, grown, produced, and traded in large enough quantities to support liquid and efficient markets. These markets provide a transparent way for commodity producers, consumers, traders and speculators to transact business.
When you trade commodities, you can speculate on the price of raw physical assets, such as gold, silver, oil, gas, wheat and sugar. Commodity brokers allow you to buy and sell commodities without needing to actually take ownership of the underlying asset or worry about physical delivery.
Commodity prices are sensitive to moves in the value of the US dollar and can be influenced by a range of factors like:
- Fluctuations in supply and demand
- Poor harvests
- Natural disasters
- Wars and conflict
- Miner’s strikes
- Trade tariff and regulations
- Big economic events
One of the primary commodity groups are Metals, which are sometimes referred to as “hard” Commodities as these physical assets are generally mined out of the ground and include precious and semi-precious metals such as gold and silver.
Energy markets make up the second biggest group of Commodities and these assets include products such as oil, natural gas and crude oil.
The energy markets are heavily traded as they have a particularly large influence on the global economy, think of how many supplementary industries and companies rely on petrol to drive business; everything from transport to farming and industrial development.
What is a commodities broker?
A commodity broker is a firm or an individual who executes orders to buy or sell commodity contracts on behalf of the clients and charges them a commission. A firm or individual who trades for their own account is called a trader. Commodity contracts include spot markets, futures contracts, options contracts, spread bets, CFDs (contracts for differences) and ETFs (exchange-traded funds).
Why trade commodities?
Commodities trading is a popular product for some traders for a variety of reasons. These include:
- Speculate long or short on rising or falling commodity prices without needing physical purchase and store them
- 24-hour trading
- Way to diversify a trading portfolio
- Trade commodities with leveraged positions
Commodities can serve as a safe haven in times of global economic uncertainty and market turbulence, because they can retain their physical value. Commodities’ intrinsic value is independent from currencies. They will often hold their value, even if a currency falls during a period of inflation.
What makes a good commodity broker?
There are various factors worth considering if you are looking for a commodity broker to trade online with. In this section, we will cover what we consider to be some of the most important factors that you need to be aware of when choosing a suitable commodities broker for your own individual needs.
Regulation
If you are looking for a broker to trade commodities online with, then regulation should really be one of the first things that you look for. The trading brokers review team believe regulation to be very important as it can give traders some protection in the case something was to go wrong. Regulated brokers must follow strict rules and procedures that are put in place to protect investors. Without regulation, there may be no help should the worst happen.
Commodities
There are currently around 50 major commodity markets worldwide that facilitate trade in approximately 100 primary commodities. Commodities are split into two types: hard and soft commodities. If you have a particular commodity in mind, you will need to ensure that the broker you are considering has that commodity available to trade. The more commodities there are, the more choice you will have moving forward.
Fees
Brokers will often charge a commission fee for processing your commodity trades through their platform. There may also be accounting fees and inactivity fees. It is important to be aware of all the broker fees and compare brokers to make sure they are providing good value.
Platforms
To trade commodities online, you will need a commodities trading platform which the commodity broker will provide you with. There are various desktop, web and mobile platforms available, some more user-friendly than others. Each platform will have a choose of trading tools, features and functionalities. If you are already familiar with a specific trading platform, you may wish to check that the broker provides it. Alternatively, you can opt for a popular and user-friendly commodities trading platform such as MetaTrader or cTrader.
Leverage
In finance, leverage refers to the act of magnifying positions in the commodities markets through the use of borrowed capital. You have to qualify for a margin account, but when you do, you’re able to use leverage (margin) to get into commodity positions. Leveraged products, such as commodity CFDs, magnify your potential profit but also your potential loss.
For example, if you had an account balance of $2,000 and leverage of 1:5, you would be able to take a position size of $10,000 ($2,000 x 5 = $10,000).
Whilst this does mean that you can control a position size larger than you would have been able to without leverage, it also means the risk is significantly greater. It is imperative that you have a clear understanding of leverage and how it works before trading with leveraged positions.
Education
The best commodity brokers should have a generous selection of educational resources such as trading guides, tutorial videos, webinars, eBooks, quizzes and more. These can help you to learn more about trading commodities online and to help familiarise yourself with the brokers products and services. We are a big advocate of brokers who support informed trading.
Tools
The best trading platforms will have an array of built-in trading tools to assist with their daily trading activities and thorough market analysis. However, if you require any additional tools, it may be worth checking that they are provided by the broker. Tools can include economic calendars and earning reports to keep up to date with the latest commodity market news, which can be used as part of a fundamental analysis. Other trading tools may include trade calculators, trading signals, market alerts and more.
Signup
Each commodity broker will have its own minimum deposit policy so check that you can meet this requirement. You may also need to provide some personal information in order to pass the brokers KYC and AML procedures. The sign-up process can be quicker at some brokers, especially if all of it is conducted online. During the sign-up process it is very important to make sure that you read all of the brokers terms and conditions, only proceeding if you understand and agree with them.
Funding
Commodity brokers can have a variety of different account funding options in order for traders to make deposits and withdrawals to and from their trading account. You should make sure that the broker has a convenient funding options for you along with the time taken and fees involved. Common broker payment methods can include wire transfer, credit/debit card whereas some brokers will offer online payment methods such as Neteller, PayPal and Skrill.
Support
There are commodity brokers located throughout the globe. Some will offer email and telephone support whereas others will also offer live chat support. You want to be able to contact the broker at a time and via a method that suits you. Therefore, it can be important to check where the brokers’ offices are located, what times they are available and how they can be reached. You could test their response time and quality prior to opening an account.
How to start trading commodities online?
Now that you have had a brief overview of what commodities are and what to look for in a commodities broker, you may be considering opening an online trading account to trade commodities online. To do so, you will need to choose a broker, follow the account opening process and you will then be able to start trading online through one of their commodity trading platforms.