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- Food : Wheat, rice, coffee.
- Energy: Oil, natural gas.
- Metals: Gold, silver, copper.
- Materials: Wood, cotton.
For instance, the gasoline in your car comes from oil and it's a global commodity.
Why Do Commodities Matter?
1. They Affect Prices: If oil prices rise, plane tickets, Uber rides and many other things get more expensive as well.
2. People Trade Them for Profit: You can make decent money by trading them. As a matter of fact. People trade them by buying at a lower price and selling at higher prices ( just like reselling your sneakers to make profit l)
3. Hedge Against Inflation: When money loses value, we often see commodities like gold rise in value.
How to Trade Commodities For Beginners.
1. Futures Contracts: This simply means agreeing to buy or sell a commodity at an agreed-upon price on some future date. For example: "A farmer agrees to sell 100 kg of wheat for $500 on a future date of 3 months. That's a Future Contract!
2. ETFs (Exchange-Traded Funds): This when you buy a basket of commodities using apps like Robinhood or eToro. For example, the GLD ETF tracks gold prices.
3. Buy Physical Commodities : It's like purchasing gold bars, silver coins, or even bags of rice for the purpose of making profit.
4 Easy Steps to Start Trading
1. Pick a Platform: Be sure to choose apps that are beginner's friendly, such as Plus500 or Webull, to start trading.
2. Learn the Basics: It is extremely important to learn about commodities first. You may follow my forum for further insight or even watch YouTube tutorials.
3. Start Small: The good thing is, you can start trading with just $50-$100. It will let you get acquainted with how to trade first before you start to invest bigger money.
4. Diversify: Don’t ever put all your money in only one commodity. Make sure to spread it across commodities like gold, crops, oil, etc.
3 Common Mistakes to Avoid
1. Over-Leveraging: This is borrowing too much money to trade. It's more like using a credit card to gamble, which is never a wise decision.
2. Ignoring the News: News related to weather, wars, or politics change commodity prices very fast. So, don't ever ignore those news.
3. Not Understanding Seasons: It's very crucial to understand how commodities perform in different seasons. For instance, the price of coffee rises in winter and gas prices jump in summer. So, you must understand the seasons very well.
2025 Trends in Commodities
1. Green Energy Demand: There is high demand for Lithium used in electric cars and copper is also booming.
2. AI Farming Tools: These are tech predicting crop yields and it affects wheat/corn prices.
3. Crypto Commodities: Bitcoin is now called digital gold by some traders. It really surged and put smiles on the faces of holders
Why Trade Commodities in 2025?
-Inflation Protection: Commodities often rise when cash loses value.
- Global Events: Wars, droughts, and tech shifts often create trading opportunities for people.
Final Tips for Beginners
- Follow Trends: You should always google commodity forecasts for free reports.
- Use Demo Accounts: Practice with fake money first before using real money. Apps like MetaTrader offer you this opportunity.
- Stay Patient: Prices move slowly sometimes and when that happens, you don’t panic.