The Essential Guide

Commodity Brokers: How and Where to Get Started? (+ Scams To Avoid)

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Risk Warning: Your Capital is at Risk.

This beginner-friendly commodity trading guide is about exploring the basics of trading before you put your money on the line.

If you are already familiar with the basics, jump straight ahead to our list of regulated brokers compared side-by-side.

By the time you finish reading this page, you will know how to make an informed decision on what you want to trade based on the type of asset and instrument to suit your needs.

You’ll also have an idea about different ways to trade your chosen instrument, like CFDs, stocks, or options.

Also, we simplify what margins and leverages are in trading and how this information can help you choose a regulated online trading platform with the right account type, fee structure, and trading features.

Here are some of the top online commodity brokers available in .

IMPORTANT: CFDs are not available in the USA due to local regulation, and regulated brokers do not accept US citizens or US residents as clients.

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 73.90%-89.00% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

If you’re unfamiliar with what to look for when choosing a broker, you might want to see our seven factors to consider before choosing a broker.

What Do You Want To Trade?

When you decide that you want to trade commodities with a broker, there are two primary factors to become familiar with. These are:

  • The type of instrument you want to trade
  • The type of commodity categories you want to trade

The type of instrument you choose will depend on whether you want to take physical ownership of an asset (eg, bullion) or trade on its price movements — as well as the contract commitments you’re willing to undertake.

As for the type of commodity, you need to research the asset classes offered by your potential brokers. Some may offer precious metals and agricultural commodities, others may offer energy commodities, or, some can have all three!

Ways To Trade Commodities

There are several ways to trade commodities and your choice of trading instrument type is largely determined by your answer to:

  • Do you want to ownership of the commodity?
  • Do you want to trade physically or online?
  • Do you want to commit to a trade or have the choice to withdraw until a given time?

Here are 7 different ways to trade commodities with the above points taken into consideration, along with storage costs, ownership, contract expiry, and leverage.

IMPORTANT: CFDs are not available in the USA due to local regulation, and regulated brokers do not accept US citizens or US residents as clients.

Trading MethodOwnershipManagement CostsExpiry DateLeverage
Bullion
CFDs
Futures
Options✅ (if executed)
ETFs/Mutual Funds
Shares

What Are Margins & Leverage?

Beginning traders are often confused about the difference between leverage and margins, so here is a simple explanation.

Margin in trading is expressed as a percentage and defines the fraction of the full trading amount that a trader needs to provide to open a position. Margin trades allow a trader to put up a defined chunk of money to execute a larger trade.

Example of Margin:

A broker’s ‘margin requirement’ on a $1000 gold CFD trade is at 5%. The trader would need to deposit 5% of $1000 to open the trade, which comes to $50.

Leverage in trading is expressed as a ratio and is determined by the margin value. It shows the trade’s value in relation to the deposit amount.

Example of Leverage:

A 5% margin requirement on a $1000 would mean a $50 real-money deposit. This would give the trader a leverage of 1:20, meaning, the trade amount is 20x more than the initial money put forward.

Please note, this is an example trade – not a recommendation.

How To Choose A Commodity Trading Platform

When choosing an online broker, our golden checklist includes seven things to consider:

  1. ☑︎ Regulators: Brokers are regulated by organizations to protect consumers. Regulators also determine the countries where the broker is allowed to operate. The more established the regulator, the stricter the guidelines are for a broker. The FCA and SEC are good examples of tough regulators.
  2. ☑︎ Account Type: Brokers offer different account tiers: most commonly ‘standard’ and ‘professional’ accounts. Standard accounts have simpler verification processes, while professional accounts require more trading experience and capital.
  3. ☑︎ Instruments and Products: Brokers offer different ways to speculate on trading instruments and different categories of products. Check to see that the broker offers what you want to trade.
  4. ☑︎ Fees: Broker fee structures vary. Some charge deposit and withdrawal fees, while others don’t. Inactivity fees are also common, and different payment methods may be cheaper to use than others.
  5. ☑︎ Leverage and Margin: If you want to open a higher value trade with a significantly lower deposit, you’ll need a broker with low margin requirements and high leverages.
  6. ☑︎ Platform Features: The quality of a trading platform is determined by its ease of use and the trading tools provided. Look for features like charting features, technical analysis tools, platform design, and educational resources that match your level of experience.
  7. ☑︎ Mobile: Does the platform offer a mobile app or in-browser mobile trading? Look for how rich the mobile experience is compared to the desktop platform.

Regulated Online Brokers

We listed our recommended online commodity brokers at the beginning of this guide. Now, we go a little deeper to compare them while keeping in mind the above checklist.

IMPORTANT: CFDs are not available in the USA due to local regulation, and regulated brokers do not accept US citizens or US residents as clients.

Plus500: Hundreds Of CFDs for Beginners & Professionals

plus500 logo

Regulated by 7 organizations with over 2,000 trading instruments available, Plus500 offers a free demo account for traders wanting to try out the platform.

Support is available via live chat and e-mail in more than 60 countries.

  • Regulators: FCA, ASIC, CySec, FSA, MAS, FMA, FSCA
  • Account Types: Standard and professional
  • Instruments and Products: CFDs on Indices, Commodities, Forex, Cryptocurrencies, Shares, Options, and ETFs
  • Fees: Overnight fee and inactivity fee (See details in our Plus500 Review)
  • Maximum Leverage: Up to 1:30 (Standard Account)
  • Top Platform Features: Position management with advanced filters, platform available in over 35 languages
  • Mobile: Android + iOS apps

Start Trading Now at Plus500

Forex.com: Learn To Trade On The Go

forex logo

Forex.com has been active for over 20 years in 140+ countries.

They offer detailed educational resources for beginners and 24/5 support via e-mail, live chat, and phone for all traders.

  • Regulators: FCA, MiFID, ASIC, SFC, CIMA, IIROC, FSA, CFTC, NFA
  • Account Types: Standard, commission, and professional
  • Instruments and Products: Forex, Futures, Options, CFDs on Indices, Shares, Commodities, Cryptocurrencies (except Canada)
  • Fees: Currency conversions, overnight fee, inactivity fee, rollovers, same-day withdrawal fee, dividend adjustments (See details in our Forex.com Review)
  • Maximum Leverage: Variable (visit Forex.com for details)
  • Top Platform Features: MetaTrader 4 (MT4) compatible, trading tutorials, advanced technical indicators
  • Mobile: Android + iOS apps

Start Trading Now at Forex.com

Fortrade: Interactive Platform Tutorial For Beginners

fortrade logo

More than 300 instruments traded as CFDs, including precious metals, energy, and agricultural commodities.

Fortrade offers traders a practical interactive tutorial to get started on the platform.

  • Regulators: FCA, ASIC, CySec, NBRB, IIROC
  • Account Types: Standard, professional, and Islamic
  • Instruments and Products: CFDs on Indices, Forex, Shares, Commodities, Cryptocurrencies, ETFs, and US Treasuries
  • Fees: Wire transfer withdrawal fee, overnight funding fee, dormancy fee (See details in our Fortrade Review)
  • Maximum Leverage: Variable (visit Fortrade for details)
  • Top Platform Features: MetaTrader 4 (MT4) compatible, interactive beginner’s tutorial
  • Mobile: Android + iOS apps

Start Trading Now at Fortrade

AvaTrade: Generous Leverages And 10+ Cryptocurrency CFDs

avatrade logo

AvaTrade offers a variety of CFDs, forex pairs, and options with a choice of six desktop trading platforms and two mobile applications. This platform offers enough variety that’s feature-packed for an advanced trader and simple enough for a beginner.

  • Regulators: FSA, ASIC, FFAJ, FSCA, ADGM, BVIFSC
  • Account Types: Standard and professional
  • Instruments and Products: Forex, Options, CFDs on Indices, Shares, Commodities, Cryptocurrencies, ETFs, and Bonds
  • Fees: Inactivity fee and overnight fee (See details in our AvaTrade Review)
  • Maximum Leverage: Up to 1:400 (for traders outside the EU)
  • Top Platform Features: AvaTrade Go and AvaOptions specialist mobile apps, choice of six desktop platforms, easy-to-use analytics, eBooks, and educational video series
  • Mobile: Android + iOS apps

Start Trading Now at AvaTrade

eToro: Mobile-Centered Social Trading Platform

etoro logo

eToro is known as the ‘social trading platform’ since traders can track the performance of other traders and copy them directly. Traders have access to several categories of CFDs with a beginner-friendly mobile application on iOS and Android.

  • Regulators: FSA, ASIC, CySec, FinCEN
  • Account Types: Standard, professional, and Islamic
  • Instruments and Products: CFDs on ETFs, Stocks, Indices, Commodities, Cryptocurrencies, and Forex
  • Fees: Inactivity fee and overnight fee, withdrawal fee, cryptocurrency fees, conversion fee (See details in our eToro Review)
  • Maximum Leverage: Up to 1:400 (for Professional Accounts)
  • Top Platform Features: Social trading to duplicate trades, social trading news feed, interactive analytics, and market sentiment tools
  • Mobile: Android + iOS apps

Start Trading Now at eToro

Markets.com: Personalize Your Platform

markets.com logo

Markets.com offers five choices of trading platforms, including Marketsx exclusively for real stock trading. The broker accepts a range of payment methods like PayPal and Skrill.

  • Regulators: FSCA, CySec
  • Account Types: Standard and professional
  • Instruments and Products: Stocks, CFDs on Bonds, Commodities, Cryptocurrencies, Forex, Indices, ETFs, Blends, and Shares
  • Fees: Overnight fee, rollover fee, currency conversion fee (See our Markets.com Review for details)
  • Maximum Leverage: 1:300 (for Professional accounts)
  • Top Platform Features: Close to 100 color-coded technical analysis indicators, very low minimum withdrawals, and social trading sentiments
  • Mobile: Android + iOS apps

Start Trading Now at Markets.com

City Index: Spreadbetting & Mobile Award Winner

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With a detailed ‘Getting Started Guide’ and an advanced trading platform with ample tutorials, City Index caters to both beginner and advanced traders. They offer CFDs across eight different asset classes.

  • Regulators: FCA, ASIC, MAS
  • Account Types: Standard and professional
  • Instruments and Products: CFDs on Forex, Cryptocurrencies, Shares, Indices, Commodities, Bonds, Interest Rates, and Options
  • Fees: Equity commission, currency conversion fee, overnight fee, inactivity fee, CFD borrowing fee (See details in our City Index Review)
  • Maximum Leverage: 1:400 (for Professional accounts)
  • Top Platform Features: Mobile chart and technical analysis with over 60 indicators, MT4 and AT Pro compatible, and live webinars
  • Mobile: Android + iOS apps

Start Trading Now at City Index

Trading212: The UK’s Top Mobile Trading Platform

trading212 logo

Trading212 has a reputation as a popular mobile trading platform due to its user-friendly design. It is a broker with a transparent account and fee structure offering CFDs and real stocks on over 3,000 global markets.

  • Regulators: FCA, FSC
  • Account Types: Professional account and 3 standard account types (CFD, Invest, and ISA – see details here)
  • Instruments and Products: Stocks, CFDs on Forex, Shares, Commodities, Cryptocurrencies, and Indices
  • Fees: Overnight fee and currency conversion fee (See details in our Trading212 Review)
  • Maximum Leverage: 1:300 (for Professional accounts)
  • Top Platform Features: Customizable, color-coded technical indicators on mobile and desktop, beginner-friendly visual dashboard, and social sentiments
  • Mobile: Android + iOS apps

Start Trading Now at Trading212

FAQs

How do commodity brokers make money?

Some commodity brokers charge a commission on trades, although most ‘no-commission’ brokers make money on a traded product’s spread. A spread or ‘pip’ is the difference between the price markers of opening a short position and a long position. Spreads and pips can be fixed or variable, but mostly they’re the latter.

Which broker is best for commodity trading?

The best broker for commodity trading depends on your individual needs and preferences as a trader. Things that will shape your decision include what you want to trade, how you want to trade it, and which brokers are regulated in your country of residence.

Other factors to consider are margins and leverages, platform features and device compatibility, and whether you can afford the fees charged by the broker.

What is the minimum amount required for commodity trading?

The minimum amount to trade commodities is determined by the minimum deposit requirement of a commodity broker. Fortrade is a broker with a minimum deposit requirement of just $1 while other beginner-friendly brokers like eToro and FXCM set a minimum deposit of $50.

Traders can get started with other regulated brokers like Plus500 and Forex.com with a $100 initial deposit.

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