How to choose a broker for commodity trading?
When looking for a broker for commodities trading, you should pay special attention to the following points.
Can I trust the broker?
To be authorized and regulated, brokers must undergo audits, meet capital requirements, and provide segregated accounts and negative balance protection. You can search the regulator’s website to confirm the broker’s status and check for any disciplinary action. The broker’s size and operating history are also worth considering. You can usually find these on the company’s LinkedIn page. If you are working with an offshore broker entity, you should be especially cautious.
Read more about Best regulated forex brokers.
Are the fees competitive?
Working with a broker that keeps spreads and commissions to a minimum can make the difference between profit and loss at the end of the day. This is a crucial point for day traders. In our broker review methodology, we consider spreads of less than 35 pips as competitive in gold and less than 3 pips as competitive in WTI crude oil. Also, don’t be caught off guard by miscellaneous account-related fees, such as inactivity and withdrawal fees.
Check out our guide on Best lowest spread forex brokers.
What is the minimum deposit?
The minimum deposit required by CFD brokers can vary depending on the broker and the specific account type. Generally, the minimum deposit can range from as low as $100 to several thousand dollars. For example, among our list of best brokers for commodities trading, they range from $100 in the case of Plus500 to $200 with Vantage.
What account types are available?
A broad range of account types helps a broker cater to different trader profiles. For example, a simple STP account may be the best for beginners in the markets, while an ECN/raw spread account can help sophisticated, active traders keep their costs to a minimum. Here are some most popular account types offered by CFD brokers:
- Demo accounts are used for practice without risking real money. Such accounts should be used by novice traders making their first steps in markets. Discover more about brokers with demo accounts.
- Spread-based accounts typically charge spreads and swap/rollover fees. These accounts are usually a good choice for traders whose trading volume is expected to be relatively modest.
- Commissions-based accounts charge commissions in addition to spreads and swap/rollover fees. Usually, spreads are tight in such accounts. These accounts are suitable for traders whose trading volume is expected to be high.
- On Islamic accounts, swap/rollover fees are not charged to insure compliance with Sharia law. Find out best brokers with Islamic accounts.
- Professional accounts usually have a high minimum deposit and offer access to high leverage that most professional traders are looking for.
Read more about Best STP forex brokers and Best ECN forex brokers.
What platforms are available?
An intuitive, easy-to-navigate platform will allow you to launch into the trading world with minimal hitches. The most user-friendly platforms are typically browser-based platforms created by the broker. Look for easy-to-implement features such as watchlists, trading from the chart, search, news, and a customizable interface. The MetaTrader 4 and 5 platforms have additional features like backtesting, automated trading, and a wider range of order types – but are less user-friendly.
Explore Best MT4 brokers and Best MT5 brokers.
Commodity markets are highly volatile and especially sensitive to global events. Browser-based proprietary platforms can cater to commodities traders, but sophisticated and high-volume commodity traders may do better using the advanced features of platforms such as MetaTrader and cTrader which offer advanced order types, 1-click trading, market depth, and news feeds.
Check out our dedicated guide on Best forex trading platforms.
Is customer support reliable?
Having solid support on hand is essential. Check the hours of availability, for example, whether help is on hand 24/7 or only during business hours. Chat support is the most convenient, so look for an easy-to-access chat window built into the broker platform. In the case of a platform outage, it is also important to be able to contact support via phone.
What kinds of commodities can I trade with a CFD broker?
As CFDs (Contracts for Difference) are derivative instruments, they allow you to trade a wide range of commodities without owning the underlying asset. The types of commodities that you can trade as CFDs include:
- Precious Metals: CFDs enable you to trade popular precious metals such as gold, silver, platinum, and palladium.
- Base Metals: CFDs provide access to base metals like copper, aluminum, nickel, zinc, and lead. Check Best metal trading forex brokers.
- Energy Commodities: You can trade energy commodities such as crude oil (Brent and WTI), natural gas, heating oil, and gasoline as CFDs. Check Best energy trading forex broker.
- Agricultural Commodities: CFDs allow you to trade agricultural commodities like wheat, corn, soybeans, coffee, cocoa, sugar, cotton, and more.
- Soft Commodities: Soft commodities that can be traded as CFDs include products like coffee, cocoa, sugar, and cotton. Check Best soft commodities forex brokers.
- Livestock: CFDs also cover livestock commodities such as cattle and hogs.
It’s important to note that the availability of specific commodities as CFDs may vary depending on the broker you choose. Therefore, it’s advisable to check with your broker or trading platform to determine the exact range of commodity CFDs they offer.
Uncover more insights about Best gold trading brokers and Best oil trading brokers.
How to avoid forex and CFD scams?
A common scam in the forex and CFD industry involves vendors offering a trading strategy that guarantees an outlandishly high return in little time. These may involve automated trading using bots or a signal service where trades are shared via chat or social media. Nobody can guarantee returns with certainty, and it is more likely that such strategies will lose money. When assessing strategy or signal providers, you should look for a live track record audited by a third party, and also be conscious that past performance does not guarantee future results.
Traders should also be cautious about opening an account with an unregulated offshore broker. Such brokers may offer a straightforward account opening process, bonuses, and high levels of leverage but client funds are typically not protected. Meanwhile, brokers regulated by top-tier authorities must undergo regular audits and are held accountable for misconduct. Traders can also benefit from having their funds held in segregated accounts, negative balance protection, and a compensation fund in the event of broker insolvency.
Our Methodology
In selecting the best commodity trading brokers, we used the results of our advanced proprietary methodology. All of the brokers listed were among the leaders in our tests.
FXEmpire has been reviewing brokers since 2011 and has pioneered the in-depth evaluation of CFD brokers. Our process has taken years to refine and involved hundreds of reviews. We’ve gone to a granular level – with over 250 data points in our analysis of each broker – so you can feel confident in selecting the right platform.
To provide the most comprehensive view, we break down the brokers according to nine different categories:
- Trust
- Fees
- Platforms and tools
- Tradable instruments
- Customer service
- Deposit and withdrawal
- Account types
- Research
- Education
In our individual broker reviews, we explain complex areas like regulatory status, so you can easily understand the safety of your funds and the benefits you are guaranteed.
Data is gathered through live testing, research, detailed questionnaires, and in-person broker demonstrations. An account is opened with each broker, focusing primarily on the services of one entity and testing using the most standard account type and platform. We conduct live tests of spreads and measure overnight swap fees and account-related costs.
Our side-by-side analysis reveals whether a broker is competitive in relation to the industry as a whole. Trading platforms take time to master, but we have already done the legwork for you, and our evaluations highlight their important features and usability.
FXEmpire abides by strict guidelines for editorial integrity. Scoring is based on objective criteria and mostly measurable data, so our reviews cannot be swayed by individual preferences or biases. The review process is independent and follows a strict protocol. In addition, all facts are carefully checked and rechecked, as reviews are continually updated. Read more about our review process here.
For this guide, we evaluated brokers’ commodity offerings, focusing on variety and quantity. We selected brokers with high regulatory standards and a strong industry track record. Cost efficiency was key; we chose brokers with tight spreads to reduce trading costs. We assessed trading software, prioritizing platforms with advanced charting, diverse order types, user-friendly interfaces, and automated trading features. Additionally, we considered the maximum leverage each broker offers for commodities, catering to various risk preferences and strategies.
Meet Our Writers
The team of forex and CFD analysts and editors at FXEmpire is composed of trading industry professionals and seasoned financial journalists. Our experts have been published on leading financial websites such as Investopedia and Forbes. In addition, they all have extensive trading experience.