Commodity Futures Trading

Futures contract is a standardized contract between two parties to buy and sell a specific asset at a specific agreed price in the future. Currencies, Metals, Stock Indices and other instruments are traded on stock exchanges. However, the most popular type is commodity futures trading.

What Is Commodity Futures Trading?

Commodity futures is an agreement to buy or sell a commodity in future at a determined price on a specific date. As commodity prices are changing all the time, it is possible to use them not only with a purpose to hedge buy/sell the commodities, but also to speculate on them. When the prices of a commodity are going up, the buyers are expected to make a profit and if the prices are going down, the sellers of futures make profit. Commodity futures trading is not conducted for all commodities. Exchanges issue futures on a specific list of tradable commodities. The most popular among them are oil, wheat, coffee, sugar, copper, gold, gas, etc. Commodity futures trading becomes available to more people due to leverage in trading. It will give you an opportunity to invest less than the commodity's actual price. Another feature of commodity futures is that each of them has its expiration date at which futures contract trading stops and the counterparties make settlements.

Commodity Futures Trading with IFC Markets

IFC Markets has developed a special instrument - continuous CFD - that is very convenient for traders involved in commodity futures trading in the framework of their long-term trading strategies. Traders have an opportunity to trade commodities through continuous CFD without expiration dates, i.e. hold their positions open as long as they wish. Continuous commodity futures are calculated based on the two nearby liquid futures. Let us take, for example, continuous CFD on Crude Oil WTI, the price of which is calculated on the basis of two nearby futures on Light Sweet Crude Oil by the following formula:

OIL = F1 x T1 / T + F2 x (T - T1) / T, where:

F1, F2 – quotes of the nearby and its following liquid futures;

T-nominal time between the expiration dates of two futures (30 days);

T1 – time remaining until the expiration date of the nearby futures contract F1

You can enjoy commodity futures trading with the best conditions in IFC Markets, investing in such commodities, as oil, cocoa, coffee, wheat, natural gas, etc.

IFC Markets is a leading innovative financial company, offering private and corporate investors wide set of trading and analytical tools. The company provides its clients with Forex and CFD trading through its own-generated trading platform NetTradeX, which is available on PC, iOS, Android and Windows Mobile. The company also offers MetaTrader 4 platform available on PC, Mac OS, iOS and Android. You may compare the advantages of both platforms.