In the world of finance, people invest in or trade both intangible and tangible assets. The intangible stuff is like stocks and bonds. A stock represents fractional ownership of a company. A bond represents a debt agreement.

On the tangible end of things, you have commodities. These are items that can either be consumed or used to make industrial products. Consumable commodities include coffee, grains, and livestock. Industrial commodities include oil and gas, metals, and lumber.

Commodities are materials people need for consumption or industrial production

Not everyone needs to own company shares, let alone cryptocurrency. Not everyone needs to lend money by purchasing a bond. But people do need to eat, drive their cars, and purchase products for everyday use. That’s what commodities are: materials (or raw materials) that people can consume or use to produce commercial goods.

The interesting thing is that mainstream investors typically don’t have commodities exposure. They’re simply not as common or accessible as stocks. They’re certainly not as hip or fashionable as cryptocurrency. Yet ignoring this financial asset class can cause many investors and traders to miss out on a different segment of financial opportunity.

Commodities are one of the oldest tradable assets out there. So, if you’re not as familiar with commodities as other assets, it might be worth taking a second look.

What kind of commodities can people invest in?

When it comes to trading or investing, commodities are typically accessible through futures, CFDs, or equity ETFs. The most common commodity classes and their respective markets can be viewed in our products section.

Why do people invest or trade in commodities?

One of the biggest reasons why people seek commodity exposure is diversification. Many commodities are uncorrelated with stocks. This means that they tend not to move in sync with the stock market. When stocks go up, down, or sideways, commodities tend to take their own independent path.

Not only does this offer more market opportunities, it can also serve as a hedge against a falling stock market. Of course, individual commodities can also undergo bear markets as well, so you have to know the fundamentals of your market before investing in or trading it.

Ways to trade Commodities

As always, do your research to ensure you select the right brokerage to suit your need, in order to access a broad range of markets and the best price and achieve your trading goals, all while protecting your capital.

Protect your portfolio and hedge against risk

While not as liquid as forex, commodities like metals are thought to be safe haven investments. These assets can be used to hedge against inflation and economic instability that may impact the profitability of any stocks and shares portfolio. As commodities tend to move in the opposite direction to stocks, the market forces affecting commodities can help preserve and protect your profits.

Diversifying further reduces risk

As the pandemic highlights just how precarious our global infrastructure is and how it impacts the markets, diversifying into stable investments like precious metals and gold trading can mitigate the risk faced in other more liquid currency markets. Spreading your risk and devising a robust diversification strategy can drive real success.

An easy and accessible way to trade

Trading in commodities like precious metals is easy to understand and has a low cost of entry which is accessible to most. Supported by ATC Brokers trading platform and an easy exit strategy with the liquid nature of gold and silver, it’s a great place to start trading or to grow an existing portfolio.

Forex Trading with ATC Brokers

Now that you’re up to speed on leverage in forex, why not set up a demo account to develop your strategies today. Or, if you’ve done your research and are ready to trade forex right away, sign up now for instant access to the following benefits

• An easy-to-use, intuitive user platform
• Strategic support and market analysis
• Real-time trading news and economic views
• An up-to-date economic calendar