During times of high inflation, commodities can potentially make a great hedge against the rising cost of living for your investment portfolio.
The first step to trading commodities is opening an account with a broker, but which is the best commodity trading platform in the UK? Well, my guide will tell you everything you need to know about some of the best brokers available and some of the big differences between commodities and stocks and shares.
Also consider: Find the best uk share trading platform
My top commodity trading platforms for May 2024
Below are five of my top picks for the best commodity trading platforms in the UK. Each comes with its own set of features, some more appealing than others.
Top commodity trading platforms at a glance
Plus500
I was impressed with the variety of over 20 commodity CFDs at Plus500, including gold, platinum, oil, gasoline, silver, and agricultural commodities like wheat and coffee. Commission-free trading and low non trading fees make this broker an excellent choice.
In addition, traders can make use of some advanced risk management tools, including stops, limits, and Guaranteed Stop to avoid slippage. Trades can be made on the move using the intuitive mobile app, which is compatible with both Android devices and smartwatches.
Plus500 has also catered to inexperienced traders with an excellent demo account, allowing traders to test the platform in real market conditions without risking any of their own funds.
All in all, this is an excellent trading platform that comes highly recommended.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 81% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
eToro
Another brilliant online trading platform for commodity investing, and perhaps one that you’ve heard mentioned before, is eToro.
If you’re looking for a platform that is simple to use, then eToro could be what you’re looking for. Indeed, the platform’s user interface is intuitive and great for beginners.
The most commonly traded commodities are present, such as oil, gold, and silver. Traders can access real-time price charts and tap into the thriving social trading community to discuss oil, gold, gas, and other top commodities.
There are more than 40 commodity markets available at eToro, and you can also trade commodity CFDs with eToro, allowing you to speculate on future price movements.
The minimum deposit at eToro is $10, and there is a $5 withdrawal fee, which is worth remembering.
This platform offers a trading app, so you can check your investments on the go. You can also use eToro’s demo account to learn about trading before putting your money in the market.
76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. Your capital is at risk. Other fees apply. For more information, visit etoro.com/trading/fees
There is a lot I like about trading commodity CFDs on Pepperstone. On a multitude of trading platforms, you can access commodity CFDs that include gold, silver, crude oil, and natural gas with extremely competitive spreads starting as low as 0.05 points on gold. There are no inactivity fees, no account fees, no commission on the standard account, and no minimum deposit, which makes this a really cost-effective option.
For traders who are new to commodity trading, Pepperstone has a number of social trading platforms with a thriving community to learn from. There is also access to the MetaTrade platforms, a firm favourite among commodity traders. Fast executions and a 99.94% full rate means you will never miss out on a trade.
Pepperstone also offers award-winning customer service, which is available 24 hours a day, 5 days a week, plus an additional 18 hours on weekends. You experience a smooth trading experience here with helpful account managers, all at exceptionally low costs.
For the latest Pepperstone products, fees, and platforms available, including stock and share trading, please read my detailed Pepperstone review.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75.6% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
AvaTrade
AvaTrade was an obvious addition to my list of the best commodity trading platforms, largely due to the sheer number of trading platforms available on their live trading account. This includes the full MetaTrader suite, two proprietary platforms, Zulu Trade, DupliTrade, and a mobile application.
AvaTrade really caters to all levels of traders. They have one of the most comprehensive educational offerings I’ve encountered, as well as a professional trading platform and a thriving social trading community offering excellent copy trading potential.
AvaTrade provides access to 27 commodity CFDs, including oil, natural gas, gold, copper, silver, coffee, cotton, wheat trading, sugar, and many more, with low entry, competitive spreads, and leverage of 10:1.
Please note that there’s a high level of risk involved with trading CFDs; 76% of retail investor accounts lose money trading CFDs with this provider.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
IG
Whether you’re buying stocks and shares or trading forex, IG is one of the longest-standing brokers in the UK and is also a brilliant option for commodities trading.
The broker offers access to more than 35 commodities across both soft and hard commodity categories.
If educational resources are important to you, then IG could be the platform for you, as it provides myriad different research and educational materials.
IG also allows you to trade commodity futures contracts on its platform, as well as derivatives such as spread bets and CFDs.
Better yet, IG has relatively low fees when compared to other brokers, as there is no deposit or withdrawal fee whatsoever.
It’s worth keeping in mind that there is an inactivity fee on IG, but you will only be charged £12 a month after two years of inactivity.
Please note that there’s a high level of risk involved with trading CFDs; 76% of retail investor accounts lose money trading CFDs with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
Saxo Markets
A commodity trader looking to pay a competitive trading fee with tight spreads when trading commodities won’t be disappointed at Saxo Markets. There’s a wide range of commodities here, including commodities such as CFDS, futures, options, spot pairs, or exchange traded commodities (ETCs).
Saxo Markets offers complete flexibility with the option to go long or short, hedge, or take a long term view. The award winning platform comes with a whole host of advanced trading tools that are excellent for trading commodities, including over 50 technical indicators and a number of excellent editing tools, in addition to a trading signal tool. There are also fundamental analysis tools, live news feeds, and risk management features, but it is worth noting that some of the data provided is available by subscription only.
Saxo Markets also offers 24-hour customer service support. So, if you need help or have queries about your account, you’ll usually be able to speak to someone to solve these.
61% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs, or any of our other products work, and whether you can afford to take the high risk of losing your money. The value of your investments can go down as well as up. Losses can exceed deposits on some margin products. Professional clients can lose more than they deposit. All trading carries risk.
CMC Markets is an exceptional platform for commodity trading. It offers access to a vast range of financial instruments via CFDs, including commodities, forex, shares, indices, bonds, and cryptocurrencies. This diversity makes it suitable for traders of all levels. With over 136 commodities, including metals, energies, agriculture, and commodity indices, CMC Markets has a highly competitive offering.
The platform’s proprietary ‘Next Generation’ trading system is a standout feature, offering modern design, customizable templates, and transparent trading costs. While MetaTrader 4 is also available, ‘Next Generation’ provides an enhanced trading experience.
For beginners, CMC Markets offers comprehensive educational resources and research tools. Experienced traders benefit from dedicated sites, rebate programmes, and a free API interface.
CMC Markets boasts a stellar reputation and is listed on the London Stock Exchange, providing added security. The platform is known for its competitive pricing, favourable spreads, and risk management tools like guaranteed stop losses.
However, it’s essential to note that it lacks backtesting capabilities, and some CFD spreads on certain indices may be high.
In conclusion, CMC Markets stands out as a top-notch commodity trading platform, catering to traders of all levels with its extensive asset offerings, user-friendly interface, and strong security measures.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Interactive Brokers
If you’re looking for online brokers with low trading fees, then Interactive Brokers could be a good option.
Indeed, while the fees vary, they are reportedly very low. This means that, if you’re planning on trading frequently, Interactive Brokers could suit you well.
Interactive Brokers is yet another online trading platform that gives its users access to brilliant educational and research materials.
So, if you’re still a beginner in commodity trading and wish to learn more about it, Interactive Brokers could be the platform for you.
And, much like the other brokers on this list, you can trade spread bets and CFDs with this provider. However, as I have mentioned, trading CFDs presents a high risk of losing money, and 68.6% of retail investor accounts lose money trading CFDs with Interactive Brokers.
Make sure you fully understand these risks before you start trading.
Interactive Broker’s non-trading fees are low, with no minimum deposit, no withdrawal fee, and no inactivity fee.
Interactive Brokers also provide a good range of trading platforms. These can be categorised by which is best for your level of experience.
Capital at risk.
What is the best commodity trading platform?
One of the best commodity trading platforms is eToro, which offers low deposit and withdrawal fees. This could be great for those who are still beginners and just want to dip their toes in the water of commodity trading.
Or, if you wish to trade futures on commodities or try your hand at spread betting and CFD trading, you should find a platform that allows you to do so.
Meanwhile, you might want to be able to check your investments wherever you are. In that case, mobile trading apps might be your priority.
Which commodity trading platform is best for beginners?
If you’re still a beginner looking to start trading commodities, it may be worth looking into a commodity broker like eToro that offers access to a good selection of educational and research materials.
This way, you can learn while you trade and refine your trading strategies as you go.
Also, if you’re still a beginner and just want to try your hand at commodity trading, you may want to consider retail investor accounts that have low minimum deposit requirements.
How do you decide which platform best suits you?
To decide which platform you want to use, you should use my guide and compare the different features each broker offers.
If you are planning on trading a wide variety of different commodities, you should ensure that your chosen platform supports many different commodities. CMC Markets, for instance, offers access to more than 90 commodities, which is much higher than some of the others on my list.
Fees and commissions should also play a part in helping you decide which broker to choose. If you’re planning on trading large volumes of commodities, you should ideally pick a broker that has lower fees and commissions on trades, such as Interactive Brokers.
This way, the fees and charges you accrue won’t eat into your potential profits too much.
And finally, the frequency with which you plan on trading should also influence your choice. For example, some brokers have higher inactivity fees. If you end up forgetting about your account after a while, an inactivity fee could eat into your capital.
What is commodity trading?
As the name suggests, commodity trading is simply when investors buy and sell different resources on stock markets.
Commodities are traded much like stocks, though they are instead listed on commodity exchanges such as the Chicago Mercantile Exchange (CME) or the London Metal Exchange (LME).
If you would like to read more about what commodities are, please read my other guide about how you can invest in commodities, where you can also discover their various benefits and downsides.
The different types of commodities
Commodities are typically split into four different categories.
Each set of commodities comes with its own set of benefits, so continue reading to find out what these are so you can figure out which you want to invest in.
Metals
Metals are a favourite for investors around the world. These, along with energy goods, are considered “hard” commodities as they must be mined or extracted from the earth.
Some of the most commonly traded metals include:
- Gold
- Platinum
- Copper
- Silver
- Iron
Gold is a particular favourite for investors, especially during times of market uncertainty or volatility.
This is because it tends to be reliably priced and has real-world value. This is why many investors will trade gold to hedge their portfolios against inflation.
Energy
Energy, as the name suggests, involves the trading of:
- Crude oil
- Natural gas
- Coal
- Petrochemicals
- Electricity
Energy commodity prices tend to fluctuate often.
For example, crude oil investors may find that prices start to climb as oil supplies become scarcer and demand for energy continues to rise.
Though it’s also worth keeping in mind that as new, green energy sources are unveiled and installed, fossil fuels such as oil, natural gas, and coal may see price drops.
Agriculture
Another potentially overlooked resource you can trade on commodity markets is agricultural goods.
These are typically defined as “soft” commodities. This is because, unlike hard commodities that need to be mined or extracted, soft commodities are instead harvested or grown.
Some of the most popular commodities in the agriculture category include:
- Wheat
- Rice
- Cocoa
- Cotton
- Sugar
The prices of these agricultural goods are impacted in different ways than other commodities.
Indeed, you may find that wheat, for example, is more volatile during the summer months due to weather conditions. And with high volatility typically comes high risk.
Though, as populations continue to grow, the need for food and other agricultural products will also increase. This could provide opportunities for profit when trading agricultural goods.
Livestock and meat
Similar to agricultural products, you can also invest in livestock and meat. These are also considered soft commodities.
As the name suggests, this includes:
- Live pigs
- Live cows
- Pork
- Beef
- Feeder cattle.
As with agricultural products, conditions such as population growth and weather can impact the prices of livestock and meat products.
How do commodity prices move?
As mentioned, the different commodity categories have their prices affected by different factors.
For example, energy products may be impacted by the demand for power or the scarcity of finite fossil fuels, such as oil or coal.
Or, for agricultural products, livestock, and meat, unseasonable weather or population growth can influence their price.
The main thing to keep in mind is that commodities are typically priced differently from traditional stocks and shares.
Supply and demand play a huge role in setting the prices for commodities. For example, if oil becomes scarce, demand will increase, thus pushing up the price.
Also, some commodity prices may be influenced by geopolitical situations around the world. Crude oil, for example, is a large export for Middle Eastern countries. When conflicts occur in this region, it can halt oil production and drive prices up.
Or, for a more recent example, Russia’s invasion of Ukraine has impacted grain prices, among other things. This is because Ukraine was one of the largest producers of grain in the world before the invasion.
However, with less grain being produced there currently, there are fewer resources trading on the commodity markets. In turn, this has pushed up prices.
What are the best commodities to invest in?
This depends on your reasons for investing in the first place and your tolerance for risk.
For example, if you’re investing in commodities to diversify your portfolio and hedge your investments against inflation, then you may want to think about purchasing gold.
Also, silver can make a good investment thanks to its status as a precious metal. Though you may find silver to be riskier, as it is used in industrial processes such as the production of solar panels, it could be impacted more by economic downturns.
If you are more tolerant of risk, you may want to consider more volatile commodities, such as coffee.
While everyone’s favourite morning brew could see sudden increases in price, its value is impacted by a number of different factors, ranging from political turmoil in producing countries to poor weather conditions.
Now that you know what commodity trading is, you are likely wondering what the difference is from stock trading.
Of course, while there are major similarities, there are also big differences, so continue reading to find out what these are.
| Commodities | Stocks | |
|---|---|---|
| Impacts of inflation | As inflation rises, commodities typically rise in price | Inflation typically has a negative effect on stock prices |
| Typical length of trades | More suited to short-term trades | Typically better for longer-term trades |
| Pricing influences | Mostly affected by supply and demand, among other lesser factors | Stocks influenced the most by the performance of the underlying asset |
| Market operating hours | Open almost 24 hours a day, five days a week | Only open during the operating hours of the country of origin of the market |
| Based on the underlying asset? | You purchase the underlying asset, and the price is tied to it | You purchase the underlying asset, and the price is tied to it |
| Allows derivative trading? | Yes, you can trade derivatives on commodities | Yes, you can trade derivatives on stocks and shares |
Similarities to stocks and shares
Tied to the value of its underlying asset
As is the case with stocks and shares, a commodity’s value is tied to its underlying asset.
Take gold, for example. When you invest in gold, its price is determined by the value of the resource itself.
This is similar to stocks and shares, where the price is determined by the value and performance of the company itself.
You can try your hand at derivative trading
Just as you can trade derivatives on stocks and shares, you can also do so on commodities.
Simply put, derivative trading is when you “bet” on how the price of a particular commodity will move.
Spread betting is one such method of derivative trading. This is when you open either a long position, where you predict the price will increase, or a short position, where you predict the price will drop.
If the price of a commodity then moves in your favour, you will turn a profit. Meanwhile, you’ll lose your bet if it doesn’t.
Another similar way to trade derivatives is through CFDs. This is essentially the same as spread betting, where you try to predict how the price of a specific commodity will move.
Though, unlike spread bets, CFDs will instead pay out the difference in price from when you opened your position to when you close it.
Both spread bets and CFD trading are complex instruments, and more than half of retail investor accounts lose money when trading CFDs or spread bets.
So, before you try your hand at derivative trading, it’s of the utmost importance that you do adequate research beforehand and fully understand how spread bets and CFDs work. Otherwise, you may be at high risk of losing money rapidly.
Differences from stocks and shares
Subject to different inflationary pressures
One of the major differences between stocks and shares and commodities is the way inflation affects prices.
Indeed, companies are usually negatively impacted by inflation since consumers are typically less likely to spend money, thus affecting that company’s share price.
This differs from commodities, which usually move inversely to inflation.
This is because, as inflation increases, so does the price of resources for industrial processes. This means that the price of commodities typically rises in turn.
This is why many people will invest in commodities to balance their portfolios against inflation, providing a hedge in difficult economic circumstances.
More commonly traded in the short term
Another big difference between stocks, shares, and commodities is the typical length of time you can expect to hold onto them.
For example, if you’re trading stocks and shares, you will typically hold onto them for long periods of time in order to increase your chances of profit when you eventually sell them.
Commodities, on the other hand, are typically held for far shorter periods of time. This is because some soft commodities, such as wheat and meat, can spoil, and some hard commodities, like oil, are difficult to store for long periods of time.
Of course, this isn’t always the case; sometimes you will hold onto commodities, such as gold and silver, for long periods of time. Meanwhile, stocks and shares that experience periods of high volatility may be bought and sold relatively quickly.
Market operating times
Finally, one of the other big differences between stocks and shares and commodity trading is the financial markets’ operating hours.
The opening times of stock markets are restricted to the operating times of the country the market resides in.
For example, UK stock markets, such as the London Stock Exchange, are open from 8 a.m. to 4:30 p.m. GMT, Monday through Friday.
Meanwhile, US markets, such as the Nasdaq, are open from 9:30 a.m. to 4 p.m. EST (2:30 p.m. to 9 p.m. GMT).
Commodities markets, on the other hand, are open almost 24 hours a day, five days a week. This is because they tend to be more global markets.
Of course, the exact opening times will depend on the commodities market you wish to trade on. For example, the Brent crude oil commodity market is open from 8 p.m. to 6 p.m. Sunday through Friday.
Best Commodity Trading Platform UK FAQs
Which commodity trading platform is best for beginners?
The best commodity trading platform for beginners would ideally be one with lots of educational and research materials on offer. This way, you can learn more about commodity trading while you’re investing.
Also, beginners may want to consider using a trading platform with low minimum deposit requirements. This will prevent you from feeling overly committed to your account if you’re required to deposit large sums of money.
How do you trade commodities in the UK?
To trade commodities in the UK, you first need to open an account on a trading platform of your choosing. Once you’ve opened your account, you should deposit the amount of money you intend to invest.
When all this is done, you should then search for the commodity you wish to trade and how you plan on trading it.
Please note
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
Trading CFDs and financial spread betting are complex instruments, and more than half of retail investor accounts lose money when trading commodity CFDs and financial spread betting. Please make sure that you know these risks before you start trading and that you’re aware there’s a high chance of losing money rapidly on your investment.
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