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How to Buy Commodities

Updated on December 12, 2015

Like all forms of trading such as stocks and Forex you need to know the basics of trading in commodities. The market action is not dissimilar to other traded markets and at certain times of the day will show very high volatility especially around breaking news. It should not be viewed as just a "roll of the dice" or another form of gambling. If you are new to commodities and trading them you will have many questions. How do you buy commodities in the first place?

The easiest method is to just open an on-line trading account. Many brokers provide superb trading platform free of charge. If you are new to the business make sure that you open a demo account first.

To purchase your commodities you would then make the account live. You have put real money in the account and have done research and training to make the current decisions. The commodity is then purchased via a futures contract, they are the agreements of the predetermined dated transactions between the commodity seller and buyer.

Also you could think about using an ETF (Exchange Traded Fund). The ETF will manage your money for you. They will look at the best options at the time and may spread out the investment to cover a loss in one area. That way if one sector of the market is not doing well your money is covered by one that is.

You can also buy commodities via Mutual Funds. This method helps you to spread any risk and cover yourself against loss.

We can go over many methods of how to trade but the best advice is to do good sound research and education from the outset.

Many Forex brokers are now able to provide good options for trading commodities along with stocks

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