How to trade commodities in the UK

Commodities trading is a popular form of asset class diversification, used to hedge against inflation and as an investment strategy. But the market for these raw materials is volatile and comes with the same risk of losses as any other type of trading. URL https://www.theinvestorscentre.co.uk/reviews/kraken-review/

The key to trading commodity prices is understanding supply and demand. The price of a particular commodity will rise or fall depending on whether demand outstrips or outpaces supply. A number of factors influence this – from weather patterns to geopolitical events and global economic trends.

There are a few ways to trade commodities in the UK, including contracts-for-difference (CFDs) and spread bets. CFDs allow traders to speculate on the underlying prices of a particular commodity by using leverage, which can magnify gains as well as losses. The amount of leverage offered by a broker will be detailed in their terms and conditions.

Choosing a reputable broker is important, as it’s the organisation that will verify your identity and safeguard your funds. It’s also the company that will provide you with access to a full range of trading tools and support.

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Another option is to invest directly in commodity companies through tracker or passive funds, which work as an indirect way of tapping into the commodities market. For example, a fund like Barings Global Agriculture has companies like Kubota and Nutrien (both agricultural machinery manufacturers) as its top 10 holdings, while Blackrock World Mining Trust contains Rio Tinto and Anglo American among its top 10. You can also buy physical commodities, such as gold or silver, through bullion dealers.