Trade with commodities
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How do you trade with commodities online in Nigeria? When a trader hears the term ‘commodities’ the most common thought is trading through a futures contract which has been in place as tradable instruments for decades. The problem with futures contacts is the size of trading you need to commit to a single commodity, say oil for example. If you want to trade with oil using a future, you first need to set up a futures trading account which can take weeks to open with a large investment company. Then you need to buy at least 1000 barrels of oil in one trade which will cost 7,200 USD at this time of writing. On top of this you then need to sell the future before the trade expiration date, otherwise you are obliged to take position of the actual oil. I don’t know about you, but where would you put 100 barrels of raw oil and more importantly how would you re-sell it to make a profit?
Another alternative to trading commodities via a future is to buy the stocks relating to oil producing companies like Shell or ExxonMobile. Although this is quite simple to do via an online brokerage firm, you are exposed to the management of the company and the decisions they make and are not really trading in the true value of the commodity yourself.
The best alternative for a commodities trader that is only interested in speculating on the price movement of a commodity is to use CFD derivative instruments to trade with oil, gold, silver, coffee and many other commodities. With a CFD you buy smaller sizes of commodities, for example only 10 barrels of oil and use leverage trading to increase your trading positions. Account openings at Nigerian-based CFD brokers, like AvaTrade for example, is relatively quick and usually only takes 5-10 minutes to complete. They also offer large variety of commodities to trade from:
We hope that this article on commoditites trading has given you the information you need. The next natural step is to use the free educational material and free demo account that our recommended CFD broker provides:
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