Commodities are products whose price is set by the market. Crude oil, gold, and wheat can be traded over the internet. Rather than dealing with physical delivery, participants trade futures or CFDs. These derivatives allow you to profit from market trends.
In South Africa, traders can access global financial markets remotely. Platforms and apps like MetaTrader provide quick and affordable entry. Both types of derivatives can be profitable. But first, how do they compare?
CFDs vs. Futures
At their core, CFDs (Contracts for differences) and futures contracts are similar. Both derivatives can be traded on margin, and their value is tied to the underlying asset (e.g., crude oil). The key distinctions relate to financing and liquidity.
A CFD has no expiration date. It is simply an agreement between the broker and its client regarding the price of the underlying asset. The trader receives the difference between the price at the beginning of the contract and the price at the moment of liquidation. A futures contract, on the other hand, is an agreement to buy or sell the asset at a certain time and a certain price. Most traders of futures never intend to arrange physical delivery. Instead, they speculate on the pricing.
Choose the Best Broker
If you intend to profit from commodities, find a reliable intermediary. Today, leading brokerage firms offer different forms of access. Clients may use web platforms, desktop terminals and mobile apps. It means that trades are always a tap or a click away. This is true for popular systems like MT4 and MT5. Both are provided by Forextime for free.
Make sure the broker is a legit organization. Global brands have a clear advantage over home-grown competitors. They are chosen by millions, so customer feedback is not hard to find. A reputable company will also be monitored by an industry watchdog like CySEC.
Futures traders need access to diverse data. Moreover, costs must be low and support reliability. The same applies to CFDs. The requirements include:
* real-time quotes;
* tools for charting and screening;
* access to leverage;
* technical indicators.
Using Mobile Apps
Apps have most features of their desktop counterparts. However, their capabilities are usually more narrow. After all, mobile technologies are not yet ready to replace computer software.
However, this is not the goal. Instead, apps are seen as useful supplements. They allow users to continue trading even on the go. Traders need to keep track of the market, but few of us can sit in front of a laptop all day.
This is an important element of appeal. Mobile apps are attractive to investors who are always on the move. Unless trading is your full-time job, mobile access is indispensable.
Yet, do not expect to make a living by day trading via apps. This is hardly achievable. However, position trading is feasible. This means those who hold on to their assets for weeks or longer are most likely to benefit from apps. If you prefer hurried trades, you may feel more comfortable using a desktop terminal.
General Tips for Trading
To make the right decisions, do some homework. Analyse the current situation before the market opens. This way, when trading commences, you will know what to do. Keep monitoring the trends via your app. Mobile access allows you to do it on the go.
Apps have price charts and other graphic tools. These will help you spot the best entry and exit points for each trade. If you do not make up your mind before the market opens, you can do it later. A smartphone or tablet can provide all the necessary price data.
Today, commodity trading is more advanced than years ago. Those who favour technical analysis use special algorithms and sophisticated chart patterns. Adherents to fundamental analysis may also find the necessary data via apps. Mobile tools supply an unprecedented amount of research instantly. Thus, data collection is much quicker and more convenient than before.
Mobile Trading Technology
Today, mobile access is important for any business. Brokerage firms were quick to adopt portable systems. Traders of commodity futures may use popular apps like TradeStatio and Interactive Brokers. Google Play Store and App Store have dozens of dedicated products. Most of these apps have similar functionality.
In the past, commodity trading required calls to a landline phone. Today, it may be done through an app. Mobile access is a logical development, as the industry keeps up with the times. Most brokers with commodities in their offerings have mobile apps. Today, getting quotes and managing trades is easier than ever.