LSE Spreads

What are Commodities?

Commodities are valuable raw materials or goods that are in demand to buy and sell. These raw commodities can be traded on centralised regulated commodities exchanges (such as the Chicago Board of Trade and Chicago Mercantile Exchange), in which they are bought and sold in standardised contract sizes. These contracts can be settled by cash or by the physical delivery of the commodities. However, commodities can alternatively be traded as a CFD, which requires no physical settlement.

Some categories of commodities that are commonly traded include metals (e.g. gold and silver) energy (e.g. crude oil and natural gas) agriculture (e.g. soy bean and wheat). Commodities traded as physical assets are typically traded as futures contracts. A commodity futures contract represents an agreement between two parties for delivery (either cash or physical) at a specific time in the future at an agreed price.

In order to trade commodities, clients do not necessarily need to trade in the commodities exchanges. Clients can trade commodities as a CFD. There is also no expiry when you trade commodities as a CFD, and any open positions will be automatically rolled over to the next month.