Forex vs. Commodities – Which is Right for You?

Forex vs. Commodities – Which is Right for You?
April 26 09:38 2017 Print This Article

Investing in shares or speculating on the financial markets is not without risk. The price of commodities can take a dip and an unexpected announcement from the Federal Reserve can easily cause ripples in the currency markets. For new investors, both markets are challenging. But, if you understand the fundamentals, you can make money via smart investment strategies. In this article, we are going to examine the key differences between commodities trading and forex trading, so you can make an informed decision about which one is right for you.

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What is Forex Trading?

The Foreign Exchange market attracts $5.3 trillion dollars of trades each day. Forex traders speculate on currency pairs. For example, you might speculate that the value of the US dollar is going to rise against sterling.

What is Commodities Trading?

Commodities are metals, energy, food, and agricultural products. The easiest way to invest in commodities is via futures contracts. Here, you agree to buy or sell a specific quantity of a commodity, say gold, at a specific price, in the future.

Pros and Cons of Forex Trading

Forex trading is extremely popular. Anyone can open a demo account on a popular trading platform. You can trade 24/7; the forex market never sleeps, which makes it popular with amateur investors. Experienced forex traders use set trading strategies, which anyone can learn. There are a huge number of tutorials available online, so it’s a great place to start if you are interested in making money on the forex trading.

Currency prices are more predictable than commodities. If you follow currency pairs, you will soon learn to spot trends and patterns, which makes it easier to predict when prices are going to rise or fall. It is possible to make huge amounts of money on forex, but you can start trading with small sums.

Pros and Cons of Commodities Trading

Trading in commodities is fairly simple, but it is less predictable than forex. Anything can affect the prices of commodities, from supply and demand to unfavourable weather patterns, so there is no easy way to predict future prices. It is possible to make large profits, but this will depend on how much money you invest. Whereas there are extensive tutorials and information online about forex trading, there is less available relating to commodities trading. You can, however, open a demo account on Oanda if you want to give it a try.

If in doubt about which one is right for you, try both and see which method of trading you prefer.

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Jena Shepherd
Jena Shepherd

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