Trade Commodities CFDs, Gold and Silver
Most commodity markets around the world trade in agricultural products and other raw materials (like wheat, barley, sugar, maize, cotton, cocoa, coffee, milk products, pork bellies, oil, and metals). Commodities are popularly traded instruments in CFD trading. We offer CFDs on a wide range of commodities instruments.
Advantages of Trading Commodities
- Commodities are extremely popular amongst traders and it is usually recommended by financial advisors to have some sort of investment in commodities when trading other instruments.
- Commodities, especially gold and silver, are considered as safe-havens, generally when markets are volatile and currencies are down commodities increase in price.
- Commodities CFDs allow you to trade on the price movement of the commodity, but doesn't obligate you to actually buy it. This allows for more freedom when trading – because when you want to buy the actual commodity you have to find someone that sells it at the price you want to pay and when you sell it you have to find someone to buy it at the price you want to get.
- Commodities CFDs can be bought and sold without owning the actual commodity. This means if you think the price of commodity is going up, you can 'buy'(or go long) while if you think the price is going down, you can 'Sell' (or go short). In both cases you will be able to take advantage of the difference in price between the time you 'open' the position and 'close' it.
Gold vs. Silver: Differences which matter most to investors
Volatility of gold and silver is different
Silver's lower price makes the value of annual supply much smaller than gold's. This explains why silver is more volatile than gold: It takes only a relatively small amount of money to have a greater impact on its price, more than gold or most any other asset class.
Industrial demand for silver and gold are different
Silver has a much higher industrial demands than gold, which means the state of the global economy usually has a considerable influence on the price of silver. During periods of economic growth when demand for silver is high, the price of the metal often increases, making it a better investment than gold.
Reaction to financial stress are different
In times of economic stress, buying gold is more desirable. The precious metal is often viewed as a hedge against economic uncertainties and inflation. If there are problems in the economy, such as political instabilities, natural catastrophes, or unfair monetary policies, investors usually rush to gold to protect their investments from losses.
Affected by central banks are different
Central banks play a role in determining the value of gold. Most central banks around the world stock gold in their reserves but they rarely keep silver in their vaults. When central banks cause a disturbance in the gold market, it could be best to look for a more predictable investment opportunity in silver.
Gold-silver ratio
The gold/silver ratio (GSR) is the current price of an ounce of gold divided by the current price of an ounce of silver. It’s a simple numerical calculation that shows how many multiples gold is trading relative to the price of silver, a common indicator used by precious metals investors worldwide.
How to Calculate an Initial Margin Requirement?
The calculation of required margin for commodities CFD is performed as follows:
Margin: Trade size in micro units × Ask price × Margin required
* A unit is expressed in US$
* Margin calculation of precious metal CFDs has nothing to do with the leverage setting in your account
Take XAU/USD as an example:
The basic platform settings for gold imply that the contract volume of 1 standard lot is 100 (100 ounces) and the required margin is 1%.
Assuming that the current XAUUSD price is 1468.88 / 1469.85, the required margin for buying 1 lot of gold would be:
100 × 1469.85 × 0.01 = 1469.85 US$
How to Calculate a Profit and Loss in Precious Metal Trading?
The formula for calculating the profit and loss of a commodity CFD is:
P&L = Number of lots × Contract size (trade size in micro-lots) × Pip movement
Units are expressed in USD
Pip movement of the BUY orders = Ask price at closing time — Bid price at opening time
Pip movement of the SELL orders = Ask price at opening time — Bid price at the time of closing a position
Let's take gold as an example:
Assume that the platform's current XAUUSD quote is 1468.88 / 1469.85. Lilly buys 1 lot of XAUUSD, and Tony is going to sell 1 lot of the same asset.
One week later the exchange rate of gold escalated to 1497.79 / 1499.75. So at this time profit and loss of our investors is:
Lilly's P&L = 1 × 100 × (1499.75 — 1469.88) = 2987 USD
Tony's P&L = 1 × 100 × (1469.85 — 1499.79) = — 2994 USD
How to Trade Gold CFDs?
Investors have a few options when deciding to trade gold. They can directly invest in gold by purchasing gold bullion, which is a measured quantity of gold that often is assigned a serial number. Eagles Markets suggest that investors purchase gold derivatives such as gold CFDs that track the underlying asset price without actually owning any gold. CFDs use leverage, allowing investors to gain greater exposure for their initial capital.
Swap Fee
Swap fees of different instruments are different
Trading Hours
View trading hours of all instruments and holiday arragement of the platform
Spread
The spread are floating, apply for Raw Spread Account to get the best trading environment
Rollover Fee
Rollover is a cost which designs to compensate the prices changes when extend the trading contract to the new one
Factors Affect Gold Price
10 Factors which affects gold markets much