How to Trade Commodities (And What to Look for in a Broker)

To trade commodities effectively, you need a broker that offers competitive spreads or commissions on commodity instruments, transparent overnight financing, appropriate margin requirements, and strong regulatory oversight. Commodity trading often involves leverage, volatility, and rollover costs — so broker structure matters as much as strategy.

Many traders decide they want to trade commodities such as gold, oil, or agricultural products without evaluating whether their broker is structurally suitable for those instruments. The core mistake is assuming that all brokers price commodities similarly. In reality, spreads, margin requirements, contract specifications, and overnight financing vary significantly. Some brokers widen spreads during volatile energy market sessions. Others apply higher margin requirements to commodities than to forex. Without comparing cost structure and execution policy specifically for commodities, traders may face higher friction and risk than expected.

Commodity brokers differ in instrument availability, pricing model, contract structure, and leverage limits. Some offer spot commodity CFDs (e.g., gold priced against USD). Others provide futures-based CFDs that track underlying futures contracts. Pricing may be spread-only or commission-based. Margin requirements differ by asset — oil and natural gas often require higher margin than major forex pairs due to volatility. Some brokers limit access to agricultural commodities entirely. Trading hours also vary depending on how the broker structures its contracts. These structural differences influence cost, flexibility, and risk exposure.

Commodity trading costs include spread, commission (if applicable), overnight financing, and potential rollover adjustments. Gold spreads may be relatively tight compared to oil or natural gas. Energy products often carry higher overnight financing due to volatility and underlying futures pricing. Futures-based CFDs may incorporate rollover adjustments when contracts expire. Currency conversion charges may apply if the account base currency differs from the commodity’s pricing currency. Traders holding positions beyond one day must evaluate swap rates carefully, as financing can materially affect performance over time.

Commodity trading frequently involves leverage, making regulatory oversight especially important. Brokers regulated by established authorities must segregate client funds and enforce leverage caps for retail traders. Offshore brokers may offer higher leverage on commodities but with reduced structural protection. Traders should verify regulatory status and confirm the legal entity providing the account. Regulation reduces operational and counterparty risk but does not eliminate price volatility or market risk.

Commodity markets can experience rapid price movements, particularly during geopolitical events or inventory reports. Platform stability and execution speed are therefore important. Some brokers provide depth of market tools and advanced order types suitable for volatile conditions. Others offer basic execution only. Slippage may be more pronounced in energy markets during major news events. Traders should test execution behaviour on the specific commodity instruments they intend to trade rather than assuming uniform conditions across asset classes.

Commodity prices can be highly volatile and influenced by macroeconomic factors, geopolitical developments, and supply-demand imbalances. Leverage amplifies both gains and losses. Energy products such as oil can experience sharp intraday swings. Agricultural commodities may react to weather reports or seasonal shifts. Overnight gaps can occur outside regular trading hours. Broker selection reduces structural risk but does not eliminate market volatility. Traders must align leverage and position size with risk tolerance.

Investors seeking low-volatility, long-term portfolio stability may find leveraged commodity trading unsuitable. Traders unaware of rollover mechanics or overnight financing costs may underestimate holding expense. Very small account holders may struggle with higher margin requirements on volatile commodities. Anyone unwilling to monitor market-moving events should reconsider short-term commodity trading.

Step one: confirm the broker is regulated and verify licence details. Step two: review which commodity instruments are available (gold, silver, oil, natural gas, agricultural products). Step three: compare average spreads and commission rates specifically on those instruments. Step four: examine overnight financing and rollover policies. Step five: review leverage limits and margin requirements. Step six: test execution on live conditions with a small position. Step seven: compare at least three regulated brokers offering commodity trading before committing larger capital. Select the broker offering transparent cost, stable execution, and strong oversight.

Now compare commodity brokers side by side using our comparison tables. Filter by asset availability, spread structure, leverage limits, and regulatory jurisdiction. You can also explore our Best Brokers for Commodity Trading pages to narrow your shortlist.