Which commodity is best for trading?

Commodities are the fundamental materials used to create other goods traded in the global economy. They can be broadly classified into two categories – hard and soft commodities. Hard commodities are usually natural resources and include metals, energy commodities, etc. Soft commodities are agricultural products like crops and livestock.

Since each commodity has a specific demand and supply curve, determine the best commodity for trading. This is because some commodities have a cyclic demand while others are dependent on various external factors.

While commodities like silver, gold, crude oil, platinum, coffee, natural gas, etc., are good for trading, it is important to understand what factors to look for to find the best commodity for trading.

One of the most important factors is the liquidity of the commodity. If the liquidity is high, then you can buy and sell the said commodity with ease. Hence, the risks are lower, and there won’t be a position that you would be stuck in without being able to exit it. This also ensures that Slippage (the bid-ask spread) is low.

Before you start trading in commodities, it is important to remember that every commodity is different. Hence, you must spend some time understanding how the prices of different commodities have performed across different market cycles. This can help you identify the best commodity to trade in.

If you plan to start trading in commodities, then make sure that you open a trading account with a platform like Motilal Oswal and leverage their daily and weekly market reports and intraday and positional advice to make informed trading decisions.

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