How to Trade Commodities Using Derivatives: A Simple Introduction

Please note: This article does not constitute investment advice. Laws governing crypto, derivatives, and other forms of trading and investments—as well as taxation—vary by region and are subject to change. You are responsible for complying with the laws in your jurisdiction. Ouinex’s services and offers, including those mentioned in this article—if any—may vary by location and are subject to change. All investments carry risk.

Trading commodities like oil, gold, or silver doesn’t require you to handle or store physical assets. With derivatives, specifically CFDs (Contracts for Difference) and futures, you can speculate on the prices of these global resources digitally, easily, and without the traditional complexities. Here’s how it works.

Key Takeaways

Commodities are raw materials like oil, gold, and grains.
Derivatives allow you to trade on their price movements (speculating whether a commodity will go up or down in price) without owning the physical asset.
You can go long (predicting the price will go up) or short (predicting the price will go down), providing flexibility in all market conditions.
Ouinex lets you trade commodity derivatives using USDT as margin, bridging the gap between crypto and traditional finance.
Effective risk management is crucial, as commodities are a fast-moving and volatile market.

What Are Commodities and Why Trade Them?

Commodities are the raw materials that fuel the global economy, such as gold, oil, and natural gas. They’re highly liquid (meaning they’re easy to buy and sell quickly) and their prices are driven by real-world events, making them a prime asset for active traders.

People trade commodities to:

Hedge against inflation: Historically, commodities like gold have been used to protect wealth during periods of rising prices.
Speculate on geopolitical events: Geopolitical tensions, conflicts, and supply shocks can cause rapid and significant price movements.
Diversify: Trading commodities allows you to diversify your portfolio beyond stocks and cryptocurrencies, adding an asset class with different market drivers (meaning that if stocks are going down, gold isn’t affected as its price is dependent on different market drivers).
Capitalize on volatility: Commodities are known for their price swings, which create opportunities for traders who can anticipate and react to these movements.

The Power of Trading Commodities with Derivatives

Historically, trading commodities was complex. Derivatives have simplified this process.

With derivatives, you can:

Speculate on price movements: You simply trade a contract based on a commodity’s price, allowing you to profit from a price increase (going long) or a decrease (going short).
Use leverage: This allows you to open a much larger position with a smaller amount of capital, amplifying your potential profits (and losses).
Avoid ownership hassles: There's no need to worry about storage, insurance, or delivery of a physical commodity.
Use crypto as collateral: On Ouinex, you can fund your trading with USDT, eliminating the need for fiat conversions. Of course, you can use fiat too, though!

How to Start Trading Commodities on Ouinex

Trading commodities on our platform is a streamlined, transparent process.

Fund your account: Deposit fiat or crypto into your Ouinex account to use as margin for your trades.
Select a commodity: Choose from our list of available commodities like oil, gold, or natural gas.
Choose your position: Based on your market analysis, decide whether to go long or short.
Set your risk controls: Use features like stop-loss orders to automatically close a position if the price moves against you, protecting your capital.
Execute and manage: Open your trade, monitor your position's performance in real-time, and close it when you're ready.

What Influences Commodity Prices?

Commodity prices are highly reactive to global events. Here’s a quick overview:

Oil responds to decisions by organizations like OPEC (Organization of the Petroleum Exporting Countries), supply disruptions, and global economic data.
Gold is influenced by inflation, interest rates, and overall market uncertainty.
Agricultural commodities are affected by weather, droughts, and trade policies.

Understanding these macro-level drivers is essential for successful commodity trading.

Commodity prices don’t move on a whim, but react to the real world. Fast. And hard. If you want a more detailed overview:

Oil

Oil is arguably the most news-sensitive commodity out there. Prices shift in response to:

OPEC+ decisions: When major oil-producing countries agree to cut or boost supply, markets react instantly.
Geopolitical tensions: Conflict in oil-rich regions can spark fears of supply shortages, sending prices higher.
Supply disruptions: Think hurricanes, pipeline shutdowns, or sanctions—anything that restricts flow.
Economic indicators: Strong growth usually means higher demand, while a slowdown can send prices sliding.

In short: oil reacts to power plays, politics, and production. Blink, and the market moves.

Gold

Gold plays a different game. It’s the classic safe haven asset and traders flock to it when things feel uncertain.

Gold prices are influenced by:

Inflation expectations: As inflation rises, gold often becomes more attractive as a store of value.
Interest rates: When rates are high, yield-bearing assets look more appealing than gold (which doesn’t earn interest). Lower rates tend to push gold up.
Market fear: Economic instability, bank failures, wars…you name it. If it rattles confidence, gold tends to rally.

Agricultural Commodities

Grains, coffee, and cocoa might not sound volatile, but their prices can spike overnight based on:

Weather patterns: Droughts, floods, and heat waves can ruin crops, slashing supply and raising prices.
Seasonality: Planting and harvest cycles affect availability throughout the year.
Trade policies: Export bans, tariffs, and subsidies from major producers can upend global supply chains.

Why This Matters

If you’re trading commodity derivatives, you’re not just looking at charts, you’re watching the world.

Understanding the macro-level drivers behind each commodity is key to anticipating price swings, timing entries and exits, and protecting your PnL. It’s not just technicals, but geopolitics, economics, and Mother Nature rolled into one.

FAQs: Trading Commodities with Derivatives

What are commodity derivatives?

They are financial contracts, such as CFDs and futures, that allow you to speculate on a commodity’s price without the need for physical ownership or delivery. Basically, you predict if the price of a commodity will go up or down and if your prediction comes true, you make money.

Do I need to take delivery of oil or gold and store them?

No. When trading derivatives, you are speculating on the price difference between when you open and close a position. The trade is cash-settled, and no physical asset changes hands.

Can I trade commodities with crypto?

Yes. Ouinex allows you to use crypto assets like USDT as collateral to trade commodity derivatives.

Is commodity trading high-risk?

Like all trading, it involves risk. Commodities can be very volatile, and the use of leverage can amplify both gains and losses. It’s essential to use risk management tools like stop-loss orders and only trade with capital you can afford to lose.

What's the minimum amount to start?

You can start with a small amount of USD or USDT to fund your account. Ouinex allows for flexible trade sizes, so you don't need a large amount of capital to get started.