A trader must be conscious before starting trading about the commodity he is going to select for trading.
At first, he collects info about commodities like crops, oil, minerals, or any other raw material. Then he tries to know about the volatility of those commodities. Yes, it’s crucial.
Like many other trading markets, prices depend upon the supply and demand ratio of any commodity.
So, you must be aware of the Most Volatile Commodities.
May I tell you?
Let’s get a short answer.
It must be a challenge for you to know about the most volatile commodities. But I am sure after reading this post, you can pass the challenge. There are numerous volatile commodities in the trading market, some of them are Bitcoin, Sugar, Crude Oil, Soybeans, Coffee, Gold, and many more. You have to select the most volatile commodity for trading.
You can know about price ups and downs through the volatility of a commodity. You can guess it by measuring the price difference of a commodity. So, it’s important to know about the volatility of a commodity on which you are going to invest your money.
After reading this post, you will be able to trade successfully with your desired commodity.
So, let’s dive into this post to enhance your knowledge.
6 Most Volatile Commodities
There are many volatile commodities found in the options market. They are like a foundation in the liquid market. Such commodities provide you with information about investing successfully.
You may be able to buy and sell beneficially according to an agreement.
If you want to know about the most volatile commodities in detail, they are listed below:
Bitcoin is one of the most volatile cryptocurrencies that helps many other major currencies to come forward on the map.
If you want to take a risky bet, cover the latest positions, and transform your portfolio, Bitcoin is the best commodity to do so. Start trading with bitcoin futures to avoid all the risks found in the market.
If you support the increasing price of bitcoin from low price, volatility elements are changed. They reach the peak of their investment level.
There are many long-term and short-term traders who divert their attention towards the volatility of bitcoin. It makes it possible to get bitcoin as a leveraging source of investment.
Gold includes one of the most volatile commodities. It is the most famous future market because of many causes. In a few past years, the price of gold reached its peak. No doubt, it was also falling around the year 2015.
It is said that the price of gold depends upon the price of the jewelry. As it increases, the gold price also goes above. If it falls, the gold price also goes down. But it is not true in all conditions.
As you know, gold can’t be destroyed, that’s why you may find the price of gold increasing yearly in the world. It happens because we mine gold more as we want.
The price may decrease with an increasing ratio of stocks. So, you can see gold working as the main element of investment.
Surprisingly, gold futures markets are liquid and as a trader, you can assign beneficial sizes for contracts.
If you study the trading charts of the past few years, you may observe that the price of sugar is going down continuously for the last 40-45 years.
Amazingly, the most affecting factor on sugar price is nothing except oil price. Yes, it’s true.
You know we make sugar and liquor from sugarcane. Liquor is a kind of fuel that has a great effect on the price of sugar.
The demand for sugarcane will decrease with the falling price of ethanol. It will generate the possible condition of overstock in the market.
If you are an expert investor and want to explore the future market, you have to put aside the actual price and divert your all attention to standard deviation.
Around the year 1970, the soybeans market got unimportance, and the industry fall. Why does this happen?
Several factors have close relationships with the up and down price of the Soybeans market like:
- Environmental Conditions
- Increasing demand for soybean protein
- Cost on Energy
- Stock Levels
- Risky Investors
- Other crops relative price
When you search its historic volatility, you may find that it has a great change in the health industry of China and Asia. It surprisingly attracts many uncertain investors.
Why crude oil is considered one of the most volatile commodities? The reason is that it attracts more investors through its honest shares in the trading market.
If you look at the previous trading charts, you can find the volatility in excess during 2008-2020. Whenever we talk about investing in oil commodities, the first thought that comes to your mind is that we are talking about fuel investment. But it’s not true…
Oil plays an important role in the industry of plastic and other materials. So, they also put their share in crude oil volatility.
We have been listening about the oil shortage and the oversupply of oil for many years. After getting proper info about it, you will be able to find the factors that will make oil so appealing for industry competitors.
Coffee is used as a breakfast item in almost every country of the world. It has become the most trading commodity in the market. On the behalf of this reason, many traders feel attraction to it and want to invest in it.
No doubt, in dollars, it has a limited price difference but when you study the coffee chart thoroughly, you can notice some large swings in percentage.
The factors that leave an impact on the price of coffee are listed below:
- Crop diseases
- Conditions related to weather or climate
- Increasing demand
- Developing markets
An intense market is produced because of the volatility found in the coffee price.
Benefits To Trade Volatile Commodities
Trading with volatile commodities provides you with many benefits or advantages. Such markets are also known as “Traders Paradise”. Why?
We will explain.
There are several reasons behind it but we will discuss the major advantages.
Let’s try to understand to have successful trading:
- Volatile commodities provide you protection against affectedness. In this way, traders can protect their investment and manage values.
- Such commodities also work as a safeguard against geopolitical risky events. These events create a disturbance among supply resources. That’s why trading with commodities will help basic losses in an investment.
- You can attain a high level of leverage by investing in volatile commodities. There is a low margin rate for commodities futures.
- Commodities and stocks both have a low correlation. Because you can find commodities in raw form. These are responsible to bring changes in trading plans.
- Another benefit to trade with volatile commodities is their lucidity that helps to discover prices according to the situation.
Frequently Asked Questions
Which one is the most fluctuating commodity?
Commodity volatility favors being the highest of the asset classes as mentioned in this post. Crude oil volatility has ranged from 12.63-90% since 1983. The same metric has natural gas.
Name the top 5 commodities in the world?
You can define a commodity as a raw material that is used to make a product or that can be consumed on its own. The most volatile commodities are Coffee, Gold, Wheat, Crude Oil, and Natural Gas.
Are commodities high risk?
Traders have to face market risk, credit risk, margin risk, volatility risk, and other risks in daily trading life. The commodity market helps people keep the focus on leverages afforded by margins.
Hopefully, you have understood the most volatile commodity properly. When you look forward to the future for trading factors, Volatile commodities will come first.
As you know, liquidity and depth are essential parts of any trading market. That’s why Coffee, Cotton, sugar, and gold are considered the most liquid trading futures in the traditional trading market.
This will prove helpful because it covers the 7 most volatile commodities in detail and also mentions their benefits of trading.
If you find these commodities more attractive, don’t forget to share this post with your friends who are trying to trade in the forex market.