Commodities

  • Hedge or take a position on a range of fluctuating commodity prices with City Index. 
    Take advantage of the opportunity to trade a position on an entire sector, rather than an individual company. City Index offers a range of commodities including crude oil, cocoa, coffee, sugar, wheat and soybeans with margins from just 3%.
     

    Commodities Example

    Let's say our US crude oil monthly CFD price is 7880 bid /7886 offer (sell price/buy price).
     

    Going Long on Commodities

    You think that demand for US crude oil is rising and expecting prices to rally, decide to buy (go long) 2 CFDs at 7886 (buy price).
    You were right: Over the coming days, the price of US crude oil rises on surging demand. When prices reach 8010, you decide to cash in your profits. We are now quoting a monthly futures spread of 8010/8016. To close your trade, you sell 2 CFDs per point at 8010.

    Result:  You bought at 7886 and sold at 8010, representing a 124-point move in your favour, which with your trade of 2 CFDs nets you a profit of US$248 (8010 – 7886 x 2 CFDs).

    Alternative scenario:
    If however, you were wrong and US crude oil prices had fallen to 7762, you would net a US$248 loss (7886 - 7762 x CFDs).  
     

    Going Short on Commodities

    You think that US crude oil stockpiles are outpacing demand, and expecting prices to fall, decide to sell (go short) 2 CFDs per point at 7880 (sell price).
    You were right: Over the coming days, the price of US crude oil falls on weakening demand. When prices reach 7754, you decide to cash in your profits. We are now quoting a monthly futures spread of 7748/7754. To close your trade, you buy back 2 CFDs at 7754.

    Result:  You sold at 7880 and bought back at 7754, representing a 126-point move in your favour, which at your trade size of 2 CFDs, nets you a profit of US$252 (7880 – 7754 x 2 CFDs).

    Alternative scenario: If however, you were wrong and US crude oil prices had risen to 8006, you would net a US$252 loss (8006 - 7880 x 2 CFDs).  
     

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