Commodities are raw materials and primary goods such as gold, oil, natural gas, wheat, and copper. They can trend strongly, but they can also move sharply around news, supply shocks, and liquidity changes.
What commodities are
Commodities are basic goods used in the economy. Common categories include precious metals, industrial metals, energy products, and agricultural products.
Prices are affected by supply and demand, weather, inventory data, production levels, geopolitical events, interest rates, and currency movement.
How people trade commodities
Commodities can be accessed through futures, options, ETFs, CFDs, broker products, and other market instruments depending on jurisdiction and broker availability.
Each product can have different contract size, trading hours, margin requirements, financing cost, and liquidity profile. Beginners should check the exact instrument before trading.
Why commodities are used in automated strategies
Some commodities can show clear directional movement, breakouts, and volatility regimes. That makes them interesting for rule-based strategies.
The same features also create risk. Automated strategies must account for gaps, sharp reversals, widened spreads, and event-driven movement.
Main risks
Commodity markets can react quickly to headlines, inventory reports, weather updates, supply disruptions, and policy changes. Risk can be concentrated around specific scheduled events.
Do not assume every commodity symbol is suitable for the same automated strategy.