10 Best Forex Brokers for Commodities Trading

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There is no central exchange to regulate the forex commodity market. Forex commodities traders have to do their trading through an intermediary, the forex commodities broker. With so many brokers vying for your custom, choosing the best forex broker for commodities trading can be a daunting task. Among some of the factors, you will have to check are regulations, platforms, commissions, fees, and account minimums. We will take a look at some of the factors you will have to look for and how to choose the best forex broker for commodities trading.

  • Regulations

Best Forex Brokers for Commodities TradingThe first thing you should do is make sure your broker is registered with the regulatory bodies of the markets he is trading in. In doing so, you can rest assured that he has complied with the operating standards demanded by the regulatory bodies.

Some of the requirements of these regulators are maintaining segregated client accounts and sufficient capitalization.

The broker is a financial service provider and has to uphold the operating standards demanded of him. Fund protection should be provided for, in case the brokerage becomes insolvent.

The following are the regulatory bodies that regulate the foreign commodities markets:

  • Australia: Australian Securities and Investments Commission (ASIC)
  • Eurozone: Markets in Financial instruments Derivatives (MiFID) and other local Regulators
  • India: Securities and Exchange Board of India (SEBI)
  • Japan: Financial Services Agency (FSA) and Japan Securities Dealers Association (JSDA)
  • Switzerland: Swiss Financial Market Supervisory Authority (FINMA)
  • The UK: Financial Conduct Authority
  • US: Commodities Futures Trading Commission (CFTC) and the Securities & Exchange Commission (SEC)

10 Best Forex Brokers for Commodities Trading

BrokerInfoBonusOpen Account
new logo FBS Markets inc Min Deposit: $1
Spread: From 0 Pips
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Regulation: CySEC, IFSC
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OCTAFX forex broker Min Deposit: $5
Spread: From 0.2 Pips
Leverage: 500:1
Regulation: FSA (Saint Vincent and the Grenadines), CySEC
50% Deposit Bonus, Real contest 1st prize Luxury car BMW X5 M, Copy trading, Trade&Win.Visit Broker
xm best forex broker Min Deposit: $5
Spread: From 0 Pips
Leverage: 500:1
Regulation: ASIC, CySEC, FCA (UK), IFSC Belize
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exness forex broker review Min Deposit: $1
Spread: From 0 Pips
Leverage: 2000:1
Regulation: FCA UK, CySEC, FSP, BaFin, CRFIN
35% of the account DepositVisit Broker
Forex.com Gain Capital review USA Min Deposit: $50
Spread: Starting 0 Pips
Leverage: up to 400:1
Regulation: FCA UK, NFA, CFTC, ASIC, IIROC, FSA, CIMA
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No Deposit Bonus Instaforex Broker Min Deposit: $1
Spread: Fixed Spread From 3 Pips
Leverage: Up to 1:1000
Regulation: CBR, CySEC and FFMS
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Pepperstone review best forex broker in Australia Min Deposit: $200
Spread: Starting 0 Pips
Leverage: 500:1
Regulation: ASIC Australia, FCA UK
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iq option best binary options brokers Min Deposit: $10
Spread:
Leverage:
Regulation: CySEC
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etoro best forex broker USA Min Deposit: $200
Spread: From 3 Pips
Leverage: 400:1
Regulation: NFA, FCA, CySec
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City Index forex broker Min Deposit: $100
Spread: Starting 0 Pips
Leverage: up to 500:1
Regulation: FCA UK, ASIC Australia, MAS Singapore
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  • Trading Platform

The broker will offer you a choice of trading platforms. The trading platform is how you will do your trading and is your gateway to the markets. Third-party trading solutions providers usually provide these platforms.

Some brokers may have their proprietary platforms developed. Choose one of these proprietary platforms. They have been developed, keeping in mind the broker’s client base.

Make sure you select good trading. Some brokers trade from their PCs. Others prefer trading from their laptops.

Features a trading platform should have

  • A comprehensive charting package
  • Good range of technical indicators
  • One-click trading
  • Stop-loss orders, trailing stops, and other risk management tools

Try the platform with a demo account provided by the broker. The best forex broker to trade commodity will always offer a free demo account. It is not worth considering a broker who does not provide a demo account.

  • Spreads and Commissions

Forex brokers, commodities or otherwise, mostly operate on spreads. That is why most of them advertise their services as commission-free.

There are three types of costs that a broker may charge a forex trader.

  • Fixed spread: In a fixed spread, the spread does not. You are aware of the spread amount before you trade.
  • Floating spread: The amount of spread in this type will keep track of the market volatility and will keep changing.
  • Commission fee: This is a percentage of the brokers spread and is fixed. You are aware of the amount before you trade.

Depending on your specific trading needs, and what spreads the broker offers you, you will have to choose one of the spreads. If you want to be certain about your trading costs, choose the fixed spreads brokers. If you want to pay smaller spreads, go for floating spreads.

  • Business Model of the Broker

There are two types of brokers, Dealing Desk brokers and Non-Dealing Desk brokers.

A Dealing Desk broker will process your trading instructions through a dealing desk in their office. When you open a position on the commodity market, the broker takes the other side of the trade to you. That means that the broker will execute your trade and will be exposed to the trade.

A Non-Dealing Desk (NDD) broker will pass your trading instructions straight through to a third party. In this case, the broker is not liable for the trade. There are two types of NDD brokers: ECN and STP. Both just act as a courier between the trader and the dealer.

ECN (Electronic Communication Network). In this type of transaction, when you press the buy or sell button, your instruction will be processed on the broker’s computer. It will then be automatically transmitted through the ECN to the dealer or the market maker without the broker’s intervention.

Also Read: Top True ECN Forex Brokers

STP (Straight Through Processing). This type of broker will, upon receiving your instructions, pass them straight through to the dealer.

Also Read: 10 Best and Trusted STP Forex Brokers

Both ECN and STP brokers just act an intermediary between the trader and the market maker or the dealer.

The business model of the broker makes a difference in the spreads you will get, whether they are fixed or variable.

  • Account Types

There are three different account types that brokers will offer you. The choice of which type of account you want will depend on the volume of trades that you want to conduct.

  • Micro account: In such an account, one trading lot represents 1’000 units of the commodity traded.
  • Macro account: In this type of account, one trading lot is the equivalent of 10,000 units
  • Standard account: In this account, one lot will mean 100,000 units of the commodity traded.

Mini and macro accounts can be opened up a small initial investment. The investment required will vary from broker to broker. If you want to open a standard account, the capital required will be larger. You should choose an account that is in keeping with your investment capital.

  • Customer service

Check the broker’s customer service reputation. You may think that you do not have to contact your broker because your broker is NDD type.

But you never know when you’ll need the broker service support. Make sure that there are multiple ways in which you can contact your broker.

It is better to know that your broker is eager and prompt in solving your problems.

Also check if your broker is providing value-added services like real-time news feed, free market analysis, and trading signals.

Conclusion

There are many factors to consider when selecting the best forex broker to trade commodities. Many traders select the brokers that charge the least spread or commission. What is more important is the trading platform because that is your conduit to the markets. The service support that the broker provides is also important in deciding the best forex broker for you.

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