What are Commodities?
Commodities are raw materials used to create the products consumers buy. They include food, furniture, gasoline, and petrol. AeronFX provides facilities to trade Gold, Silver, Crude Oil, Brent, and Natural Gas from the MetaTrader 5 platforms. We allow you to trade these commodities as CFDs, which means you never hold the physical assets.
What moves Commodities?
Commodities are moved by supply and demand. Demand for CFDs on Commodities usually comes from factors and conditions like economic cycles and population growth. Supply issues affecting commodities can include weather, the costs of extraction, and war.
How do I trade Commodity CFDs?
A CFD is an arrangement made with a set end date. Traders who expect an upward movement in price will buy a CFD, while those who see the opposite downward movement will open a sell or ‘short’ position. At the end of the contract, the two parties exchange the difference between the price of the commodity at the time they entered into the contract, and confirmation of the end price.
BUY XAU/USD
Opening price - 1771 * 100 * 0.1 = USD $17,725
Closing price - 1777 * 100 *0.1 = USD $17,770
Profit on trade = $17770 - $17725 = $45
Commodity Financing Examples
Financing rates vary depending on the instrument and may change on a daily basis. These are quoted at an annual rate. Each product has two quoted rates: one for a long/buy position and the other for a short/sell position.
A negative funding rate will result in a charge being debited from your account balance. A positive funding rate will result in a credit to your account balance.
The daily financing charge or credit will be claimed/passed from/to your account balance every day you hold the position and will be visible in your transaction history (accessible via the portal).
Daily financing charge or credit = size of position x applicable funding rate* days/365
Short Position
Daily financing charge or credit = size of position x applicable funding rate/365
A customer is short one opened at 5pm ET Monday
Financing cost (swap) = 1777 x 100 x 0.1 lot x 0.16 *1/365 = $7.79
The charge or credit will always be in counter currency
Long Position
Daily financing charge or credit = size of position x applicable funding rate/365
A customer is long one opened at 5pm ET Monday
Financing cost (swap) = 1777 x 100 x 0.1 lot x 0.24 *1/365 = -$11.68
The charge or credit will always be in counter currency
