The cost of oil and gold are two key indicators of the global economy. They respond to geopolitical events, inflation, supply and demand, and monetary policy. However, their dynamics often differ: oil depends more on the economic cycle, while gold depends on demand as a “safe haven” from all kinds of market stagnation.
In this article, we will learn how to trade volatile asset groups such as oil and gold. You will also learn about the advantages of trading with the DotBig broker.
What is Commodity Volatility?
The volatility of a commodity shows the degree to which its cost fluctuates over a certain period. High volatility can be caused by several factors, including changes in supply and demand, geopolitical cases, market speculation, and seasonal features.
For example, agricultural commodities may exhibit volatility due to weather conditions affecting crops, while oil prices may fluctuate sharply due to political instability in oil-producing regions or changes in energy policy.
Traders closely monitor volatility, as it affects both the risk and the potential profitability of their trades.
Top Most Volatile Commodities
The most volatile commodities can change depending on market conditions. According to DotBig reviews, oil is usually considered the most volatile commodity, as fluctuations in its prices are often caused by geopolitical tensions, supply disruptions, and changes in global energy demand.
Next, gold is a highly volatile commodity. This metal is experiencing strong price fluctuations because there is both industrial and investment demand for it.
Other energy sources, such as natural gas, may also experience high volatility. Its prices are very sensitive to weather conditions, inventory levels, and changes in energy consumption patterns.
If you want to trade in any volatile market, you should carefully study, analyze and observe the asset you are going to trade, as well as develop a detailed risk management strategy.
Oil Trading Specifics: Things to Consider
The oil market is one of the most favorable for trading. Let’s recall the main advantages that prove this.
The asset is amenable to technical and fundamental analysis. Raw material quotes are particularly susceptible to various news. To keep abreast of the oil market, DotBig experts recommend that you keep an eye on:
- macroeconomic indicators, for example, crude oil inventories in the United States, which are released every Wednesday.
- Trump’s Twitter account, which can push oil up or down a few dollars with a single message.
- events in the Middle East.
- monthly OPEC reports and cartel meetings.
Fundamental analysis is important in oil trading, but decisions should be made quickly, as some news has a short-term impact. In addition, oil does not depend on currency quotes, so it is often used as a protective asset during instability.
Gold Trading Specifics: Things to Consider
The main feature of gold is that the asset is used as a safe haven in the market. When the Forex is shaking, central banks are making fateful decisions, and the government of one country is putting pressure on the currency of another, gold remains on the sidelines. Therefore, when the situation in the currency and stock markets is difficult and unclear, investors transfer money to gold.
Protecting assets from global instability is only one of the options for using metal. There are 3 more reasons:
- Hedging against inflation as gold retains its purchasing power when the currency depreciates.
- Speculation on price changes, as gold is one of the most volatile tools on the market.
- Diversification to balance the investment portfolio.
Ways of Trading Gold and Oil
At the DotBig Forex company, experts offer beginners a guide to start trading gold on the market:
- Define your goals
Set your short- and long-term goals, manage possible risks and expected profits.
- Select a trading asset
Decide what exactly you are going to trade: physical commodities, CFDs on oil or gold, ETFs on commodities, futures, mining stocks, etc.
- Develop a strategy for trading gold or oil
Use a trading strategy that suits your financial goals and stick to it. These can be investments in shares of oil companies or strategies for scalping on gold, day trading in oil, etc. Pay special attention to both technical and fundamental analysis, use various technical indicators to analyze the past and predict future price movements, monitor the commodity price chart and stay informed about important economic events.
- Choose a broker
Find a reliable gold trading broker who meets your needs, to whom you can entrust your funds, and open an account with him. For example, DotBig exchange offers various ways to trade volatile commodities: CFDs on stocks, CFDs on futures, CFDs on currencies correlated with oil and gold, etc. In addition to existing assets on the market, the company has developed its own trading platform that allows traders to create and trade other market instruments.
- Test your strategy
Try your trading strategy on a demo account, or on a live account, but with a small initial deposit. Adjust your strategy if necessary.
Oil and Gold Trading with DotBig: From Where to Start?
Only adult investors can start trading with the DotBig trading platform. At the same time, their level of trading experience does not matter. The company cooperates with both seasoned and novice clients.
To open a brokerage account with DotBig investments, follow a few simple steps:
- Visit the broker’s website and fill out the registration form with personal data.
- Confirm your identity by providing the necessary documents (passport/driver’s license and utility bill with a limitation period of no more than six months).
- Top up your trading account using available payment gateways such as bank transfer, credit/debit card or electronic wallets.
When registering, provide your current contact information, your actual residential address, and your real name. Also note that you are 18 years old. The broker verifies this data during the verification process.
At the DotBig broker, the minimum deposit is $100. With this amount, you can start trading and trade fractional stocks, micro and mini lots on Forex, cryptocurrencies. However, keep in mind that a small deposit will not make a big profit.
The amount of initial capital also depends on the trading strategy. So, when scalping, traders usually open several trades at the same time, for which $100-200 may not be enough. However, if you are just starting to learn trading, scalping may be too difficult a strategy for you, as it requires knowledge of technical analysis.