Investing in commodities first requires that you take an opinion on a commodity. For example, you might like the look of a “safe” commodity – one that does well when the market is floundering – and choose gold. Silver is also a safer commodities bet, and a good hedge against inflation and other major world events.

If you believe the economy is strengthening, you might choose copper, which is considered a proxy for the strength and direction of the overall market. Or you might decide to invest in oil if you’ve noticed it going upwards, or agricultural commodities such as coffee, cocoa, and cattle.

These days when people ask themselves how to trade or buy commodities, CFDs looks like a good option for Aussie traders. Rather than buying, trading or investing in the commodity itself, you’re making a bet on the movement of the commodity – whether it will rise or fall. In this case, you’ll use a CFD provider (such as CommSec) to place an order on the commodity, putting in your entry orders, your stop orders, and your take profit orders.

However you may decide that investing in commodities directly is a more lucrative option, and trade global futures from Australia with a non-CFD broker.  That is, you need to find an Australian futures broker who can trade on US (and other) futures markets for your commodity of choice.

The ASX trades futures over grain, electricity and wool, as well as options over grain futures. Futures are traded on DTP, the Derivatives Trading Platform (aka CLICK).

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