CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Commodity definition

Commodity has a particular significance in relation to IG's platform. Here, we define commodity in general investing and explain what it means to you when trading with IG.

A commodity is a basic physical asset, often used as a raw material in the production of goods or services.

To be traded on the markets, a commodity must be interchangeable with another commodity of the same type and grade. That means that to a trader, gold is gold: no matter where it was mined, or which company mined it. The term for this quality in commodities is fungible.

Types of commodity

Some of the most commonly traded commodities include:

They are split into two varieties. Hard commodities are metals or energy resources, mined or extracted from natural resources. Soft commodities are agricultural, farmed or grown. Soft commodities tend to be seasonal, and prone to spoilage.

The buying and selling of commodities for profit is known as commodities trading. Commodities trading is split into two types, the spot market and the futures market. The spot market is used for commodities that will be delivered immediately, and the futures market is for commodities that will be delivered at some point in the future.

Most commodities traders are speculators and do not wish to take delivery of the commodities they are trading, so most futures contracts are closed before their delivery date. Futures contracts are traded on futures exchanges, with most commodities being associated with a specific local exchange.

Visit our commodities section

Find out more about commodities trading with IG.

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. Professional Clients can lose more than they deposit.

The value of shares and ETFs bought through an IG stock trading account can fall as well as rise, which could mean getting back less than you originally put in. Please ensure you fully understand the risks and take care to manage your exposure.

IG does not issue advice, recommendations or opinions in relation to acquiring, holding or disposing of a CFD. IG is not a financial advisor and all services are provided on an execution-only basis. This communication is not an offer or solicitation to enter into a transaction and shall not be construed as such.

IG is a trading name of IG Limited a company registered at 2702 & 2703 Level 27, Tower 2, Al Fattan Currency House, DIFC, Dubai, United Arab Emirates. IG is authorised and regulated by the Dubai Financial Services Authority (DFSA) under reference No. F001780.

The information on this site is not directed at residents of the United States, Belgium or any particular country outside the UAE and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

Commodity definition

Types of commodity

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