What are the Pros and Cons of Online Commodity Trading?

Article Details
  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 09 February 2020
  • Copyright Protected:
    Conjecture Corporation
  • Print this Article

Online commodity trading has become increasingly common as the Internet has evolved and provided more secure means of buying and selling commodities. While the process is simpler and certainly more secure than in years past, there are still some risks associated with using the approach to investing, rather than more traditional methods. These potential disadvantages include limited access to input from brokers, failure to understand how and when to place an order, and the possibility of having an online account compromised by a hacker.

In terms of benefits, online commodity trading provides a quick and easy way to execute orders. An experienced investor who understands how to read market conditions and accurately project the movements of various commodities can use this approach to quickly invest in commodity funds that are compatible with his or her investment strategy. Since the online interface makes investing in silver, gold, or precious metals in general a quick and easy process, it is possible to jump on a good deal before the opportunity passes. Many online commodity trading tools provide access to several markets and the chance to enjoy investing in stocks while also participating in commodity futures trading.


Cost is also sometimes a benefit with online commodity trading. Depending on the type of interface that is used, the fees that apply to each transaction may be lower than speaking with a broker by phone or utilizing some other type of offline method. Some trading sites use a flat fee approach, ensuring that the fee remains constant no matter how much money is involved in the trade. Others will require a percentage of the total value of the trade itself. Some will even offer a set number of trades per month for one low rate, with any trades above that amount charged according to a schedule provided when the trading account is established.

While the process of online commodity trading is relatively straightforward and can often be cost-effective, there are some potential drawbacks to consider. Some trading sites do not offer much in the way of access to brokers. This can be especially difficult for investors who could use some professional advice before placing a trade order, in that the chances of making the wrong deal and losing money is increased. In addition, the level of security may not be sufficient to prevent hackers from gaining access to trader accounts, an event that could cause a great deal of financial damage. For this reason, verifying the security protocols of any trading portal before making use of it is very important. In like manner, choosing an online commodity trading option that includes the ability to reach a broker for advice, either by online chat or via a voice communication, is essential.



Discuss this Article

Post your comments

Post Anonymously


forgot password?