This crossover appeared in mid January 2019 and with sustained supportive macroeconomic conditions, copper prices extended further. Additional data inputs such as the bullish MA crossover can give traders the information required to select a focused trade. https://bigbostrade.com/ This is where fundamental factors play an integral role in trading copper. Market participants who follow macroeconomic events such as the US-China trade talks would be aware of decreased volatility and intensity around the topic as it slowly dissolved.
Milan Cutkovic has over eight years of experience in trading and market analysis across forex, indices, commodities, and stocks. He was one of the first traders accepted into the Axi Select programme forex trading for beginners which identifies highly talented traders and assists them with professional development. It has been prepared without taking your objectives, financial situation and needs into account.
Options contracts are derivatives, meaning that none of the underlying assets are owned. Traders can exercise their contracts to purchase an asset at their strike price or choose to sell the contract to realise their profits. Because of copper’s extensive use in construction, the commodity trading price determinants are often the rate at which houses are being built or redeveloped around the globe. In addition to the US housing market, the aggressive growth of emerging markets in China and India has a significant impact on the copper spot trading price.
- For example, when the Dollar falls, a buyer will have to pay fewer of his/her domestic currency to purchase a specified amount of copper.
- No representation or warranty is given as to the accuracy or completeness of this information.
- Download a powerful trading platform like MetaTrader 4 or its upgraded version, MT5, to execute trades quickly and gain a transparent view of the market.
The most common form of fundamental analysis is supply and demand analysis as well as evaluating the value of the US dollar. The LME provides robust inventory information, that describes the volume of copper currently held in storage. The charts of the storage levels, give an investor a history of inventories which can help determine supply and demand. For example, you can see from the chart of LME copper inventories that stockpiles have declined from late April into mid-May.
The main ways to trade copper through a broker or an exchange are through bullion, contracts for difference (CFDs), futures, options, ETFs, and shares. Copper futures are standardized contracts and can only be traded on regulated exchanges. While each country would generally have its own exchange to trade copper futures, the exchanges discussed here are the ones with the highest trade volume.
Admiral Markets
As emerging markets grow, demand for housing should follow in those regions as well. Copper has played a key role in technology for thousands of years and continues to do so in today’s industrial expansion. Leverage allows you to increase the notional value of the underlying product using borrowed capital. The initial margin needed to purchase one contract of CME copper is $3,750.
The list of tokens is longer than many rivals and the broker offers a secure trading environment. Skilling offers Standard and Premium accounts with competitive leverage and spreads across a wide range of major, minor and exotic forex pairs. Over 70 currencies are available, providing more trading opportunities than most competitors. The content on this site should not be considered investment advice and we are not authorised to provide investment advice. Nothing on this website is an endorsement or recommendation of a particular trading strategy or investment decision. The information on this website is general in nature, so you must consider the information in light of your objectives, financial situation and needs.
Commercial and investment banks are intermediaries for corporate producers and consumers. They generally will provide access to over-the-counter swaps and options that are used to hedge production or supply chain consumption. Investment funds, on the other hand, speculate on the future direction of copper.
This site is not intended for use in jurisdictions in which the trading or investments described are prohibited and should only be used by such persons and in such ways as are legally permitted. Your investment may not qualify for investor protection in your country or state of residence, so please conduct your own due diligence or obtain advice where necessary. This website is free for you to use but we may receive a commission from the companies we feature on this site. Tom is an experienced financial analyst and a former derivatives day trader specialising in futures, commodities, forex and cryptocurrency. In Economics and Management and his work has been published on a range of publications, including Yahoo Finance, FXEmpire and NASDAQ.com. In that type of market condition, a trader will look to sell copper at the high resistance level and buy at the bottom support level.
In some cases, spot market buyers are required to take physical delivery of a commodity, especially if held for an extended period. For long-term investors, a copper ETF offers a far more practical solution. We will choose the top CFD brokers that offer copper trading and share some essential trading strategies to help you get started.
Understanding the importance of copper can help you with a bias on risk appetite in the overall markets. Brokers that offer copper trading may provide a range of platform options, including proprietary terminals, mobile apps, and third-party tools like TradingView. Look for custom copper trading charts and graphs, price history, signals, alerts, watchlists, and news streams. Tight spreads and no/low commission copper trading brokers should rank highly. Also check for any non-trading costs, such as deposit/withdrawal charges and account maintenance fees. Once you have identified a trusted broker, it is time to sign up for an account and deposit funds.
Final Word On Copper trading
The market’s trade volume has been on the rise over the years as both retail and institutional investors look to tap into this market for different purposes. This article will explain what copper futures are and how one can trade using these contracts. Copper is offered through specific exchange-traded funds that hold copper futures in a trust. Copper exchange-traded funds (ETFs) are designed to track the price of copper.
The largest copper mine – Escondida – located in Chile’s Atacama desert accounts for 5% of the globe’s total copper production. If you're new to futures, the courses below can help you quickly understand the Copper market and start trading. CFDs are leveraged products, which means that you are only required to put down a fraction of the full value of your position in order to gain full market exposure. While leveraged products do magnify your profits if your prediction is correct, if the market were to move against you, you could face magnified profits. When acquiring our derivative products you have no entitlement, right or obligation to the underlying financial asset. AxiTrader is not a financial adviser and all services are provided on an execution only basis.
When a MACD crossover buy signal occurs momentum is turning positive. You can see that momentum occurs before trend crossovers and in some cases has divergent signals. Approximately 43% of the copper used today is in building and construction.
Supply factors and the cost of substitute metals can also have a strong impact on the copper trading price. As well as the length of trade, copper traders need to consider the methods they are going to use to make predictions about future prices. These methods can include market fundamentals, technical analysis or acting upon rumours and news. Copper trading strategies such as hedging and arbitrage should also be acknowledged at this point. Pepperstone is a fast and reliable CFD broker with 1200+ assets covering forex, commodities, shares, indices, and ETFs. You can also trade currency indices, which aren't available at many alternatives.
Can i trade copper online?
A consolidating market is identified as a market that traded in range-bound, meaning sideways moving market. Market consolidation occurs at a time when supply and demand are roughly equal and the copper market is often in a state in consolidated mode. While the US and China are the two biggest players in the copper trade, copper is used globally. As the population and wealth of developing nations increases, the world expects to see a concurrent rise in demand for copper. Traders should be evaluating the health of the global economy, not just the economies of the US and China when deciding whether the price of copper is likely to rise or fall. In the US, copper is used primarily for housing and construction projects.
In many financial markets, such as futures exchanges, copper is traded and quoted in pounds. However, in industrial applications or when discussing global production and consumption, copper is often measured in metric tonnes. Copper prices are mostly driven by commercial industry demand and the rate of supply by copper-producing countries.
That increase in supply can act to keep the price of copper down even as global demand increases. Another effective way to trading copper is through the Contract for Difference (CFD) market, which allows traders to speculate on a commodity price without owning the asset. As expected, a decline in economic growth was realized with copper following suit. From January 2020 to mid March 2020, copper prices fell roughly 30% due to the COVID-19 pandemic.
Kwakol Markets
Clients can trade on the MT4, MT5 and cTrader platforms, as well as a copy trading solution whereby a fee is only paid on profitable trades. Once you have decided you want to trade copper through the CFD market, it’s time to place your first order. EToro offers a user-friendly web-based trading platform where you can easily place orders on your desktop or mobile phone. In China, copper is used more for manufacturing than for construction. Growth in Chinese demand for copper as a raw material has played a major role in driving up the price of copper in recent years.
A standard copper futures contract comprises 25,000 pounds of copper in weight, and the price is quoted in US dollars. COMEX has also introduced E-mini copper futures, allowing traders to opt for a 12,500-pound contract instead of the standard 25,000 pounds. The smaller size ensures that retail traders can still enter the market. Opening it up to more traders provides additional liquidity in the market.
This means that the sheer magnitude of the US housing market has a significant impact on the demand for copper. The US housing market can be monitored using factors that influence the need for housing or the price of housing, including non-farm payrolls and US GDP data releases. As well as being a trader, Milan writes daily analysis for the Axi community, using his extensive knowledge of financial markets to provide unique insights and commentary.
Pros & Cons of Investing In Copper
Your broker will also give you access to other resources to help you manage your money. The value of copper also tends to follow the global economy due to its applications in almost all sectors. It is also playing a key role in renewable technology and the move away from fossil fuels, which helped drive up prices in 2023. Similarly, if the construction industry or housing market is booming, the price of copper tends to rise.
Global Prime
For some over-the-counter trades, such as spread betting or some options contracts, this is the end of your active involvement in the trade. However, for CFDs, stock and ETF purchases and American options contracts, investors can monitor the payout or price of their assets and capitalise on market movements to take profits or minimise losses. American-style options contracts are traded on regulated exchanges, offering call and put options to traders with the ability to close out a contract at any point.
Copper traders need to be attuned to the risk posed by political and social unrest around the world as it relates to copper supply. Although China has mines of its own, Chinese demand requires additional supply which is sourced from other major copper producing countries. This is why the Chinese economy is such an important factor to consider when trading copper. If China continues on its growth trajectory, one can expect sustained demand for copper (see chart below). It is important to note that China is determined on being self-sufficient in the long-term which could disrupt future supply/demand dynamics.
Trading copper futures is simple, and several online platforms can be accessed for this purpose. Here’s a simple step-by-step guide for how you could start trading in copper futures. The next section will elaborate more specifically on the market participants who trade copper futures and how they can benefit from the market.