CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how this product works, and whether you can afford to take the high risk of losing your money. It is important to understand the benefits and risks involved with copper futures before placing a futures trade. Copper futures also provide the ability to trade with greater leverage and allow a more efficient use of trading capital. However, trading leveraged products like copper futures also involves the risk that losses can exceed the amount originally invested and may not be suitable for all investors. Like any commodity the copper futures price fluctuates daily based on several factors.
It would be difficult to imagine building any significant industrial infrastructure without it. For this reason, it is thought of as a commodity that moves closely in parallel with the world market.
Copper is commonly used as an indicator for global economic health due to its wide range of uses. Before you trade this popular market, it’s important to learn how to trade copper and decide which trading strategy you will use. Due to copper’s wide range of global uses, it’s a high-demand metal. As a result of this high demand and the global mining market’s struggles to keep pace with it, traders may consider copper a lower risk commodity. Please note that foreign exchange and other leveraged trading involves significant risk of loss.
Over-the-counter derivatives are complex instruments and come with a high risk of losing substantially more than your initial investment rapidly due to leverage. You should consider whether you understand how over-the-counter derivatives work and whether you can afford to take the high level of risk to your capital. Investing in over-the-counter derivatives carries significant risks and is not suitable for all investors. If you choose to take advantage of leveraged trading, you can use a small amount of capital to open larger trade positions.
How is copper traded?
As copper becomes more expensive, cheaper metals, such as aluminium, are being used instead of copper in power cables and electrical equipment. Other base metals, including nickel, lead and iron, are also used as substitutes for copper in some industries. The instability caused by political and environmental issues in copper-producing regions can impact market price as supply chains are broken. According to Statista, worldwide volumes of copper production reached over 20,000,000 metric tonnes. This number has been consistent since 2016, which indicates that supply is relatively stable.
Some people claim that copper is a precious metal, but in reality it is a base metal. One is that precious metals are rare in nature, but this isn’t the case for copper. Finally, precious metals occur in nature in their metallic state, but copper is almost always found in oxide and sulfite ores that need refining. All that aside, copper is still a commodity metal and is just as good a trade vehicle as any precious metal out there. When acquiring our derivative products you have no entitlement, right or obligation to the underlying financial asset.
AvaTrade invites you to trade copper, as well as many other commodities. With us you can receive copper market news, data, guidance and copper market tips. Copper is also used for different new green technologies such as environment friendly batteries and more. Green energies are on the rise as human kind is always searching for better solutions, and a growth in such technologies can bring about an increase in the price of copper.
This copper trading strategy would involve buying copper at a known support level and selling when it reaches a point of resistance, taking advantage of shorter-term market movements. Since precious metals are defined by their scarcity and high economic value, copper can be considered as a precious metal. As copper demand increases, world copper stores will gradually deplete, in turn, making copper a rarer metal. While precious metals like gold and silver are considered a store of value, copper’s value lays in its wide range of practical uses.
Utilise our world-class trading platforms and powerful tools to enhance your trading experience. With an Axi account, traders of all levels have access to top resources to help further improve their skills. View some of the most popular copper CFDs you can trade with Axi below. For a full list of copper trading instruments, view our product schedule.
Today it has a wide range of applications in industrial manufacturing and everyday items, including microwaves and heating systems. However, the demand keeps growing, especially in regions like China, and supply disruptions during a chaotic 2020 continue to further the supply/demand imbalance. It is worth noting that increases in mining input costs such as the price of oil and equipment can adversely impact share prices.
While in periods of economic downturn, the price of copper is low as there is less money being spent on infrastructure growth. Copper CFDs allow traders to speculate on the price of copper without actually owning bullions, ETFs, futures, options, or mining shares. However, a global halt in GDP growth can also pose risks to traders considering copper. Another major risk of trading copper is due to the industrial shift to using alternative metals to copper. The profit on your CFD position would depend on whether your prediction of copper price movements was correct and the extent to which the market price moved in your favour. If the market moved against you, your CFD position would result in a loss.
Emerging markets
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk.
Like most commodities, copper price changes based supply and demand. Copper is commonly used for different appliances, mostly for housing and electrical machinery. A decline in new house constructions can indicate a slower economy, which can result in a drop of copper prices. Should the supply from a region or country slowdown or even stop completely, it could greatly affect the copper market and change its price.
Copper futures require active maintenance of positions by the trader, and so are considered a more sophisticated way to trade. Given the belief that copper is a jack-of-many-solutions metal, speculation can be simpler than with other metals like gold that are seen as a store of value. The global housing market overheated and took a tumble during the Great Recession of 2008. As emerging markets grow, demand for housing should follow in those regions as well. In this guide we explore regulated copper brokers, different ways to trade, and the reasons why people trade copper. As copper is used in such large quantities all over the world, its price is often used as a benchmark for global economic health.
However, it is these price fluctuations that can present traders with opportunities to capitalise on the market movements. Copper can be traded through a variety of trading instruments where traders may or may not own the actual product. The main ways to trade copper through a broker or an exchange are through bullion, contracts for difference , futures, options, ETFs, and shares. Copper futures contracts are offered through NYMEX on the Globex® trading platform and are available to trade electronically through Schwab nearly 24 hours per day, 6 days per week. In addition to copper futures, COMEX-listed gold futures contracts and NYMEX-listed silver futures contracts are available to trade at Schwab nearly 24 hours per day, 6 days per week.
Speculate on commodities
For a complete overview of all the copper instruments available to trade and their active time zones, view our product schedule. Unlike its other metal cousins, gold and silver, copper futures are traded as a commodity, not a precious metal. The reason copper is considered a commodity is because of its wide use in large quantities worldwide. Copper is used in plumbing, communication, and everything in between. You can find copper futures listed as a commodity on the London Metal Exchange , the Comex, and on the Multi-Commodity Exchange.
There is also an emerging market demand for copper, mostly from China as they are the biggest consumers of copper. Known as the manufacturing hub of the world, China consume almost half of the world’s copper but do not have enough reserves. This situation gives rise to increasing the supply and global copper trade. RJO Futures has a team of knowledgeable and experienced Senior Market Strategists that would be more than glad to assist you in trading copper futures.
Ways to Trade Copper
When the copper market is trending, it means that it is constantly reaching higher highs or lower lows. This will generally occur at the beginning and end of the copper market life cycle. When you trade copper, you have the opportunity to take advantage of markets that are both rising and falling. You can do this by opening a position to ‘buy’ copper if you think the price will increase, or a position to ‘sell’ copper if you think it will decline. Your decisions about which direction to trade in should be based on the analysis you have chosen to perform and the copper trading strategy you have made.
You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. As with all other asset classes, trading copper can be very profitable with the right risk and trade management practices in place. Because many different factors – such as supply and demand issues, or economic outlook – can cause the price of copper to change quickly, the copper market can be volatile.
There are a variety of trading strategies that you can employ depending on your personal preferences and knowledge of technical indicators. But broadly speaking, copper trading strategies will depend on whether the market is trending or consolidating. To learn more about copper’s qualities as a metal, how it’s produced, and which countries lead copper production, see this Copper Commodity Guide. To get a better idea of how copper futures work, see this explanation of leverages and margins.