Commodities vs Forex

Forex Mentor

Commodities are physical equipment that is traded like coffee, oil, gold, cocoa and many more products, including mined products. Forex trading on excentral or foreign exchange actually trades the currencies based on their pricing changes like Euro, USD, Yen etc. The analysis and approaches are somewhat similar to both, but there are various factors that are different in both of them. There are at least 50 different commodities that are very well known across the world. The commodity can be traded through futures contracts, and the commodity will be sold or bought at a particular date and at a particular price. The major difference lies in the products that are traded in these two trading systems.


The market of commodities is highly regulated, whereas the regulations of the Forex market are not that strong. The highly regulated commodities are more secure, and you would rely more on these policies. Traders would be more comfortable to trade with more regulations. This ensures that you find a strong network and trade without the fear of getting cheated. There are people who would be more comfortable trading in places bound by regulations. 

Leverage and Liquidity

Leverage exists in both the markets Forex and Commodity, but there are much more leverage options in the foreign trading market. You don’t have to figure out largely to find the leverages. There are 50:1 leverages, and you can incur huge losses in case not used wisely. The leverages can also be used in Forex, but the market leverages are much better in Forex trading. The liquidity of the is maximum as compared to any other marketing standards. The trading in Forex has the largest volume consumption every day, which is lesser in Commodities. 

Limits of Exchange

Commodities are traded across an exchange, whereas the foreign exchange markets are over the counter, and trading can be done through brokers or interbank markets. As commodities are traded over an exchange, there are daily range limits. If the range of the daily limit is reached, then the market is considered as the limit up or limit down. The trading would be stopped completely. There are chances of quick losses in the Forex market, but there are very few chances of situations where exiting the trade is difficult.


The pricing of the Commodity depends on factors like demand, weather, availability etc. The commodity has lesser predictability than the Forex markets. Analysis of the Forex trading market is easier. Though there is a lot of volatility in the Forex market, they follow a certain pattern that would help us determine the next changes. Major trends are created in the Forex market, which is absolutely absent in Commodity exchange markets.

Both the market structures are profitable if you can strategize properly. Commodity trading and Forex trading requires effort and time. Forex trading is actually very inexpensive as compared to the Commodity trading market. The trading products vary in both the trading and hence be sure about what you want to choose. All the best!

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