How To Trade Commodities and Stocks On Exness

If you are planning on trading commodities or stocks on the Exness platform, then this guide is for you, as it explains the basics and shows you the way forward.

Exness is a popular online broker that offers a range of trading platforms, various account types, excellent trade execution, and various other connected services to its customers.

You can trade stocks, commodities, indices, and Forex on the Exness platform. Each group of tradable instruments has its pros and cons, so it’s up to you to learn the specifics. This guide will focus on only stocks and commodities.

What Are Stocks and Commodities?

Stocks are the shares of public corporations that can be bought and sold on exchanges. Owning the stocks of a company entitles the holder to earn dividends from the company and can also offer them voting rights, depending on the quantity of stocks owned.

Commodities are everyday goods that can be exchanged for one another and they are also traded on exchanges. Commodities can include precious metals such as gold, silver, and platinum, as well as energy commodities such as crude oil, heating oil, natural gas, and refined products, such as petrol.

Traditional trading of stocks and commodities originally involved the direct purchase of the said asset, but CFDs developed to create a new type of market for speculators.

What Are CFDs?

CFD or Contract For Difference is a transaction designed for speculative trading; it enables a trader to buy or sell an asset without actually owning that asset. So, as the name implies, the contract is for the difference in prices of the asset during buying and selling. 

For instance, when you buy gold from a CFD broker, you do not buy a physical gold asset, but you rather enter a contract with the broker to settle the price difference after you sell the gold contract that you just bought. If you end up selling the gold for a higher price than you bought it, then you just made some profit and the broker will credit you, but if you sell it for a lower price than you bought it, then you just made a loss, and your broker will debit your account with the amount lost.

As you can see, CFDs make it easier to focus on price speculation than on actually buying the underlying asset. It even makes it easy to first sell an asset before buying it. This is necessary for those who want to “short” a market as they are anticipating a market downturn. CFDs allow you to first sell the market short and later buy the market to close your contract. In other words:

1. CFD trading allows you to borrow an asset from your broker.
2. Then immediately sell that asset in the market.
3. Wait for the asset’s price to drop.
4. And then buy back the same asset at a lower price to pay back the loan you took from the broker.

Another major advantage of trading CFDs is margin. In trading, margin is a service offered by the broker that allows a trader to engage in transactions way larger than he can actually afford. It allows a trader with $100 for instance, to engage in $10,000+ trades, thereby potentially earning more profit than from a $100 trade.

How To Trade Commodities and Stocks on Exness

Step 1. Register An Account

Your first step is to head over to exness.com and create an account. The process is straightforward but may differ slightly according to your country’s laws. They will need an email, a phone, your name, and some form of ID. Once the account is ready, then you can fund it or continue demo trading.

Step 2. Select Account Type

Next, you will need to select an account type. Exness offers various account types, including Standard, Pro, Zero, and Raw Spread. Choose the one that best serves your needs and matches your budget.

Step 3. Select Trading App

Your third step is to select a desired trading app. Exness offers various apps to choose from, so you may need to check them out individually to see what’s right for you. They include Metatrader 4 and 5, Metatrader Web, Metatrader Mobile for mobile devices, and the Exness app. Choose what’s best for you or you can also use them all.

Step 4. Add Trading instruments

Exness offers a wide range of trading instruments, from Forex to commodities, stocks, and indices. Inside your trading app, select the commodities and stocks that you would like to trade.

Step 5. Calculate Margin

Every trading instrument has its margin requirements, so you need to find out the requirements for the instruments that you chose to trade and keep them in mind. If you are unsure about it, you can place a few demo trades on the platform and watch the trading dashboard to get all the information that you need.

Step 6. Calculate Stop-loss and Take-profit

This step depends a lot on your trading style. Do you intend to scalp, day-trade, or swing trade? Your trading approach will determine your risk tolerance and potential trading profits. Make sure you know what you are facing.

Step 7. Know Your Trading Hours

Different markets have different opening hours. Even different Forex pairs have their most active trading periods, which are also the best opportunities to make the most profit. So, make sure you know the trading hours of the stocks and commodities that you have chosen to trade.

Step 8. Analyze The Markets

Once you are set, you can now open your trading app and analyze the markets using your favorite market analysis method. (See section on market analysis below for more info)

Step 9. Place Your First Trade

If your chosen market analysis system gives you a buy or sell signal, now is the time to take your first trade.

Trading Keys To Success

Different asset classes have different methods of fundamental analysis in order to make a profit from them. This is important and worth mentioning because stocks and commodities are very much different from each other.

Here is a closer look at how you can approach each class and what you need to keep your eyes on:

• Commodities: When trading commodities, you need to keep your eyes on issues that can either create shortage or surplus/glut. The major causes here include geo-politics, how various countries interact with one another, armed conflicts, as well as government policy changes. Weather can also play a role for agricultural commodities such as corn.
  
• Stocks: When trading stocks, you are more focused on the individual performance of the companies. How much do they earn? how much dividends do they pay? are they acquiring a small company or are they being acquired or merging with competitors? Market and economic realities are also important. Is their market growing or dying? how innovative are they? what might the company’s finances look like in 5 or 10 years?

Technical Analysis & Trading Methods

In addition to the fundamental analysis methods explained above, there is also technical analysis, which involves leveraging one or more technical tools to gauge market sentiment and decide on a trade direction.

These various technical analysis methods are as follows:

• Trend following: Here, you simply follow the direction of the charts. A very basic approach that can bring good returns in trending markets.
• Trend Lines: Prices tend to get repelled from diagonal and horizontal lines. Identifying them and using this information for trading can be profitable.
• Moving Average: This is a mathematical indicator that calculates the average of x previous bars (which could be 2, 3, 120 or more). The philosophy is that when you connect these averages into a single line, a bullish market will be above the line, while a bearish market will unfold below it.
• MACD: The MACD name stands for Moving Average Convergence and Divergence and in simple terms is a technical indicator that utilizes multiple moving averages to create more reliable trading signals.
• Stochastic: The stochastic oscillator uses mathematics to predict highs and lows. It can produce good signals when combined with another indicator. 
• Gann Methods: W.D Gann developed a market analysis approach that you either love or hate. It is based on geometry, straight lines and angles.
• Channels: A channel is basically two parallel trend lines—with one tracking the lower points and another tracking the high points in a given period. It can produce quite reliable trading signals.
• Fibonacci Retracements: Fibonacci studies follow a natural approach to nature that is equally evident in trading charts. Fibonacci traders rely on market movements swinging between 62%, 38%, and 162% etc of previous moves.
• Elliot Waves: This is another interesting analysis method but it can produce very subjective results.

Trading Methods

• Scalping: This involves taking trades for as little as a few seconds or usually for a few minutes before closing them. Scalping brings little returns but when coupled with a large trading capital and multiple trades each hour, then it can be quite profitable.
• Day Trading: These traders usually take one to three trades a day and hold each for a few hours. A large number of traders take this route.
• Swing Trading: A swing trader may take just one or two trades in an entire week or two. They tend to go for larger wins, while equally risking more capital per trade.
• Position Trading: Position traders may take two or three trades in an entire calendar year.

Winning and Consistency

You don’t need to win every trade to become a successful trader. In fact, many institutional traders have been known to make serious money with just about a 60% win ratio. Rumor even has legends succeeding with as low as 40% win ratio.

What matters is your risk/reward ratio. If you risk only $1 to make $10 and you win only 40% of your trades. Then you make $40 ($10 x 4 winners) from your winners, while losing $6 ($1 x 6 losers) from your losing trades. So for every 10 trades, you make about $36 and if you repeat this process consistently, then you are indeed profitable while winning only 40% of your trades.

Frequently Asked Questions

Q: Do I purchase the physical stocks or commodities while trading on Exness?

A: No, you do not. Trading on Exness is strictly on a CFD basis. You are trading only for the difference in prices (purchase & sell prices). You keep the difference if it’s a profit or the broker subtracts the loss from your account, if it’s a losing trade.

Q: What factors move the commodity markets?

A: Various factors move the commodity markets and affect prices. These include geo-political situations such as a change of government, a war, or a presidential election in a key producing country. Natural disasters can also cause supply shortages, as well as industrial innovations, which can either increase or lower the demand or supply of the commodity.

Q: What is Exness VPS hosting?

A: This is a web hosting service for traders using automated systems. If you have a trading robot, then you can rent an Exness VPS to securely and reliably run your bot round the clock.

Q: How do commodity/stock traders make money?

A: Commodity and stock traders make money by accurately speculating in which direction the market will go and consequently either buying or selling the stock/commodity. If the trader bought the instrument and the price increases, then he can sell it and keep the price difference as his profit. Likewise, if the trader sold the instrument and its price drops, he can equally buy it (close the trade) to make a profit.

Q: Can I trade gold or silver as a beginner?

A: Sure you can trade gold and silver as a beginner. All that is required is that you understand what you are doing and this includes knowing all the right settings for the trade. It is better, however, to first try your hand with demo trading using a practice account. It allows you to get your feet wet and learn from possible mistakes without incurring real monetary losses.

Conclusion

We have reached the end of our quick guide to start trading commodities and stocks with Exness. Hopefully, this introduction has shown you the right considerations to make and steps to take. Also, if you are new to trading, please do not rush it. Try to learn as much as you can first. Trade using a demo account until you are comfortable enough to trade real funds.

You can register on Exness.