Best Commodity Trading Platforms in Canada
What You Should Know
- There are only a handful of platforms in Canada that offer commodity trading.
- Commodity trading platforms in Canada offer Contracts for Difference (CFDs) trading, which allows users to speculate on commodity price changes without holding the underlying commodity or future contracts.
- Most commodity trading platforms offer 500:1 maximum leverage with a spread starting from $0.02.
- You need a verified commodity trading account to access commodity trading platforms in Canada.
About Trading Commodities in Canada
Commodities are raw materials or primary agricultural products that can be bought and sold on global markets. They include agricultural products, energy sources, metals and precious metals. You can trade commodities online via various platforms available in your region. Commodity markets are often volatile. The availability of high leverage makes commodity trading very risky, which makes the government carefully regulate commodity trading.
Best Commodity Trading Platforms in Canada
| Name | Spread (min) | Commodity Products | Availability |
|---|---|---|---|
Interactive Brokers | $0.85/contract | Futures | All Canada |
| $0.02 - $1.5 | CFD | All Canada | |
| $0.02 - $6 | CFD, Futures | All Canada | |
| $0.6 - $25 | CFD | All Canada | |
| $4 - $9 | CFD | All Canada | |
| $1.29/Side + Fees | Futures | All Canada | |
| $0.02 - $16 (Avg.) | CFD | Not Available in BC and ON |
Other Ways to Trade Commodities in Canada
Even though there are ways to trade specific commodities via spot, futures, or other derivative markets, there are less complex financial instruments that help you gain exposure to commodities. Canadian ETFsand certain stocks can help you track the performance of various commodities without owning the underlying commodity. For example,
- Energy Commodities:
Stock: There are many Canadian oil stocks, such as Suncor Energy Inc. (TSX: SU)
ETF: iShares S&P/TSX Capped Energy Index ETF (TSX: XEG) - Gold & Mining:
Stock: Barrick Gold Corporation (TSX: ABX)
ETF: There are many Canadian gold ETFs, such asiShares S&P/TSX Global Gold Index ETF (TSX: XGD) - Agriculture Commodities:
Stock: Nutrien Ltd. (TSX: NTR)
ETF: iShares Global Agriculture Index ETF (TSX: COW)
You can trade stocks and ETFs with most online trading platforms in Canada. Some of the notable platforms that can help you trade commodities via equities are below.
Best Equity Brokers for Commodity Trading in Canada
| Name | Commission | Account Types |
|---|---|---|
Moomoo | Canadian Market (CAD$) Stocks & ETFs: $0.0149/share (min. $1.49) US Market (USD$) Stocks & ETFs: $0.0099/share (min. $1.99) US Options: $0.9 per contract (min. $1.5/order) USD/CAD Exchange: 0.09% + USD$2.00 | Cash Account Margin Account Registered Accounts |
Stocks & ETFs: $0.01/share (min. $4.95) Options: $9.95 + $1/contract Indices: From 0.5 pips | Cash Account Margin Account Registered Accounts | |
Stocks: Free Options: $2 per contract | Cash Account Registered Accounts |
What Is a Commodity Trading Platform
Commodity trading platforms allow you to trade commodities or derivatives with commodities as underlying assets. Most trading platforms that allow commodity trading may offer contract for difference (CFD), or commodity futures trading.
Commodity platforms in Canada are highly regulated, so only a handful of platforms offer commodity trading. The Big Six banks in Canada offer commodity trading for some individuals, but this page focuses on standalone trading platforms.
Commodities Markets
Commodities can be split into three different categories: Metal, Energy, and Agricultural.
- Metal Commodities: This category includes precious metals, industrial metals and some ores. Both types of metals have a relatively stable demand that correlates with economic conditions.
- Energy Commodities: Energy includes oil and petroleum products, natural gas, hydrocarbon gas liquids, coal, and Uranium (for nuclear energy). Electricity is also considered an energy commodity that is widely consumed by most people.
- Agricultural Commodities: Most items grown on various farms are agricultural commodities. Some may have a larger market than others. Agricultural commodities can be split into even smaller sections: grains, oilseeds, livestock, dairy, fertilizer, and lumber.
Commodity Trading Account Set Up
To trade commodities or any related instruments, you need to register on an accredited trading platform. The government requires the platforms to collect personal information on their users before they are allowed to trade. You may need to provide the following information to set up a commodity trading account:
- An application form with personal information.
- Know-Your-Customer (KYC) documents for verification.
- ID / Drivers Licence / Passport.
- Proof of Address (utility bill, rental agreement, bank statement)
These can be easily uploaded to the platform's portal. The verification may take no longer than a day. Once you are verified, you can fund your account and start trading.
How to Choose a Commodity Trading Platform
To make a choice between different commodity trading platforms, you should consider the factors that matter most to you. For example, some people may prefer a platform with many commodities, while others might look for a low-commission platform to trade a specific commodity.
- Number of Commodities: Different platforms may have different commodities available for trading. Depending on your use of the platform, you may benefit from a larger variety of commodities. On the other hand, if you are planning to trade a specific and common commodity, this factor may not be important for you.
- Spreads, commissions & Fees: High spreads and fees may be a significant expense in commodity trading. You should look at the spread for your desired commodity before choosing the platform. Generally, different platforms have similar fees for commodity trading but spreads on specific commodities may vary.
- Trading Tools: A modern trading platform should contain a range of tools that help traders make decisions. These tools include charts with financial information and technical analysis tools. Large platforms may include other tools that may be helpful in commodity trading.
- Margin Costs: If you are an experienced trader looking to trade with margin, margin trading terms may also be an important consideration. Most commodities platforms offer a 10:1 maximum margin, but the interest charged on the margin may differ.
Commodity Trading Platform Fees
When commodity trading via contract for difference (CFD), the platforms often do not charge commission fees explicitly. Instead, they act as a counterparty to your trade and make money through a spread between the bid and ask prices for different commodities. The spreads vary depending on the commodity and platform used.
Commodity Spreads on AvaTrade
| Commodity | Min Spread | Min Trade Size (Unit) | Min Spread Cost |
|---|---|---|---|
| Brent Oil | $0.02 | 10 (Barrel) | $0.15 |
| Cocoa | $6.00 | 1 (Metric Ton) | $6.00 |
| Coffee | $0.15 | 10 (lbs x100) | $1.50 |
| Copper | $0.00 | 100 (lbs x100) | $0.44 |
| Corn | $0.25 | 1 (Bushels x100) | $0.25 |
| Cotton | $0.06 | 10 (lbs x100) | $0.60 |
| Crude Oil (WTI) | $0.02 | 10 (Barrel) | $0.20 |
| Gasoline | $0.00 | 1000 (Gallons) | $1.50 |
| Gold | $0.28 | 1 (Troy Oz) | $0.28 |
| Heating Oil | $0.00 | 1000 (Gallons) | $1.50 |
| Natural Gas | $0.00 | 100 (mmBtu) | $0.20 |
| Palladium | $0.65 | 1 (Troy Oz) | $0.65 |
| Platinum | $1.10 | 1 (Troy Oz) | $1.10 |
| Silver | $0.02 | 100 (Troy Oz) | $2.30 |
| Soybean | $1.00 | 1 (Bushels x100) | $1.00 |
| Sugar | $0.03 | 100 (lbs x100) | $3.00 |
| Wheat | $0.25 | 1 (Bushels x100) | $0.25 |
Commodity Trading FAQ
How do you become a commodity trader?
To start trading commodities, you simply need to open a commodity trading account on a commodity trading platform. To open a trading account, you need to pick a suitable commodity trading platform, provide the necessary information to verify your identity, fund your account, and you can start trading.
How much money do I need to trade commodities?
Commodity trading offers a lot of leverage, allowing you to trade with relatively little money. You can start trading with as little as $10 on some platforms. You typically have to contribute 10% of the total contract value when trading commodities.
How to invest in commodities in Canada?
For most Canadians, the best way to invest in commodities in Canada is with an online platform. Online trading platforms offer a wide range of tools to trade commodities with relatively low spreads. Canadian traders can access various platforms that offer commodity trading including CMC Markets, Ava Trade, and FXCM.
What is the best way to trade commodities?
Contract for Difference (CFD) trading is one of the most popular ways to trade commodities. A CFD allows traders to speculate on the price difference without holding the underlying commodity. This helps traders to easily access commodity markets without the need to store the physical commodity. CFDs also offer a high leverage trading that allows traders to take risky bets.
Disclaimer:
- Any analysis or commentary reflects the opinions of WOWA.ca analysts and should not be considered financial advice. Please consult a licensed professional before making any decisions.
- The calculators and content on this page are for general information only. WOWA does not guarantee the accuracy and is not responsible for any consequences of using the calculator.
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