Start Trading Now
Sign up for ZitaPlus, where knowledge and personalized support come together for your success.
Open Real Account Open Demo Account
Financial markets offer a wide range of opportunities, but few areas draw as much attention as forex and commodities. Both are highly liquid, accessible to retail traders, and influenced by global events. Yet, they operate under different dynamics.
Forex trading involves currency pairs such as EUR/USD or USD/JPY, which are often influenced by economic data and central bank decisions. Commodity trading, on the other hand, focuses on tangible assets like gold, oil, or wheat, which respond to factors such as supply disruptions, seasonal demand, and geopolitical shifts.
Understanding the distinctions between these markets is important for anyone looking to trade more effectively. In this article, we’ll explore the structural and strategic differences between trading commodities and forex, covering everything from contract sizes to market behavior.
Although the instruments are quite different than each other, it's important to understand what you’re actually trading in each market first.
Forex Trading involves exchanging one currency for another. These transactions are always done in pairs, such as EUR/USD, where you are buying the euro and selling the U.S. dollar. The forex market is the largest and most liquid in the world, with daily volumes exceeding $6 trillion. It's influenced by interest rates, economic indicators, and geopolitical developments.
Commodity Trading deals with physical goods like metals, energy products, or agricultural items. Traders don’t usually take possession of these materials. Instead, they use derivative contracts such as CFDs (Contracts for Difference) to speculate on price movements. Gold, crude oil, natural gas, silver, and coffee are just a few popular examples.
While forex pairs reflect the relative strength of two economies, commodity prices often reflect a blend of supply-demand fundamentals, storage levels, and broader market sentiment.
For example:
Though both markets are speculative and fast-paced, what moves them, and how you trade them varies in key ways. Their differences include:
Let’s take a closer look, starting with how trades are measured.
One of the first differences traders notice between forex and commodities lies in how positions are measured and valued.
In forex trading, positions are standardized using lots:
Let’s say you trade 1 standard lot of EUR/USD. That means you’re trading 100,000 euros against an equivalent value in U.S. dollars. The pip value depends on the lot size and the currency pair but usually equals $10 per pip for a standard lot in most major pairs.
Commodities, on the other hand, don’t follow a uniform lot size. Instead, each asset has its own contract specifications. For example:
Because commodities vary so widely in size and value, it’s important to check your broker’s contract specifications. Even small price movements can lead to significant profit or loss depending on the product.
These differences make understanding the underlying instrument critical before placing a trade.
Leverage plays a central role in both forex and commodity CFD trading. It allows traders to control larger positions with a relatively small amount of capital. However, the level of leverage available and the margin required can differ significantly depending on the market and instrument.
Forex is well-known for offering high leverage, especially on major currency pairs. Some brokers allow leverage up to 1:500, although many regulated regions impose stricter limits:
For example, with 1:100 leverage, you can control a $100,000 position with just $1,000 of margin. This makes forex appealing to short-term traders and scalpers, but it also increases exposure to market fluctuations.
Commodities tend to offer lower leverage compared to forex. This is mainly because these markets are more volatile and prone to sudden price swings due to weather events, supply chain disruptions, or geopolitical tensions.
The key reason for this difference is risk control. Currency pairs like EUR/USD are generally more stable than crude oil or natural gas. Since commodities can be influenced by unpredictable events, brokers limit leverage to protect both traders and themselves from excessive exposure.
ZitaPlus offers dynamic leverage for both forex and commodities. This means the leverage level adjusts based on trade size, market conditions, and the asset being traded. This structure helps reduce the risk of overexposure and ensures a more controlled trading environment. This is especially useful for new traders who may not be fully aware of volatility risks.
Volatility is quite important when comparing forex and commodity trading. While both markets experience price swings, the drivers behind those movements are often quite different.
Forex markets are typically influenced by:
Major currency pairs like EUR/USD, GBP/USD, and USD/JPY tend to be less volatile on average due to high liquidity. That said, news releases can still create sharp intraday moves. Exotic pairs, such as USD/TRY or EUR/ZAR, often show wider spreads and higher volatility.
Commodities are heavily influenced by real-world events, including:
For example:
Take a look at our article about volatility in oil and gold trading for a better understanding of the markets.
Another major distinction between forex and commodities lies in their trading hours and liquidity profiles. Both factors influence how accessible and active a market is, which can have a direct impact on spreads, execution speed, and trading strategies.
The forex market is one of the most accessible financial markets in the world:
The market is available almost always. This allows traders to react to global news and economic releases instantly. High liquidity in major pairs keeps spreads tight and slippage low, even during volatile periods.
Commodities have more fragmented trading sessions, depending on the specific product and the exchange where it's listed. Although CFD brokers provide access almost all the time, actual liquidity frequently reflects regular market hours.
Liquidity in commodities can drop significantly during off-peak hours. This can lead to wider spreads and less favorable pricing.
| Feature | Forex | Commodities |
| Typical Liquidity | Very high (especially in major pairs) | Varies by asset; highest in gold and oil |
| Best Trading Hours | London & New York session overlap | US hours for oil, London/NY for metals |
| Spread Behavior | Generally tight spreads | Spreads may widen in off-peak hours |
| Ease of Entry/Exit | High, even for large volumes | Depends on asset class and market timing |
| Market Depth | Deep and consistent across major pairs | Less predictable in niche or seasonal assets |
When trading either forex or commodities, it is a must to understand the cost structure to manage profitability. These costs go beyond spreads and include commissions, overnight financing charges, and account-specific fees.
Swap charges apply when positions are held overnight. These reflect the cost (or gain) of borrowing to maintain the open trade.
Other costs may include:
Although forex and commodity trading share some technical tools and platforms, the strategies that work best can differ significantly due to the unique characteristics of each market.
Forex markets are known for their high liquidity and sensitivity to economic indicators. As a result, many traders rely on short-term and medium-term strategies that capitalize on volatility during major news releases and central bank announcements.
Common strategies in forex include:
Commodities are often more volatile and are strongly influenced by supply-demand dynamics, seasonality, and geopolitical events. These traits favor strategies that either ride the trend or hedge against larger macro risks.
Popular commodity strategies include:
While some strategies can be performed in both markets, their success depends heavily on the asset's behavior and the trader's ability to adapt.
Trading both forex and commodities can be a smart way to balance your portfolio. These two markets behave differently, and combining them can help reduce risk while offering more chances to profit.
Forex prices often move based on things like interest rates, inflation data, and central bank decisions. On the other hand, commodity prices usually react to supply and demand, seasonal changes, and global events such as conflicts or weather conditions.
Since they follow different patterns, trading both can help protect you when one market becomes too volatile. For example, when currency markets are calm, commodities like oil or gold might offer better opportunities.
Some currencies and commodities are also connected. For instance:
If you understand these relationships, you can build strategies that either balance or improve your trades. For example, if you foresee gold will rise, you might also consider a trade involving the Australian dollar.
Most brokers, including ZitaPlus, let you trade forex and commodities on the same platform. This makes it easier to manage your trades, check your charts, and keep your strategy organized. It’s a practical way to stay flexible and take advantage of what each market offers.
ZitaPlus offers access to both forex and commodity CFDs on a single, powerful platform, MetaTrader 5. You can trade major currency pairs, gold, oil, and more with:
If you focus on one market or combine both, ZitaPlus gives you the tools to trade confidently and manage risk efficiently.
Trading forex and commodities doesn’t have to be an either-or decision. When used together, they can complement each other and offer greater flexibility in your trading approach. With the right tools and understanding of each market’s behavior, you can build a strategy that adapts to changing conditions and captures more opportunities.
Is it harder to trade commodities than forex?
Not necessarily. Commodities can be more volatile and are influenced by different factors, but with proper research and strategy, both markets are accessible to traders.
Can I use the same strategies for forex and commodity trading?
Some strategies like trend following or support/resistance work in both. However, due to different market behaviors, it's important to adapt your approach accordingly.
Why do commodities often have higher swap charges than forex?
Commodities, especially energy products and metals, are subject to higher financing costs due to storage, demand, and volatility. These costs are reflected in overnight swap rates.
Are commodities more affected by geopolitical events than forex?
Generally, yes. While forex is also impacted by political developments, commodities like oil and gold react more directly to wars, sanctions, and global supply disruptions.
Can beginners trade both forex and commodities?
Yes, but it’s best to start with one market, build a strong foundation, and then expand. Many platforms, including ZitaPlus, offer demo accounts to practice with both asset classes.
Would like to learn how to look financial markets from a different angle? Then keep reading and invest yourself with ZitaPlus.
