Recently, why are more and more people starting to pay attention to trading commodities? Actually, it makes sense because traditional investments no longer meet everyone's needs.

Commodities are basic raw materials, such as copper, crude oil, wheat, coffee beans, and gold, used in manufacturing other products or for daily consumption. The problem is, you can't easily store natural gas or crude oil at home, so trading commodities is a good solution for investors looking to diversify their portfolios.

Commodities are divided into two main categories: Soft Commodities (agricultural products like coffee, cocoa beans, sugar) and Hard Commodities (extracted products like crude oil, natural gas, precious metals). There is also a classification based on product types, such as agriculture, livestock, energy, and metals.

Popular commodities traded in financial markets include coffee and sugar (agriculture), Brent crude oil and natural gas (energy), and gold, copper, platinum, and palladium (metals). Interestingly, Thailand is a major producer of coffee, sugar, and soybeans.

Commodity prices are determined by various factors. Demand increases as people's income rises, and consumption behaviors change. Supply depends on production factors such as labor, capital, land, water, natural resources, and production efficiency. Uncertainty factors include weather conditions, feedback loops from investments and speculation in futures markets—all of which cause commodity prices to be highly volatile.

The advantages of trading commodities include several points: First, it protects against inflation; as living costs rise, these prices tend to increase. Second, risk diversification, because commodities have low correlation with other assets like stocks and bonds. Third, liquidity, as they can be easily traded online. Fourth, high return opportunities, especially during uncertain economic times. Fifth, long-term growth potential due to increasing demand and decreasing resources.

However, there are also risks to watch out for: First, high leverage, which increases risk. Second, high volatility—commodities are twice as volatile as stocks and four times as volatile as bonds. Third, opposite price directions compared to equities. Fourth, environmental impacts—production and extraction of commodities can negatively affect the environment.

For beginners interested in trading commodities, there are four main methods: First, commodity ETFs, which allow investment without owning the physical asset. The advantage is low capital requirement, flexibility, and no worries about storage. Second, commodity futures, which are forward contracts. They offer multiple profit opportunities, and require less capital. Third, stocks of commodity companies like BHP Group, Rio Tinto, Vale SA, which help diversify risk and hedge against inflation. Fourth, CFD trading on commodities, which is online trading through brokers. It allows profit in both rising and falling markets, uses leverage, operates 24/5, and offers diverse investment options.

When trading commodities, three costs should be considered: Spread (the difference between bid and ask prices), Swap (overnight holding fees), and Commission (trading opening and closing fees). Investors should choose platforms with low commissions, tight spreads, and demo accounts for practice before real trading.

Commodity trading hours are not 24/7 and depend on the specific product. For example, gold and silver open at 06:00 and close at 24:00 (Monday to Friday). Crude oil opens at 06:00 and closes at 24:00. Coffee opens at 16:15 and closes at 01:30. Sugar opens at 15:30 and closes at 01:00. Investors should check the schedule with their broker.

In summary, trading commodities is a good opportunity for portfolio diversification, but it’s important to choose a broker with suitable features, such as access to multiple markets, fast deposits and withdrawals, low commissions, and demo accounts. Most importantly, do not invest solely in commodities to reduce risk. Study the details and understand the risks before investing.