How to Trade Copper Online
When people think about trading or investing in metals, undoubtedly their mind will firstly turn to gold or silver before considering copper. Whilst copper may not share the same status as those shiny precious metals, it plays a crucial role in our lives.
In this article, we will take a look at this versatile commodity, examine the different ways of trading copper and provide step-by-step instructions of how to trade copper online!
Table of Contents
What Is Copper?
Copper is an incredibly versatile metal, which is very important in the modern world and its continued development. It is widely used in building and manufacturing industries due to its excellent conductivity of heat and electricity.
Copper piping and wiring runs through our homes, a small automobile contains around 20kg of copper, and the world’s telecommunication networks rely heavily upon it.
Due to its usefulness in building and manufacturing, the price of copper tends to enjoy a positive correlation with economic growth and is generally seen as a reliable indicator of global economic health.
Top 10 Copper Producing Countries
When trading copper, and other commodities, it can be helpful to understand where it is produced. Having this information can allow you to identify any factors on the supply-side which could influence the price of copper.
Source: USGS – Mineral Commodity Summaries 2024.
With more than a third of global production taking place in two neighbouring countries, any issues in the region could have a significant impact on global supply and, subsequently, price. What else affects copper prices?
What Affects Copper Prices?
Before we examine the different methods of trading copper and explain how to trade copper online, it is worth taking a look at what affects the copper prices, as this will play an important role in any copper trading strategy.
As with any freely traded asset, the price of copper is determined by the balance of global supply and demand, which can be affected by a number of factors. In the following sections, we will examine a couple of these factors.
Economic Health
Due to its positive correlation with economic growth, the performance of copper is generally viewed as an indicator of global economic health, earning it the nickname “Doctor Copper”. This relationship is an important thing to bear in mind when trading copper.
In times of economic expansion, countries build and manufacture more and therefore demand for copper increases, pushing up prices. On the other hand, when the global economy slows down, these activities also slow and demand for copper decreases, causing prices to fall.
China is, by some distance, the world’s largest consumer of copper. Consequently, copper prices can be particularly sensitive to China’s economic performance, as any change in Chinese demand can have a significant impact on total global demand. As such, copper price can be volatile around the time of scheduled Chinese economic announcements.
Substitutes
Although copper enjoys better conductivity of heat and electricity than other metals, as well as superior ductility (its ability to be easily shaped and drawn), there are substitutes for the metal which, despite their inferiority, start to look more appealing when copper prices are high.
This availability of substitute metals, such as aluminium, can cause a decrease in demand for copper when its price becomes too high and is, therefore, something to bear in mind when copper trading.
Copper Trading – The Different Methods
So, how can you gain exposure to copper? The first thing that may occur to you is to buy physical copper bullion in the hope of selling it for a higher price in the future. However, this method of copper trading presents a number of logistical issues, particularly storage.
Fortunately, there are several different ways of trading copper which don’t involve having to buy copper bullion. Below, we have identified three methods of doing so, each of which we will explain briefly in the following sections, before providing a step-by-step guide to trading copper online.
| Copper Futures |
| Copper Options |
| Copper CFD Trading |
Copper Futures Trading
A copper futures contract is a legally binding agreement between two parties to exchange a specified amount of copper on a specific date in the future at a predetermined price.
By trading copper futures, traders can speculate on the price of copper without ever taking ownership of physical copper bullion. However, futures do have an expiration date, by which time traders must either exit their position, settle the contract or roll it over to another month.
Copper Options Trading
Copper options work in a similar way to futures contracts, in that they represent an agreement regarding the exchange of a specified amount of copper in the future.
However, a copper options contract provides its holder with the right, but not the obligation, to buy or sell (depending on the type of contract) a specified amount of copper at a predetermined price by the contract’s expiry date.
However, the method of pricing options is complicated, with factors other than the underlying asset influencing price. Consequently, copper options trading is only really suited to more experienced investors or traders.
Copper CFD Trading
Contracts for Difference (CFDs) represent a contract between two parties in which they agree to exchange the difference in price of an underlying asset between the time the contract is opened and closed.
Similarly to trading copper futures and options, copper CFD trading does not require the trader to take ownership of or deliver physical copper. Furthermore, like futures, CFDs also benefit from the use of leverage, which allows traders to command larger position sizes with a smaller deposit. However, as well as magnifying potential profits, leverage can also magnify potential losses, meaning that it must be used with caution.
Unlike futures and options, copper CFDs do not have an expiration date, meaning that a position can be held open for as long as the trader desires. However, it should be noted that CFDs are subject to swap fees, which is interest charged on a position left open overnight.
How to Trade Copper Online in 4 Steps
With a Trade.MT5 account from Admiral Markets it is possible to trade copper CFDs, as well as trade CFDs on a number of other popular commodities! In order to start trading copper, follow these steps:
- Open a Trade.MT5 account with Admiral Markets and log in to the Dashboard.
- Open the web trading platform.
- Search for copper CFD and open a price chart.
- Create a new order, enter the desired volume and click ‘Buy’ or ‘Sell’.
Trade Commodity CFDs with Admiral Markets
As well as copper, owners of a Trade.MT5 account can trade CFDs on some of the world’s most popular commodities, including crude oil, natural gas, silver, coffee and many others! Click the banner below to register for a live account today:
FAQ
Which country produces the most copper?
Chile is the largest producer of copper in the world, accounting for an estimated 23% of total global production in 2023.
Which country has the most copper?
Chile has the world’s largest copper reserves, accounting for roughly 20% of the world’s total reserves.
What is the best way to trade copper?
There are a number of financial derivative products which allow traders to trade copper prices in both directions, including futures contracts, options contracts and CFDs. Each method of trading copper is different, with each product having its own distinct advantages and disadvantages.
What are CFDs on copper?
CFDs (Contracts for Difference) on copper are a type of financial derivative product which can be used by traders to speculate on the price of copper without taking or delivering ownership of the commodity.
What is the symbol for copper CFD?
On the MetaTrader trading platforms, copper CFDs can be found under the trading symbol COPPER.
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About Admiral Markets
Admiral Markets is a multi-award winning, globally regulated Forex and CFD broker, offering trading on over 8,000 financial instruments via the world's most popular trading platforms: MetaTrader 4 and MetaTrader 5. Start trading today!
This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.
