CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Between 54-87% of retail CFD accounts lose money. Based on 69 brokers who display this data. *Availability subject to regulation.
Coal is among the leading forms of non-renewable energy resources in the world. It has had a remarkable effect on the world’s energy supply since the advent of industrialisation in 19th century. The most notable form of coal is anthracite, which is the highest ranked form of coal due to its high carbon content and therefore excellent burning properties. It is also known as hard coal or black coal.
Coal is a fossil fuel, along with petroleum and gas. It is composed mainly of carbon created from the remains of ancient plant and animal life forms dating back over 300 million years. As such it is a finite resource and once exhausted, alternative energy sources will be necessary. For now, however, it continues to be available in abundance, and is mined from pockets underground.
The largest coal producing country is China, and it has held this status for over three decades. Other major producers include the USA, Australia, India, and Indonesia. In terms of production, the largest company is Coal India Limited which in 2016/17 produced over 598.6 million metric tons of coal (statista). Of the countries with the leading coal reserves, Colombia ranked first in 2016, with 4.88 billion metric tons (statista).
Coal is mainly used for generating electricity and steel manufacturing. As around half of the US’s electricity is still produced from coal, for the time being, domestic power continues to be heavily reliant on this fossil fuel.
There are several types of coal and a number of factors affect the price of each. The different types include Peat, Lignite, Bituminous and Anthracite, and they vary in their carbon content.
An important factor affecting all types of coal is environmental awareness, which influences the demand and supply of coal. When coal is mined, methane is released, having adverse environmental effects. Similarly, pollutants are released when coal is burned. There are therefore calls from Governments and citizens for industries to shift to a less polluting energy resource.
Coal does however produce other byproducts when it is burned, which can be useful, for example plastics, cement, and tar (used on roads). The demand for these products can increase the demand for coal.
The price of other fuels also has a major impact on the price and demand for coal. When the other fuels rise in price, coal seems an attractive option and the demand increases. Likewise, when the price of other fuels decreases, the demand of coal will consequently decrease.
As for the supply of coal, there are multiple factors in play including freighting costs (as large quantities of coal are traded internationally), technical issues in mining, weather conditions, and production costs.
Coal is traded on exchanges and on over-the-counter markets. It is not a commodity that is heavily traded though, as it’s difficult to transport and the transportation charges significantly increase the price.
Coal can be traded as futures, as standardised contracts where the seller agrees to provide delivery at a future date. The price and amount are finalised at the time of signing the contract. Coal futures and options are offered by the Chicago Mercantile Exchange Group (CME).
Another common method for acquiring positions in the coal industry is through the stocks of coal producers and related companies, and Exchange Traded Funds (ETFs).
The VanEck Market Vectors Coal ETF aims to track the performance of the Stowe Coal Index (which has the ticker COAL) by investing in global companies with a market cap of over $200 million whose revenues are based on the coal industry. The ETF can be traded as a contract for difference (CFD) through many regulated online platform providers, such as IG.
Trading with CFDs means taking a position based on speculation that whether the price of the underlying commodity (or index tracking the commodity) will rise or fall. Leverage is offered by many brokers which can be used to gain a greater exposure to the price fluctuations.
However, this also exposes the trader to greater risks, so they should ensure they understand the risks before placing a trade. Registering with an authorised and regulated broker from a country with a strong regulatory reputation is recommended as this will minimise the chance of unfair treatment with regards to money held with the broker.
Based on the price at which coal is currently trading
Position usually predicts that the price will rise
Usually purchased with the intention of taking delivery
Volatility factors, such as weather changes, are more predictable
Price is based on projected price of future delivery
Trades are usually to take advantage of price movements, rather than for the purpose of taking delivery at the end of the contract
Volatility issues are less predictable and the price can be subject to sudden movements
Forex.com scored best in our review of the top brokers for coal , which takes into account 120+ factors across eight categories. Here are some areas where Forex.com scored highly in:
Forex.com offers one way to tradeForex . If you wanted to trade COAL
The two most important categories in our rating system are the cost of trading and the broker’s trust score. To calculate a broker’s trust score, we take into account a range of factors, including their regulation history, years in business, liquidity provider etc.
Forex.com have a AAA trust score . This is largely down to them being regulated by Financial Conduct Authority, segregating client funds, being segregating client funds, being established for over 19
|Regulated by||Financial Conduct Authority|
|Uses tier 1 banks|
|Segregates client funds|
Want to see how Forex.com? We’ve compared their spreads, features, and key information below.
|GBP/USD Spread||0.9||DAX Spread||250.0|
|FTSE 100 Spread||150.0|
|Platform||MT4, Web Trader, NinjaTrader, Tablet & Mobile apps|
|Base currency options||USD, GBP, EUR|
|Funding options||Bank transfer, Cheque, DebitCard,|