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for COTTON

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Markets.com

Offers five ways to trade: Forex, Shares, Indices, Commodities, ETF and CFD

 
Markets.com
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$100Min. Deposit Learn More
  • MT4
  • WebTrader
  • Mobile apps
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Trust Score:

B

0

Established in:

2008

Regulated by:

CySEC, Financial Services Boar...

CFDs are leveraged products and can result in the loss of your capital. Rankings are influenced by affiliate commissions. All information collected on 1/11/2017.

The Ultimate Guide to

Choosing a Broker
For Cotton

Not sure which broker is right for you?

Don’t worry - we’ve got you covered. In this guide, you’ll learn:

Ready?

Part 1

Why Choose Markets.com
For Cotton?

Markets.com scored best in our review of the top brokers for cotton, which takes into account 120+ factors across eight categories. Here are some areas where Markets.com scored highly in:

  • 9+ years in business
  • Offers + instruments
  • A range of platform inc. MT4, Web Trader, Tablet & Mobile apps
  • 24/7 customer service
  • Tight spreads from 2.0 pips
  • Used by + traders
  • Allows hedging
  • 5 languages
  • Leverage up to 100:1

Markets.com offers five ways to trade: Forex, Shares, Indices, Commodities, ETF and CFD. If you wanted to trade COTTON through copy trading or other means, skip to part two.

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.

Markets.com have a B trust score, which is good. This is largely down to them being regulated by CySEC, Financial Services Board, segregating client funds, being established for over 9 years, and much more. For comparison:

Trust Score comparsion

Markets.com
Trust Score B
Year Established 2008
Regulated by CySEC, Financial Services Board
Uses tier 1 banks
Company Type Public Private Private
Segregates client funds

The second thing we look for is the competitiveness of the spreads, and what fees they charge. We've compared these in detail in part three of this guide.

Part 2

Who Markets.com is (& Isn’t)
Suitable For

As mentioned, Markets.com allows you to trade in five ways: Forex, Shares, Indices, Commodities, ETF and CFD.

Suitable for:

  • CFD Trading
  • Forex Trading

Not Suitable for:

To trade with Markets.com, you'll need a minimum deposit of $100. Markets.com offers a range of different account types for different traders including a mini account, vip account.

Finally, Markets.com isn't available in the following countries: AF, DZ, AS, AO, AU, BE, BA, BR, KH, CA, CN, CU, KR, GU, GY, HK, ID, IR, IQ, IL, JP, LA, MO, MY, MM, NZ, MP, PA, PG, PH, PR, RU, SG, KR, SD, SY, TW, TH, TR, UG, VI, VU, USA, VN, YE.

Part 3

A Comparison of Markets.com vs. vs.


Want to see how Markets.com stacks up against and ? We've compared their spreads, features, and key information below.



Spread & fee comparsion

The spreads below are illustrative. For more accurate pricing information, click on the names of the brokers at the top of the table to open their websites in a new tab.
Markets.com
Fixed Spreads
Variable Spreads
EUR/USD Spread 2.0
GBP/USD Spread 2.0
DAX Spread 2
FTSE 100 Spread 2
S&P500 Spread 1

Comparison of account & trading features

Markets.com
Spread type
EUR/USD Spread 2008
EUR/GBP Spread CySEC, Financial Services Board
Crude Oil Spread
Gold Spread Public Private Private
DAX Spread

Part 4

What is Cotton?

Cotton is a type of plant fiber used primarily in textile products, such as clothing. It has been used for thousands of years, and as it is an integral part of the enormous global textiles industry, is an important agricultural commodity in the trading markets.

The top 5 countries in terms of cotton production are China, India, USA, Pakistan, and Brazil. China and India are the world’s largest producers of cotton with an annual production of 23 million and 27 million bails respectively (2016/17 – USDA Aug 17). The total international cotton export value is worth over $50 billion (2016 – Trade Map).

Fundamental Influences

The price of any given commodity depends on the level of its global supply and demand, and this holds especially true for cotton as it’s traded all over the world.

There are a number of factors that can influence the prices of cotton. One of the current factors affecting price is high stock levels. Cotton production has outweighed its consumption, leading to stockpiles building up which reduces the price.

Another important factor is government policy in countries that are leading producers of cotton such as China and India. The two together are responsible for almost half of the global cotton output and any change in their trading policies can bring about a major change in cotton prices.

The US is one of the world’s largest exporters of cotton, responsible for 14.2 million bails, or more than a third of the world’s exports. One factor affecting the region’s cotton production though is the competition with soybeans over acearage. As prices for soybeans rise, less acearage is devoted to cotton production and vice versa.

Some of the other factors that can influence the price include cotton’s relationship with other competitive fibers, global demand for the consumer textile, usage of new technology for production, and fluctuations in currency value.

How is Cotton Traded?

Cotton is one of the most widely traded commodities and gets a high volume of trades on a daily basis; however, most traders don’t actually intend to receive the delivery of cotton. Many online brokers, such as Plus500 and AvaTrade, offer Cotton as contracts for difference (CFDs) to traders. In a CFD, the trader takes a position, depending on whether he thinks the price of the underlying commodity will rise or fall before the expiry of the contract.

Popular Trades

Cotton producers and consumers usually trade in cotton by purchasing and selling cotton futures. Producers of cotton utilise a short hedge to secure a selling price while consumers employ a long hedge to lock in a purchasing price. Speculators also trade cotton futures. When speculators think that cotton prices will go up, they purchase cotton futures. Similarly, if they feel the prices will go down, they sell cotton futures.

Benefits of Trading Cotton with a CFD

CFD’s are a convenient way to trade cotton because, unlike cotton futures, a trader is not obliged to take a high minimum position. Cotton futures contracts are mainly designed for large companies and small to medium traders usually opt for CFDs. With a CFD, the trader takes a position on whether they feel the price of the underlying commodity will go up or down. Traders use the leverage offered by brokers to gain greater exposure to the market movements. For example, Plus500 offer a leverage of 1:152 for cotton. This means that for a minimum buy order of 500 contracts of cotton from Plus500, with a spread of 0.10, a trader can open a position with a margin of just £176, exposing them to a total value of £26,620 worth of cotton contracts. As with many CFD brokers, this is based on a futures contract, which in the case of the Plus500 CFD is the ICE Cotton No 2 Futures.

Cotton CFD (CT) Plus500 - 26/08/2017

Cotton CFD (CT) Chart from Plus500 – 26/08/2017

Spot Cotton vs. Cotton Futures

Spot Cotton:

  • Price is on the basis of immediate delivery

  • Immediate settlement of trade

  • Involves high volatility and delivery issues can suddenly arise

Cotton Futures:

  • Price is on the basis of a forecast of future prices

  • The position is subject to time and can be kept open

  • Volatility factors, such as weather conditions, are more predictable

Related Commodities

  • Wheat

  • Cocoa

  • Soybeans


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