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.
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).
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.
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.
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.
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.
Forex.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 Forex.com scored highly in:
Forex.com offers one way to tradeForex . If you wanted to trade COTTON
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,|