Commodity Trading – Trade Sizes and Margin Requirements

When trading commodities it is imperative to understand what it is we are buying or selling.

Each commodity will be measured in its own unit. Below we see the unit for each of the most popularly traded commodities:

Commodity Units
Crude Oil Barrell
Gold Troy Oz
Silver Troy Oz
Platinum Troy Oz
Corn Bushels (100)
Soybeans Bushels (100)
Wheat Bushels (100)
Natural Gas mmBtu
Heating Oil Gallons
Gasoline Gallons
Coffee C lbs (100)
Sugar no.11 lbs (100)
Coffee No.2 lbs (100)
Brent Oil Barrell
Palladium Troy Oz
Copper lbs (100)

A short sell on gold of 10 ounces at the current market rate of $1,326.60 our margin requirement would be $66.33 (0.5% of $13,266). This is all we would need in our account to open this position.

Trade Type Short Sell
Instrument Gold
Trade Size 10 Troy Ounces
Current Market Price $1,326.60
Cost of Trade without Leverage $13,266.00
Margin Requirement (Leverage) 0.5% (200:1)
Used Margin for Trade $66.33

If we had a trading account in a different currency denomination then this $66.33 would be converted to our currency at the current exchange rate.

Leave a Reply

Your email address will not be published. Required fields are marked *