The commodities market is a marketplace where raw or primary products are bought and sold. These commodities can include metals, energy, agricultural products, and other goods. The market is divided into two main categories: the physical market and the derivatives market.

The physical market is where actual commodities are bought and sold. For example, a farmer may sell a certain quantity of wheat to a miller, or an oil company may sell crude oil to a refiner. In these transactions, the buyer takes possession of the physical commodity.

The derivatives market, on the other hand, is where contracts for future delivery of a commodity are bought and sold. These contracts are based on the price of the underlying commodity and are used as a way to hedge against price volatility or speculate on future price movements. The most common types of derivatives contracts are futures and options contracts.

Futures contracts are agreements to buy or sell a specific commodity at a specific price on a specific date in the future. They are traded on commodity exchanges, such as the Chicago Mercantile Exchange (CME) and the Intercontinental Exchange (ICE).

Options contracts give the holder the right, but not the obligation, to buy or sell a specific commodity at a specific price on or before a specific date in the future. They are also traded on commodity exchanges.

Additionally, the commodities market can also be separated into soft and hard commodities. Soft commodities include agricultural products, such as wheat, corn, and coffee, while hard commodities include metals, such as gold, silver, and copper and energy products like oil, natural gas and coal.

Contracts for Difference (CFDs) and futures contracts are both derivatives that allow traders to gain exposure to the underlying asset without having to take physical delivery. However, there are some key differences between the two that may make CFDs more suitable for some traders.

Here are a few reasons why CFD trading may be considered better than futures trading:

• Leverage: CFDs allow traders to trade with leverage, which means that they can control a larger position with a smaller amount of capital. This can be beneficial for traders who want to make a large profit from a small price movement, but it also increases the risk of losing more than the initial deposit.
• Short selling: CFDs allow traders to take short positions, which means that they can profit from a falling market. Futures contracts, on the other hand, typically require the trader to take a long position, which means that they can only profit from a rising market.
• Lower costs: CFDs often have lower costs than futures contracts. For example, CFDs typically do not have an expiration date, which means that traders do not have to roll over their position. Additionally, CFDs do not require traders to pay any exchange or clearing fees.
• Greater flexibility: CFDs offer greater flexibility in terms of the range of markets and assets that can be traded. Futures contracts are typically available for a limited number of markets, such as commodities, whereas CFDs can be used to trade a wide variety of markets including equities, commodities, indices, forex, etc.
• Accessibility: CFDs are generally considered more accessible to retail traders because they can be traded through online brokers with relatively low minimum deposits and with leverage. This is in contrast to futures contracts, which are typically traded on regulated exchanges and require significant capital, and a higher level of knowledge to trade.

A commodities trading strategy is a plan that outlines how a trader will buy and sell commodities in order to make a profit. There are many different types of trading strategies that can be used in the commodities market, each with its own advantages and disadvantages. Some common strategies include:

• Trend following: This strategy involves buying commodities that are in an uptrend and selling those that are in a downtrend. This strategy is based on the idea that prices tend to continue moving in the direction of the trend.
• Contrarian: This strategy involves taking positions that are counter to the current market trend. This strategy is based on the idea that markets tend to overreact to news and events and that prices will eventually return to their fair value.
• Spread trading: This strategy involves buying and selling two different, but related, commodities in order to profit from the difference in their prices. For example, a trader might buy crude oil and sell gasoline, which is refined from crude oil.
• Hedging: This strategy involves taking a position in a commodity in order to offset the risk of an existing position in another commodity or financial instrument. For example, a farmer who grows wheat might sell wheat futures in order to hedge against the risk of a decline in the price of wheat.
• Arbitrage: This strategy involves buying and selling the same commodity simultaneously in different markets in order to profit from price differences. For example, a trader might buy crude oil in New York and sell it in London, taking advantage of any difference in the two prices.

It's important to note that no strategy guarantees success, and different strategies may be more or less suitable depending on the trader's objectives and risk tolerance. It's also important to have a good understanding of the market, commodity, and the factors that influence the commodity's price before implementing any strategy.