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It may seem outdated to invest in things like gold, copper, coal, and iron, or even livestock and crude oil. But commodities trading, or the trading of physical assets on the commodities market, is a great way to diversify your portfolio. And you can even invest in commodities via futures contracts, exchange-traded funds (ETFs), or options.
Still, it’s not without its risks. Commodities trading is generally considered risky since prices fluctuate based on supply and demand—the latter is often majorly impacted by unforeseeable occurrences (think natural disasters, floods, even epidemics). Learn more with our picks of the best commodity trading books.
Best Overall: A Trader's First Book on Commodities
Commodity trading is high-stakes, and it is crucial that you have mastered the fundamentals before you attempt to make money for yourself or your company. This book focuses not on market theory and analysis, but on the trading environment itself: What are the mechanisms through which you can make money, and how do they work? What is the best trading platform? How do you figure out your gains or losses — and how do you prepare for margin calls?
Beyond knowing math and computer skills, you need to master these fundamentals. Also, you will learn the history of the commodity futures market and a more thorough understanding of how to evaluate the risks of using margin. A lot of the advice in the book will help a beginner skip over learning the hard way and be more successful at commodity trading the first time around.
Related: The Best Options Trading Books
Best for Beginners: Hot Commodities
Jim Rogers, co-founder of the Quantum Fund, is one of the most successful investors in history. He describes how the late 1990s was the golden era of commodities, and why it’s going to be a hot place to invest for decades to come. Lest you think he is all talk and no action, you will rest assured knowing that the commodity index fund he manages has seen a 165 percent gain, making it the single best index fund in the entire market. While most investors stick to traditional stocks and bonds, they’re missing out on both the income potential and security of the commodity market.
But you do not need to invest a boatload to make money; you need patience and a great advisor like Rogers on your side. Learn about supply and demand and how to utilize market fluctuation in your favor. If you have considered commodity trading in the past but had doubts, this is the book that will convince you it is worth the risk.
Best for Basics: Commodities for Dummies
You can invest in commodities without fully understanding how the entire market works. But if you want to have a comprehensive understanding of the market, this book is a must-read. If you learn how to create your investment strategy, you will not have to rely on costly investment funds or opaque index funds to invest. This book speaks about common investment pitfalls and successful strategies, how to diversify an existing portfolio to include commodities, and how to invest in the most popular commodities like metals.
Get the advice you need to learn how to manage the risks and rewards of commodities. Diversifying your portfolio is almost always recommended, and trading commodities are worth investigating. Get the answers to all the most common commodity trading questions in Commodities for Dummies.
Best for Prospectors: Gold Is A Better Way
Investing in the traditional stock market works for a lot of people, but there is something weird about the fact that you can never actually hold what you are buying in your hand. Not so with the precious metals market: Although you probably will not be storing gold bullion in your basement (though there is nothing wrong with that if you do), metals offer a safe and reliable asset tied to something in the physical world.
This book makes the case that everyday investors should consider these traditional assets — and explains the ins, outs, and whys behind that advice. Even though Gold Is a Better Way is a guide to investing, it reads more like a novel with a lot of visual cues, making it fun to read. You will not only learn about gold but also a little bit about how all markets work. If you are looking to be informed and entertained at the same time, this book is a great choice.
Related: The Best Stock Market Books
Best Quick Read: The Little Book That Still Beats The Market
We do not know if “Little” is an excellent name for a 208-page book, but this is incontestably a classic primer full of solid advice. The premise is simple: The way you make money in the stock market is by looking for good businesses or products that are priced below what they are worth. Obviously, this is easier said than done, but thankfully Joel Greenblatt has distilled this abstract idea into an easy to follow formula — it is so easy that even those who are not great at math will be able to understand and apply it.
In addition to the formula, the book gives you time-tested philosophies of investing, why the stock market usually beats individual investors who try to game the system, and why this formula has the ability to stand the test of time. The Little Book That Beats The Market will help you put together a long-term strategy to ride the wave of ups and downs in the stock market.
Best Personality Studies: Market Wizards
The author of this book, Jack D. Schwager, set out to discover why the best investors are so successful. Is there some unique formula they all have figured out how to use to their advantage? Is it inborn knowledge? Is it inherited money — or luck? It turns out, it’s a combination of a lot of things (no shocker there), but all successful big-time investors have a solid foundation of knowledge and theory, a solid grasp of an investment strategy, and a great attitude.
In this book, you will get to hear about it in the words of these investors themselves, and the insight on how to apply them if you are not a mega-millionaire yourself. Mark Wizards laid out in different helpful sections covering futures, equities, economy-wide trends and psychological analysis. It is more of an inspiring read instead of a step-by-step "How To" book.
Best Case Study: The Complete TurtleTrader
Investor Richard Dennis was a legend, and his followers were known as the Turtles. All 23 of those turtles, who had minimal investment experience, became millionaires overnight. How?
Of course, overnight success is very rare even if you are a brilliant investor, but this book is a case study on a time where it happened. The craziest part? These people became millionaires because of a bet. Dennis’ placed a classified ad after a bet with his professional partner and found people from all walks of life to train for two weeks — and gave them a million dollars to invest.
At the end of two weeks, the turtles netted Dennis a cool $100 million. The “investors” were everyone from professional card players to musicians and game designers. In this book, they will tell you what the whole process is like: what the interviews were, what they learned from the master, and how you can apply the rules as well.
They even show you where they have ended up — and many of them have ended up running some of the most substantial hedge funds in the company. Many of them are even training the second generation of turtles with their fundamental investment strategy.
The whole story is crazy, and this book tells it all.
Related: The Best Investing Books
Best for Quants: Technical Analysis of the Financial Markets
If you are not a quant, you should probably skip this book. A quant is someone who does not use simple investment strategies, but rather a sophisticated manipulation of the markets, to make money. There’s a lot of math and computer skills involved. If that sounds like you, then this book will teach you how to apply those skills and make yourself a valuable asset to any investment firm because being able to track and analyze the market is an invaluable skill.
John Murphy’s textbook teaches you all the skills you need, from the advanced technical skills and applications to a variety of charting methods, graphical interpretations, and real-life examples that will put you well on your way to learning how to master the markets. It will be a go-to resource you will want to read over and over again.
Carley Garner’s “A Trader’s First Book on Commodities” (view on Amazon) is our best overall pick for its detailed coverage of the fundamentals of commodities trading, like theory, analysis, and the commodities trading environment. It also throws in the history of the commodity futures market, plus how to use margin to evaluate risk when trading commodities.
Meet the Expert
This roundup was updated by Rachel Morgan Cautero, who has a master's degree in journalism from New York University and more than a decade of journalism experience, most in the personal finance sector. Most recently, she was the managing editor of DailyWorth, a finance-based media destination for women. She’s been published in SmartAsset, The Atlantic, Life & Money, Parents, WealthRocket, and Yahoo Finance.