Top Steel Trading Platform

Best Steel Trading Platforms 2024

Pepperstone

Licenses:

CySEC, BaFin, FCA, SCB, CMA

Minimum Deposit:

$0

Trade Now

XM

Licenses:

CySEC, ASIC, IFSC, DFSA, FCA

Minimum Deposit:

$5

Trade Now

What you need to know about steel market trading

Steel belongs to the category of metals. It is composed of 98% iron which is an ore. Steel has several uses:

• Construction: It is today the most used metal in this sector since it is used in particular to reinforce concrete.
• Automotive: Steel parts represent 55% to 70% of a vehicle's weight. In this industry, steel is used to manufacture chassis, body parts, or engines.
• Food industry: It is used in the manufacture of packaging and kitchen utensils.
• Other: Steel is increasingly used in the manufacture of electronic components.

Where can I trade Steel?

Steel trading is done over the counter but also on organized markets. The reference market is the LME (London Metal Exchange). Secondary exchanges are the NYMEX (New York Mercantile Exchange), the SFE (Shanghai Futures Exchange), and the MCX Multi (Commodity Exchange of India). You should know that Steel is traded as a contract, the size of a contract on the LME is 20 tons.

How to trade steel?

Depending on your level of risk aversion and the amount of time you have available to trade, the steel trader may choose one of the following three trading techniques:

• Scalping: Forex scalping is limited to the day. All your positions must be closed at the end of the day. It is a very dynamic trading style. Steel scalping is done on very short time units such as 5 minutes or 1 minute to have many trading opportunities! For example, the scalper will take 120 positions per day with a target of 5 pips per trade. Warning: we do not recommend starting trading with scalping.
• Day Trading: Steel day trading is also limited to the day. All your positions must be closed at the end of your trading day. This style of trading allows you to take positions in 15 minute or 30 minute time frames. This means that you will take fewer positions than in scalping and your targets per trade will be smaller. For example, a day trader will take 3 positions per day with targets between 15 and 50 pips. Day trading is suitable for traders who want to limit the number of positions and risk exposure. These approaches obviously require taking into account the economic calendar on a daily basis, but the importance of fundamental analysis will be less than in swing trading, since the position will be closed quickly, especially in the case of scalping.
• Swing Trading: If you have a full-time job, swing trading is the best alternative. You will only need to analyze the charts for a few minutes a week. To swing trade steel, the trader will focus on the daily and H4 or even H1 charts to fine-tune the position. In this approach, news will play an important role since the position will remain open for a long period of time and will be subject to the influence of various factors.

3 Best Brokers for Trading Steel

1. Pepperstone - Best Overall Broker for Trading Steel.

   Pepperstone is well-regarded for providing a robust trading environment for steel traders. With competitive spreads, advanced trading tools, and fast execution speeds, Pepperstone stands out as an excellent choice for both novice and experienced traders.

2. Plus500 - Best Broker with Multiple Licenses.

   Plus500 offers a secure and user-friendly platform for trading steel. With numerous regulatory licenses and strong investor protection measures, Plus500 is ideal for traders seeking a reliable platform for various financial instruments.

3. XM - Best Platform and Excellent Brokerage for Beginners.

   XM excels by offering extensive educational resources and practical online workshops to support steel traders. Its user-friendly interface and comprehensive support make XM a great choice for beginners.

Factors influencing the price of steel

The evolution of the steel price depends on the confrontation of supply and demand. This is what creates the major long-term trend movements. A drop in demand or an increase in supply pulls steel prices down. Conversely, an increase in demand or a decrease in supply pulls steel prices up. The following are the factors influencing the supply and demand of steel in the world:

• Automotive and construction sectors: Steel is primarily used in these industries. It is therefore necessary to monitor these markets to anticipate the evolution of steel demand in the world.
• Chinese exports: To ensure its economic development, China has massively supported local steel producers, making China the first steel producer in the world, far ahead of its competitors. When its local activity decreases, China exports its steel, notably to Europe. An increase in Chinese exports is a sign of a decrease in demand for steel in the world, while a decrease reflects a sustained economic activity.
• The Dollar: All raw materials are quoted in US Dollars. There is a negative correlation between the dollar and steel. If the dollar falls, the price of steel rises and vice versa.
• Stock levels: A rise or fall in stocks is due to changes in demand but also in supply. If zinc production is high or demand is low, this will cause stocks to rise. Conversely, a drop in production or an increase in demand pulls down zinc stocks.

The benefits of trading steel via CFDs

Plus500 CFD system is relatively simple, to invest in the steel market you simply buy a CFD contract on the upside or the downside. You can then sell it whenever you want. The advantages of using CFDs to trade steel are numerous:

• Invest in both the upside and the downside.
• No time limit to sell your contracts.
• No commissions.
• 24-hour commodity trading.
• Invest with a minimal budget thanks to the leverage effect.
• Take your gains/losses immediately and at any time.

4 tips to follow to trade steel successfully

1. Understand the variables that influence the commodity in question: This will involve mapping the variables that impact supply and demand. Get to know your market.
2. Be careful with leverage: This advice is even more valid for beginner investors. If leverage can make you gain a lot, it can also make you lose everything. So be careful if you're just starting out in trading.
3. Controlling your take profit and stop loss levels: There is a strong leverage effect, the definition of relevant Stop Loss and Take Profit levels are vital elements for your trading. These are your minimum and maximum resale levels. If the price of the asset falls below or rises above these levels, your asset will be sold automatically. If you analyze your positions through support and resistance levels, these elements will help you place your stops.
4. Master the technical analysis tools: These are tools that can be used with many assets including commodities. They allow you to establish trends on the evolution of prices. Many indicators exist but using all of them could be counterproductive, we advise you to focus on 3 or 4 tools.

In conclusion

Investing in steel is often a wise investment. This is especially true during periods of inflation or economic rebound. Trading steel with Plus500 allows you to benefit from both price increases and decreases. Probably the biggest concern with investing in steel is the costs associated with them. These costs, including transaction costs, vary considerably between trading platforms. So, in order to optimize your return, take the time to compare the offers available on the market.

FAQs

How do I trade steel?

Steel is often traded as futures contracts on exchanges such as the Chicago Board of Trade (CBOT). Many online brokers like Plus500 use quotes from these exchanges to create CFDs that can be traded more easily and with far fewer capital requirements. You can also invest in ETFs that track commodity index values.

Is steel trading risky for investors?

All investments carry a degree of risk that you should be aware of. That being said, the risk associated with steel trading is less than that associated with stock trading.

Should I invest in stocks or steel?

The answer to this question depends on your objective. If you are investing to increase your wealth, stocks and their derivatives would be a better solution for you. On the other hand, if you are a speculator who holds intraday and swing positions, steel might be ideal.