| You are considering the trading of commodities, or | | | | We will now explain the sensible approach to take for |
| the options on futures as a wonderful way to | | | | a commodity trader when opening a futures trading |
| supplement your income. You can even go one step | | | | account. The very first thing one should consider |
| further and determine that trading commodities and | | | | once they have decided they would like to trade |
| futures is a wonderful way to make a living. This is a | | | | commodities is to find a broker that they feel |
| great idea! The futures can only go two directions; | | | | comfortable working with. A commodity broker who |
| up or down. All one needs to do is determine the | | | | has the years of experience, understands charting |
| commodity direction and jump on board. What could | | | | analysis for the many commodity markets, and also |
| be easier? | | | | incorporates seasonal tendencies into their futures |
| The next logical step is to find a place to execute | | | | analysis. Many commodities such as gold and silver |
| your trades. You begin by going to the internet to | | | | have strong seasonal tendencies, not just the |
| find commodity and futures brokerages. You quickly | | | | agricultural commodities. Make sure the commodity |
| discover that there are many futures brokerages | | | | broker you are considering will take the time to work |
| offering a number of services to the commodity | | | | with you, teaching you futures chart analysis, provide |
| trader. Through your research you discover there are | | | | you seasonal information, and generally speaking, |
| three basic levels of service futures brokers provide | | | | increase your overall trading knowledge, so you can |
| to commodity traders, which are full-service, | | | | become a successful commodity trader. |
| discount, and online futures trading. Through more | | | | Please keep in mind that the leverage when trading |
| intense research you find out the very cheapest | | | | commodities is tremendous. For example; the margin |
| means to execute your trades is through online | | | | required in your trading account to hold a Corn |
| trading. Generally speaking the majority of beginning | | | | futures contract is $2100.00. Corn futures pay $50.00 |
| commodity traders will opt for online futures trading | | | | per one cent of movement. You purchase a Corn |
| because it is normally the least expensive choice. | | | | contract and it moves twenty-five cents in your |
| Also, there is the sense of independence when online | | | | favor the very next day, your profit for that one |
| trading because one can place their own trades, | | | | Corn futures contract would be 25 x $50.00 = |
| bypassing a commodity desk clerk or futures broker. | | | | $1250.00. That is almost a 60% return on your original |
| The next thing needed is to call several futures | | | | investment, which in this case was the margin money |
| brokerages and negotiate the cheapest online | | | | that was required for you to hold a Corn futures in |
| commission possible. It has been my experience over | | | | your commodity trading account. That is some |
| the years that beginning commodity traders spend a | | | | significant leverage! The tremendous leverage |
| great deal of time and effort negotiating a | | | | associated with commodity contracts is the very |
| commission rate. I believe the primary reason new | | | | reason why you need a well qualified, professional |
| futures traders spend so much time looking for the | | | | commodity broker to work with you, assisting you in |
| cheapest commission rate is because it is what they | | | | improving your trading skills. |
| understand best. By this, I mean when they were | | | | Finally, when deciding on a broker to work with, go |
| young they saw their father haggle with the car | | | | to the National Futures Association website and |
| salesman to get the the very best price for the new | | | | check out the history reported by the NFA for the |
| car and mom scouring the weekly grocery ads to | | | | broker you have an interest in working with. Also, |
| find the best price for needed groceries. It is what | | | | check out the Futures Commission Merchant that |
| we all have been exposed to all of our life. This | | | | your commodity broker clears his trades through. |
| approach is fine for most endeavors but probably the | | | | This only takes a few minutes of your time and you |
| very worst approach to take when establishing a | | | | can verify that your broker is licensed and registered |
| commodity trading account. As explained earlier, | | | | with the proper authorities and does not have a |
| pursuing a cheap commission rate is what a new | | | | history of poor trade execution. |
| futures trader understands best. | | | | |