Hello and welcome to another of my online trading and investing sites, and my purpose here is to try to provide you with as much information as possible about one of the lesser known types of commodities brokers, and in particular one that is often referred to as a full service commodity broker. Now, let me say straight away, that this type of commodities broker is relatively specialized, and in terms of the more common, discount commodity broker, is one that perhaps many of us will never use for our online futures trading. However, they can and do have a firm place in the online trading community, and as such you would do well to consider them, when researching your own broker account.
As a full time commodities and forex trader myself, I know how difficult it can be when you first start, and begin to look at the vast number of brokers offering a commodity trading account. I began my trading career in the futures market, trading ftse index futures, at a time when the internet was just starting, and as such all my orders were placed by phone to the broker, who then placed these orders direct with the floor traders of the exchange. On many occasions, the line between the broker and the floor of the exchange was left open, allowing me to hear the outcry from the trading pit, as the futures traders yelled to make themselves heard above the roar and din of a typical futures trading day. Indeed many of the larger exchanges still operate an open outcry system, particularly in the larger commodities exchanges such as the Chicago Mercantile Exchange, where futures trading brokers operate alongside the more familiar electronic trading systems, now favoured by many discount futures brokers. This is how I started my trading career, trading futures, making many mistakes and learning quickly, as I began to build my own trading experience. Several years later, and having built my experience by trading in both equities and options, I finally moved back to trading the futures market, one I know well, and specialized in trading commodities, markets that require patience, determination and detailed analysis, in order to be successful.
If you have never traded in commodities before, then a full service commodity broker may be the best choice for you, as it takes a great deal of time, effort, hard work and analysis to be successful, and I can safely say that I never stop learning even to this day. One of the reasons it is so difficult to master for novice or inexperienced traders, is simply that moving from an equities background into commodities, requires acquiring two very different skills. The first is to understand how the commodities markets work, which is very different to any other, and by this I mean that the underlying commodities being traded are often mineral based or agricultural, and as such are affected by an enormous number of factors from supply and demand, to climatic conditions, industrial demand, natural disasters and finally world economic and political uncertainty. In addition, you will also need to learn how to trade futures, or alternatively you may prefer to use a futures trading system using options, requiring an options broker. Whichever you choose, in learning how to trade commodities, your choice of broker will be dictated by your trading strategy and instruments, and these in turn may ultimately dictate the type of broker account your choose. As the name implies, full service commodity brokers will give you just that, a full service for your trading including advice and investment analysis, whilst discount commodity brokers offer a lower cost trading platform with no, or very little contact from your broker. This is the decision you will face when you begin to research the market for your commodity trading account.
So let’s start by looking at the full service commodity broker, and consider the advantages and disadvantages of this type of broker.
Commodity Prices Have Scope to Rise into the End of Trading Week
18 May 2012 at 8:56am
Crude oil and copper may rise amid profit-taking on risk aversion bets while gold and silver ride QE3 hopes and growing fears of Eurozone instability may spread.
Crude Oil, Gold May Recover as Greece Eurozone Exit Fears Digest
17 May 2012 at 8:46am
Commodity prices have scope to recover amid profit-taking as markets digest the latest batch of negative Greece-linked news flow.
Commodities Sold on Greece Woes, May Extend Losses on Fed Minutes
16 May 2012 at 11:08am
Commodity prices fell in Europe as Greece-linked risk aversion gripped markets. Minutes from the Fed’s April meeting may compound losses as QE3 bets fade.
Gold, Silver Rise as US Dollar Pulls Back After Eurozone GDP Data
15 May 2012 at 10:40am
Gold and silver rose as the US Dollar retreated amid recovering risk appetite after a firm set of Eurozone GDP figures. Crude oil and copper have scope to catch up.
Crude Oil, Gold Sink as Euro Crisis Fears Grip Financial Markets
14 May 2012 at 9:00am
Commodity prices retreated sharply lower as lingering political uncertainty in Greece fueled broad-based risk aversion across the financial markets.
Commodities Sold as Risk Appetite Unravels, US Data May Cap Losses
11 May 2012 at 8:58am
Commodity prices dropped anew as risk aversion gripped financial markets but US economic data on tap ahead may help counter selling pressure.
