The right commodity broker is the most important thing you can do to place the odds in your favor of being successful when considering the trading of commodity markets. When looking for a commodity broker to work with there are several important qualities the commodity broker must have.
The first quality you should look for when considering a broker is someone who is honest in their business affairs. How can you determine a brokers' honesty? There are a few different ways to determine rather or not the person is honest in their professional dealings. You can go to National Futures Association website and actually check the commodity brokers past history and find out if there have been past charges against the person and rather or not the charges were substantiated. Another excellent method one can use to determine if the futures broker you are considering is an honest person, is to ask the commodity broker for references that you can check out.
Another quality you should be looking for when considering a commodity broker is their willingness to take the necessary time to work with you, assisting you with your commodity analysis, execution techniques for entering a futures trade, and setting a potential profit objective, as well as, a protective stop for the commodity being traded. You want a futures broker who is available during trading hours for the futures markets you plan on trading.
The broker that you are considering working with should be knowledgeable in the commodity markets you plan on trading. The broker should know how much each commodity market you plan on trading pays per tick. An example would be the soybean market. For every one cent of movement the soybean futures changes; the corresponding dollar value of change is $50.00. A nine cent change in the soybean futures would be 9 X $50.00 = $450.00. The futures broker should know when the commodity markets you plan on trading open and when they close trading for the day. The commodity broker should be able to inform you in advance when important reports are coming out for the futures markets you plan on trading, as well as, the exact margin required for each commodity market you plan on trading.
Once you have completed a check of the commodity broker you are considering working with you will need to spend some time speaking with the broker. This is a very important step you must take before you open a commodity trading account. The commodity broker you have chosen may have all the qualities you are looking for, but after speaking with the person you discover that you simply are not comfortable with that person. It is essential to your future trading success that you are comfortable working with the futures broker you have chosen. You must remember that your commodity broker is working with your money, and your money, in level of importance, is right behind your health.
Trading commodities is a very difficult endeavor that can be quite rewarding if you have the right tools to assist you with your trading. The most important commodity trading tool you can have in your futures trading toolbox is a top notch commodity broker that you are 100% confident in their ability to be your trading partner.
This article has been written by Sandra Case, who is Vice President of Commodity Research for Absolute Futures Commodity Brokerage. For further information regarding this article or information on other commodities or trading of the commodity markets please contact Sandra Case 419-349-7118.