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Choosing
a Commodity Broker
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Of course we would love to earn your business, but
understanding that we can’t be everything to everyone, we thought a few tips might
help.
The three most common things to look for when searching for a commodity broker:
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1. |
PRICE |
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When pricing commodity brokers you’ll find the extreme commissions being
anywhere from $300 to $19 per round trip, and the average firm runs in the $100 to $50
range. Finding the lowest possible commissions with the most suitable service is crucial
to profiting in these markets. Low commissions are easy to define, suitable service on the
other hand will depend on the type of trader you are and plan to become.
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2. |
FEATURES |
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Ah, bells and whistles. It’s great to have all the newest and most
innovative products on the market, but what are you going to use? Let me give you an
everyday example:
My husband and I belonged to a gym. This gym had everything, indoor pool, basket ball,
racket ball and tennis courts, saunas, hot tubs, rock climbing, gymnastics, all types of
classes, restaurant, recreation room, nautilus, free weights and a wide assortment of
cardiovascular machines. It also had a price to reflect the vast assortment of activities.
In the beginning, we thought that since those activities were available we would use them.
Come to find out all we used were the free weights, nautilus and a stair climber. So after
a year at the expanded prices we switched to a gym that fit our needs.
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Some features that we believe are essential:
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A. |
Charts & Quotes-
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There are a lot of services out there that are fabulous (with a fee), the
faster the update the more money it will cost. Delayed commodity quotes of 10 minutes to a half-hour
(for free) are more than adequate for most traders. Remember when you're trading with real
money the broker you choose should have no problem with you calling in to get real time
quotes.
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B. |
Broker Availability-
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There is nothing more frustrating than not being able to get a hold of
your broker. Because of the hours and logistics, brokers usually work in teams. Including
an assistant you should talk to no more than three people. So if possible ask to get to
know your brokers teammates, since at some point or another you will be dealing with them. |
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C. |
Market News-
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If you’re a seasonal trader or use fundamental signals to compliment
your technical trading, market news is vital. I personally have never met a trader who is,
has never been, or never will be influenced by fundamental news. So if you’re at the
very beginning of your trading endeavor trust us and find a brokerage with market news
accessible to you.
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D. |
Account Information by Fax or Online-
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Account information is something you should feel you have too much of.
Every time your account has activity, buy, sell, expiration, conversions of funds, funds
sent, and funds received you should receive notification by mail from your clearing firm.
Every time you buy or sell your broker should contact you via phone, e-mail or fax. Those
are industry minimums. Bonus information would come from the Internet and fax-back. This
information would include the preceding and a ninety-day trade history (positions
open/closed, funds in/out, and profits/loses).
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3. |
PERSONALITY |
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We feel this is probably the most important thing. You and your broker
should "click". Talk to as many brokers as you feel necessary to find the one
that is going to suit you best. Explain the type of trading you plan on doing. The broker
you choose should be familiar with the type of system that you plan on using.. If you have
developed you own system, you should go over the basics to make sure he/she follows your
thought pattern. After you have interviewed and chosen a broker, continue to build a
rapport. Don’t hesitate to call with questions (after trading hours while paper
trading), an important part of our job is teaching/guiding new traders. Even if you have a
firm grasp on what you’re doing, contact with your broker will make the transition
from paper to real money a lot smoother.
After a month or so of paper trading with a broker, as "good faith" we recommend
sending in the paper work. We don’t believe you should be required to open an account
before you start your paper trading. If a broker that you contact or contacts you is
overly pushy to get you to open an account, chances are that pushiness will continue
(either getting you into trades or off the phone).
Your Money---Your Pace |
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There is a risk of loss trading futures. Past performance in not
indicative of futures results.
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