Before we talk about futures commodities trading, please keep in mind that trading in these contracts has:
1) High degree of risk for financial losses
2) High leverage
3) High volatility and fluctuations
So please use only risk capital, funds that will not adversely affect your life style.
1) Get familiarized with are the contact sizes (and point value) for
each commodity traded. While there are hundred of contacts around the
world, maybe you should try and focus on the ones that are trading in
the US, specifically in NY and Chicago.
2) Ask for the margin requirement on the different commodities. Each
commodity has its requirements and that should help you determine what
commodities you should have in your portfolio
3) Decide how you are going to trade: Are you going to use a mechanical
trading system, technical trading system or on fundamentals. What ever
you use, make sure you trade with some kind of methodology; just don’t
use hunches and “tips” on late night TV.
4) Determine whether you should use a full service commodities broker or
a discount online broker. This depends whether you have experience in
other financial instruments like stock or stock options. Typically full
service brokers will charge more, but could prove to be very valuable
when it comes to stopping you from making a mistake.
5) Paper Trade– Make sure that you practice either by a manual log or a
simulated online trading platform. It does not cost a dime and it will
give you an idea about the day to day volatility that occurs in the
futures market. The period that you are trading might not give you a
clear indication about a specific commodity, so you should look at past
periods and see how certain commodities could fluctuate.
6) Shop around! Whether you use a full service broker or an online
trading platform, you will need help. Make sure that who ever you work
with is a brokerage that time, staff and patience to guide you through
when you need their help.
Past performance is not indicative of future results. There is a substantial risk of loss in futures trading.