How To Be A Commodities Trader and How To Trade For A Commodity Fund.
How To Be A Commodities Trader and How To Trade For A Commodity Fund.
If you are looking to become a commodities trader there are generally two paths that you can take. You can become a commodity broker or you can work for a commodity fund and trade commodities and try to achieve a profit.If you are a commodity trader broker, than you are definitely more focused than if you were to become a regular broker or even a registered securities representative. Today there are over 663,000 securities representatives, but only 53,000 commodity brokers. Since commodities are in high demand today, there will likely always be demand for these brokers. Brokers will work with clients and buy and sell commodities and keep a fee. If you are going to work for a commodity fund you will buy and sell commodities and attempt to generate profit for your fund.
How To Be A Commodities Trader and How To Trade For A Commodity Fund: The Difference Between a Broker And A Trader
Both of these are great careers but can be quite difficult to land especially if you don’t have any experience. There are a few questions you have to know the answer to before determining whether this is the right career for you. First of all, the salary you get offered is obviously important. Generally these brokers make good money, but it takes time to built up the income. Commodity fund traders usually will start out with a smaller base and will have to work a ton of hours in the beginning. But if you can stick it out your bonus will be huge if your fund has a good year and the top commodity funds can produce six figure bonuses.
Brokers will usually operate on a commission only basis. At first, they have to build up their client base. Therefore, it will often require months before they are earning a livable income. As a broker once you have a solid client base built up your job will generally be much easier. Think about whether you are a good salesperson or not. Like it or not, selling is part of this field. After all, there are lots of other commodities brokers out there, and you need to convince your prospects that you are the right person for the job. Therefore, your level of success will depend on your ability to persuade them. On the other hand commodity traders who work for funds will be analytically driven and you will need to have a strong math background and understanding of the financial markets. High level math skills and masters degrees are all qualifications that will need to be neccessary if you are looking to trade commodities for a fund.
How To Be A Commodities Trader and How To Trade For A Commodity Fund: How To Trade For A Commodity Fund
You will need to go to a top school and study finance or financial engineering. Computer science and programming skills are quickly becoming neccessary to trade for any type of fund. Learning technical and fundemental analysis just like how we trade on this site is a great way to get your feet wet in trading and figure out if this really is a career you would enjoy.
How To Be A Commodities Trader and How To Trade For A Commodity Fund: How To Become A Broker
You have to be licensed with the National Futures Association (NFA) to be an official commodity broker. To achieve this licensing, you have to pass the series 3 test, which is not the same thing as the series 7 test designed for stock brokers. There are 2 components to the test. The first part makes sure you know about basic futures components, and the 2nd part covers the rules and regulations. In most instances the commodity trader company you are working for will provide you with study manuals for them.