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How to Get Your Friends and Family Interested in Commodity Trading

June 11, 2020 by Daniels Trading| Futures 101

Commodity trading can be a lonely endeavor. Hours of intense preparation and strategy implementation can be both physically and mentally taxing. Introducing friends and family to the markets is a great way to gain trading buddies to share information and hard-earned wisdom with—plus, you get to help those close to you achieve their financial goals.

Of course, not everyone is interested in finance. Many people have full-time jobs, raise children, or simply do not understand how active trading works. The key to attracting these folks to the marketplace is to remove the mystery. By taking some time out to explain the basics, benefits, and potential upsides, you will have a great shot at bringing your friends and family into the commodity markets.

Explain the Basics

Without a doubt, one of the biggest concerns people have about commodity trading is that they don’t understand how it works. In an attempt to attract readers, mainstream media outlets frequently promote stories that involve market crashes, Ponzi schemes, and insider trading. It’s no wonder that the futures markets often carry with them a negative connotation.

Perhaps the best way to remove the stigma is to explain the basics. If covered thoroughly, two key points can reinforce confidence in the commodity market’s integrity:

  • Commodity futures are exchange-traded: Futures contracts are exchange-traded financial instruments. Transactions are guaranteed and cleared through a centralized intermediary, thus eliminating the risk of counterparty default. When compared to over-the-counter (OTC) products such as cryptocurrencies or forex pairs, futures offer participants an enhanced degree of security.
  • Commodity futures are regulated: In the U.S., brokers, clearing houses, and exchanges are subject to regulation. All are monitored by the Financial Industry Regulatory Authority (FINRA) and must be licensed by the Commodity Futures Trading Commission (CFTC).

If a friend or family member is hesitant to embrace commodity trading, it is likely because of false preconceived notions. The fact is, commodity futures are a safe and efficient way of trading earth-borne materials. When compared to sectoral stocks and ETFs, they offer a collection of unique advantages.

Read tips and tricks compiled from the advice of experienced futures brokers in  our e-book:Basic Training for Futures Traders

Benefits of Commodity Futures

According to a spring 2019 Gallup poll, 55 percent of Americans own equities products. If your friend or family member has an IRA or 401(k), chances are they fall into this category. Should this be the case, a brief explanation of how commodity futures can benefit a structured portfolio is one way to replace hesitation with incentive.

Here are three key benefits of commodity trading:

  • Flexibility: A trader can profit from taking either a long or short position in the market. This flexibility opens the door to a wide array of strategic options, specifically those designed for hedging and speculation.
  • Leverage: The capital efficiency offered by futures has few equals. Low margin requirements (3-12 percent) provide traders with robust purchasing power and the ability to maximize the potential of their risk capital.
  • Diversification: When compared to ETFs, mutual funds, or specific stocks, commodity futures are an ideal way of trading the world’s raw materials. Contracts reflect the value of the underlying asset directly, free of tracking errors and variance.

These are just a few of the benefits provided by commodity futures. However, these three are enticing to anyone interested in maximizing capital efficiency and directly engaging the commodity markets.

The Upsides of Commodity Trading Are Attractive

For thousands of individuals, the personal freedom afforded to active traders is the single largest upside. You aren’t subject to the conventional 9-to-5 work week or a standard salary. The constraints of the job are left up to you.

If a friend or family member is a self-starter and interested in living life on their own terms, commodity trading may be an ideal profession. To learn more about how to get started, check out Daniels Trading’s e-book Basic Training For Futures Traders. Featuring tips on discipline, goal-setting, and all-around competent trading, it is a great resource for any aspiring trader.

Basic Training for Futures Traders

Filed Under: Futures 101

About Daniels Trading

Daniels Trading is an independent futures brokerage firm located in the heart of Chicago’s financial district. Established by renowned commodity trader Andy Daniels in 1995, Daniels Trading is built on a culture of trust committed to the firm’s mission of Independence, Objectivity and Reliability.

Risk Disclosure

THIS MATERIAL IS CONVEYED AS A SOLICITATION FOR ENTERING INTO A DERIVATIVES TRANSACTION.

THIS MATERIAL HAS BEEN PREPARED BY A DANIELS TRADING BROKER WHO PROVIDES RESEARCH MARKET COMMENTARY AND TRADE RECOMMENDATIONS AS PART OF HIS OR HER SOLICITATION FOR ACCOUNTS AND SOLICITATION FOR TRADES; HOWEVER, DANIELS TRADING DOES NOT MAINTAIN A RESEARCH DEPARTMENT AS DEFINED IN CFTC RULE 1.71. DANIELS TRADING, ITS PRINCIPALS, BROKERS AND EMPLOYEES MAY TRADE IN DERIVATIVES FOR THEIR OWN ACCOUNTS OR FOR THE ACCOUNTS OF OTHERS. DUE TO VARIOUS FACTORS (SUCH AS RISK TOLERANCE, MARGIN REQUIREMENTS, TRADING OBJECTIVES, SHORT TERM VS. LONG TERM STRATEGIES, TECHNICAL VS. FUNDAMENTAL MARKET ANALYSIS, AND OTHER FACTORS) SUCH TRADING MAY RESULT IN THE INITIATION OR LIQUIDATION OF POSITIONS THAT ARE DIFFERENT FROM OR CONTRARY TO THE OPINIONS AND RECOMMENDATIONS CONTAINED THEREIN.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE. THE RISK OF LOSS IN TRADING FUTURES CONTRACTS OR COMMODITY OPTIONS CAN BE SUBSTANTIAL, AND THEREFORE INVESTORS SHOULD UNDERSTAND THE RISKS INVOLVED IN TAKING LEVERAGED POSITIONS AND MUST ASSUME RESPONSIBILITY FOR THE RISKS ASSOCIATED WITH SUCH INVESTMENTS AND FOR THEIR RESULTS.

TRADE RECOMMENDATIONS AND PROFIT/LOSS CALCULATIONS MAY NOT INCLUDE COMMISSIONS AND FEES. PLEASE CONSULT YOUR BROKER FOR DETAILS BASED ON YOUR TRADING ARRANGEMENT AND COMMISSION SETUP.

YOU SHOULD CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES AND FINANCIAL RESOURCES. YOU SHOULD READ THE "RISK DISCLOSURE" WEBPAGE ACCESSED AT WWW.DANIELSTRADING.COM AT THE BOTTOM OF THE HOMEPAGE. DANIELS TRADING IS NOT AFFILIATED WITH NOR DOES IT ENDORSE ANY TRADING SYSTEM, NEWSLETTER OR OTHER SIMILAR SERVICE. DANIELS TRADING DOES NOT GUARANTEE OR VERIFY ANY PERFORMANCE CLAIMS MADE BY SUCH SYSTEMS OR SERVICE.

GLOBAL ASSET ADVISORS, LLC (“GAA”) (DBA: DANIELS TRADING, TOP THIRD AG MARKETING AND FUTURES ONLINE) IS AN INTRODUCING BROKER TO GAIN CAPITAL GROUP, LLC (GCG) A FUTURES COMMISSION MERCHANT AND RETAIL FOREIGN EXCHANGE DEALER. GAA AND GCG ARE WHOLLY OWNED SUBSIDIARIES OF STONEX GROUP INC. (NASDAQ:SNEX) THE ULTIMATE PARENT COMPANY.

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Risk Disclosure

THIS MATERIAL IS CONVEYED AS A SOLICITATION FOR ENTERING INTO A DERIVATIVES TRANSACTION.

THIS MATERIAL HAS BEEN PREPARED BY A DANIELS TRADING BROKER WHO PROVIDES RESEARCH MARKET COMMENTARY AND TRADE RECOMMENDATIONS AS PART OF HIS OR HER SOLICITATION FOR ACCOUNTS AND SOLICITATION FOR TRADES; HOWEVER, DANIELS TRADING DOES NOT MAINTAIN A RESEARCH DEPARTMENT AS DEFINED IN CFTC RULE 1.71. DANIELS TRADING, ITS PRINCIPALS, BROKERS AND EMPLOYEES MAY TRADE IN DERIVATIVES FOR THEIR OWN ACCOUNTS OR FOR THE ACCOUNTS OF OTHERS. DUE TO VARIOUS FACTORS (SUCH AS RISK TOLERANCE, MARGIN REQUIREMENTS, TRADING OBJECTIVES, SHORT TERM VS. LONG TERM STRATEGIES, TECHNICAL VS. FUNDAMENTAL MARKET ANALYSIS, AND OTHER FACTORS) SUCH TRADING MAY RESULT IN THE INITIATION OR LIQUIDATION OF POSITIONS THAT ARE DIFFERENT FROM OR CONTRARY TO THE OPINIONS AND RECOMMENDATIONS CONTAINED THEREIN.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE. THE RISK OF LOSS IN TRADING FUTURES CONTRACTS OR COMMODITY OPTIONS CAN BE SUBSTANTIAL, AND THEREFORE INVESTORS SHOULD UNDERSTAND THE RISKS INVOLVED IN TAKING LEVERAGED POSITIONS AND MUST ASSUME RESPONSIBILITY FOR THE RISKS ASSOCIATED WITH SUCH INVESTMENTS AND FOR THEIR RESULTS.

TRADE RECOMMENDATIONS AND PROFIT/LOSS CALCULATIONS MAY NOT INCLUDE COMMISSIONS AND FEES. PLEASE CONSULT YOUR BROKER FOR DETAILS BASED ON YOUR TRADING ARRANGEMENT AND COMMISSION SETUP.

YOU SHOULD CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES AND FINANCIAL RESOURCES. YOU SHOULD READ THE "RISK DISCLOSURE" WEBPAGE ACCESSED AT WWW.DANIELSTRADING.COM AT THE BOTTOM OF THE HOMEPAGE. DANIELS TRADING IS NOT AFFILIATED WITH NOR DOES IT ENDORSE ANY TRADING SYSTEM, NEWSLETTER OR OTHER SIMILAR SERVICE. DANIELS TRADING DOES NOT GUARANTEE OR VERIFY ANY PERFORMANCE CLAIMS MADE BY SUCH SYSTEMS OR SERVICE.

GLOBAL ASSET ADVISORS, LLC (“GAA”) (DBA: DANIELS TRADING, TOP THIRD AG MARKETING AND FUTURES ONLINE) IS AN INTRODUCING BROKER TO GAIN CAPITAL GROUP, LLC (GCG) A FUTURES COMMISSION MERCHANT AND RETAIL FOREIGN EXCHANGE DEALER. GAA AND GCG ARE WHOLLY OWNED SUBSIDIARIES OF STONEX GROUP INC. (NASDAQ:SNEX) THE ULTIMATE PARENT COMPANY.

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