StoneX Financial Inc, Daniels Trading Division

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How Do You Trade Commodities Online?

by | Futures 101

For many professional traders, commodity futures are the crème de la crème of the financial markets. Featuring robust liquidity and consistent volatility, metals, energies, and agricultural products provide participants with many profitable opportunities.

If you’re interested in learning how to trade commodities from a confident, competent perspective, then read on. We’ll cover three steps essential to getting started trading commodities online.

Secure the Services of a Futures Broker

At its core, trading commodity futures is the buying and selling of various commodity-based futures contracts. For retail traders, the services of a broker are necessary to facilitate any and all transactions. In essence, your broker is your partner in the markets, so selecting the best one for the job is of the utmost importance.

From a practical standpoint, a broker provides a trader with several indispensable services:

  • Expert guidance: A competent broker provides timely assistance to clients. When trading commodity futures remotely, this service is critical to troubleshooting problems as they arise.
  • Market access: The provision of streaming market data and order routing services are two vital components of online futures trading. Without these elements, trading commodities via internet connectivity is not possible.
  • Platform options: To trade online, you must use a software trading platform. Most futures brokers provide a collection of options that feature advanced charting, technical indicators, and multiple order types.

Each of these components is an essential part of online trading. For anyone interested in learning how to trade commodities, market access and software platforms are two key areas on which to concentrate your focus.

Boost Your Commodity Futures IQ

Before ever placing a trade, it’s important to build a formidable futures-oriented knowledge base. Getting up to speed on important concepts such as liquidity, volatility, and the functionality of order execution is essential. If you want to learn how to trade commodities, a little bookwork is required.

 

One of the best things about online futures trading is the availability of educational materials. No longer do aspiring traders need to earn an undergrad degree in finance or attend expensive seminars to learn how the markets work. All that is needed is some time, effort, and an internet connection. Here are a few online tools that can help you boost your futures IQ:

With a period of dedicated study, it’s relatively easy to learn about market fundamentals, basic technicals, and trade execution. And the best thing is that many great web-based educational resources are at your fingertips 24/7/365, absolutely free.

Enter the Live Market

After securing the services of a broker and beefing up your commodity futures IQ, it’s finally time to enter the live market. The best way to do so is on a trading simulator. A trading simulator provides a new trader with a completely risk-free means of practicing order placement, position management, and real-time market evaluation.

Although SIM trading is a good way to become proficient at placing orders and managing positions, it’s also an essential strategic tool. By observing the behavior of different commodity products, you will be able to select a market and strategy suitable for trade.

One of the key points of any book about how to trade commodities is market selection. Your ideal market should satisfy your trade-related goals given all available resources. There is some ambiguity in this department, but answering the following questions can help you choose a suitable commodity:

  • What is the contract’s size? Is it too big for my account? Is it too small to meet my financial objectives?
  • Is the market consistently liquid? Can it be traded efficiently?
  • Is there enough volatility for my strategy? Is there too much?

Trading the proper market in terms of leverage, volatility, and efficiency is a key factor driving long-term profitability. For anyone learning how to trade commodities online, this is a lesson to keep in mind.

Want to Learn How to Trade Commodities Online?

If you’re interested in becoming active in commodity futures, an excellent way to begin is by talking with a market pro. To learn more about the potential of these exciting markets, schedule your free one-on-one consultation with a member of the Daniels Trading team today.

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Risk Disclosure

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI does business as Daniels Trading/Top Third/Futures Online. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI.

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

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