How to Start Making Money with Online Commodity Trading

Online commodity trading has become very popular in the financial world today. Many investors that previously used the stock market exclusively have now branched out into the commodities market as a way to diversify their portfolios. Here are the basics of how to start making money with online commodity trading.

Choosing an Online Commodity Broker

The first part of the process involves choosing the right online commodity broker for you. There are many different brokers that will allow you to trade commodities online. However, they are not all created equal. The success of your online commodity trading will have a lot to do with the quality of the broker that you choose. When looking at the different brokers that are available, you need to see what other people think about each broker.

You can generally read reviews and forum posts in order to get an overall feel for a broker. If the broker has a bad reputation, there will be many people who are upset with them. If a broker is generally considered to be a good one, most of the information that you come across will be positive. You should also check with the National Futures Association. They are the governing body in the commodity futures market and you can look at a database full of complaints against brokers. They will be able to tell you if a broker has a lot of complaints against them.

You should also pay attention to the commission structure of the broker. You do not want to have to pay too much money in commissions.

Opening an Account

Once you locate a commodities broker to work with, you will need to open an account. Generally, you can find a link on the company's website that will take you to the application page. Complete the application with your personal information, and then your account will move to approval. Once your account is established, you will need to fund it with a check, money order, credit card, debit card or cash in order to start trading.

Trading Plan

Once you are ready to trade, do not immediately jump right into the market. Instead, find a trading plan that works for you. Every trader needs to have a written trading plan to follow. These are the rules that will govern each trading decision that you make. For example, you should have a specific rule that governs how much you are willing to risk on each trade that you take. In addition, you should have rules that state when you will take profit on a trade and when you will take a loss. By spelling all of this out in advance, you will be able to avoid trading with emotion and be much more profitable in the long run.

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