Choose Commodity Trading Brokers

How To Choose Commodity Trading Brokers

Are you looking for a commodity trading broker? There are a number of them listed on the yellow pages, even more found online. If you wish to find the best broker, then you need to consider a number of things such as their background, the systems they use, and finally, the commission they charge. While some brokers offer guarantee higher winnings than the others, they rarely guarantee high profits mainly because they charge a high commission. Hence, if you’ve found a good commodity broker, the next thing you’ll need to ask is: “What are your commissions?”

In a mechanized time such as today, comparing commission rates has become so much easier. The development of online comparison sites have served to bring down rates. From $150 per round turn in the 1990s, many full service brokers now charge as low as $80-$30 per contract. Keep in mind, however that these commissions are paid per contract purchased, not per order requested. When you’re comparing commission rates, take note of the round turn rates which cover the buy and sell side of the trade.

The trading style of a broker has a huge impact on the commission you will be required to pay. Some brokers may offer daily trade recommendations. In this case, commission rates should be found at the low end. On the other hand, if brokers offer one trade plan per month, then commissions will be more expensive. Of course, it is also important for you as a trader to determine whether the recommendation is solid and will enable you to improve your account.

The best thing about the online commodity trading is that it allows you to negotiate the commission rate. Sometimes, choosing by the commission rate alone is not enough – you’ll also have to know whether the broker can make you the money. If the broker is really good, then he is a great partner in the futures market and will probably charge higher than the others. You’ll also have to be reasonable when evaluating his rates. If you pay him $20 per month, then you cannot expect him to spend half his day analyzing your trade. On the other hand, if you are an active trader, then $20 every 2 days is not a bad rate.

Most brokers are willing to negotiate rates, especially for their established clients. New traders may find it difficult to get discounts but you’ll get it later once you’ve proven your worth. On the other hand, if you’re not making money because of your broker’s recommendations, then you deserve a break in paying for the commissions – or you might want to look elsewhere.

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