The Futures and Commodities Market is an incredibly lucrative, very profitable space to trade your finances in. However, finding a futures broker and brokerage who will genuinely meet your needs and requests profitably can prove to be extremely difficult. What does one look for, exactly, in a good futures and commodities brokerage? In a market where past profits are not indicative of future results, new traders must have a very keen, educated eye for what a good futures and commodities brokerage will do to handle their finances and expectations competently and professionally.

Adaptability

• The commodities market is extremely volatile. Past profits in any contract cannot be seen as indicative of future profits within said contract. Therefore, a successful commodity trading firm will hire commodity brokers who are confident in their view of the futures markets and can prove their ability to adapt to real-time market changes.
• A good commodities and futures firm will have futures brokers who have the best research and market information at their fingertips.
• However, to simply have the educational resources on hand is far less than enough. A good commodities brokerage will employ futures and commodities brokers who are ravenous in consuming this information and just as quick to point out the relevance to their clients.
• Joe Easton, Senior Commodities Broker at Cannon Trading Company, believes “A good commodity brokerage is built on timeliness. Having a broker/trade desk available at a moment’s notice is imperative in the fast-moving futures markets.” A good futures and commodities brokerage should be able to meet your futures and commodities trading needs at any time, day or night.

Client Services/Customer Relations

• Commodities and Futures Brokerages are in the business of introducing traders to clearing firms said traders may not have access to on their own. They make their commission based on the trades that come from forming that initial relationship.
• “Over the years, I’ve learned that each client is unique and need different things to enhance their trading experience at our brokerage”, says Kim Pabillon, Commodities Broker at Cannon Trading Company. “I think by simply listening to your clients’ needs and requests provides that one on one experience that many clients look for when seeking out a new futures broker.”
• Joe, Kim’s colleague, agrees: “Personalized service where your futures broker knows your name and treats you with a tailored understanding of your trading needs is also an imperative quality of any futures brokerage”.

The Difference between Respecting Risk and Being Reckless with it

• To the wandering eye, trading commodities like silver or natural gas sounds attractive because of their healthy return potential.
• However, trading commodities is no money tree. Market speculation of any kind is a practiced skill that demands tireless research and focus. Your trading pedigree must consist of practiced steps to learn in commodity trading, what trading platforms are most user-friendly, key market analysis strategies, ways you can lower your level of risk.
  • The cultivation of your trading style, which you’ll develop over time spent trading in the market (which we’ll cover in Finding and Crafting your Personal Trading Style).
• Commodity brokers and firms carry with them a healthy understanding of skepticism. Not negativity per se, but the ability to see past a contract’s daily long and short to what the realistic profit margins will look like when the volatility stops.
• It is common knowledge to buy commodities when they’re at a lower price point. The idea is that you buy low with the understanding that the price will go up within a certain length of time.
• Of course, the price can go down after the purchase as well. This is the risk, and a good commodities broker will alert you to risk-taking in the futures and commodities market.
• This may seem careless in the eyes of some. However, the fact remains: No financial market is risk-free. The futures market is one based almost entirely on speculation. The risks are high and you can potentially lose far more than you’ve invested, making it a considerably riskier financial market than many of the others. This is why research and analysis are so critical to successful commodity trading. This brings us to:
• Technical Analysis
  • Technical analysis uses historical charts and data to analyze prior price trends in the hopes of predicting upcoming futures contract pricing
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  • Commodity traders look for past price points where heavy trading occurred with the purpose of finding key trigger positions as those prices come up.
  • Some traders swear by technical analysis, and base their futures trading solely on the data gathered from their own research.
  • However, there are still many traders who incorporate a healthy mix of both Fundamental and Technical Analysis in their futures trading to successful results.
• Any futures broker who promotes risk-free commodity and futures trading is being unethical, and shouldn’t be trusted.

‘It’s a Marathon, not a Sprint’ Big-Picture Outlooks over Instant Gratification

• A futures broker will be honest with you about the level of risk involved in trading futures and commodities contracts.
• Therefore, it is simply a better practice for both parties to judge success not by the number of failures, but by the size of each profit against those losses.
• If your profits per trade are larger than the size of your losses per trade, a futures broker will alert you that you are trading the market with a good potential for success.

Finding and Crafting your Personal Trading Style

• Futures trading is often mistaken by the average layman as being a knowledge-centric market.
• Technically it is. However, the application of this knowledge is more important than simply absorbing it.
• In many commodity and futures trading situations, good futures traders and brokers alike will lean more on what not to do in a particular trade than what to do.
• Instead of asking “how much do I know?” try asking “how well do I know what works for me?”
• By asking yourself this question, you may find yourself on a path of dropping bad habits rather than adding/enhancing good ones. This is a positive change to futures trading.
• Drop the bad habits, study the good ones. After a while, your futures trading success will rely on your own methods and techniques.
• A good futures broker will pick up on your trading habits and advise you accordingly. This is the first step to dropping your bad trading habits and ensure that they don’t impede on your potential profits.
• Kim Pabillon states it very clearly: “What makes an excellent broker is one who takes the time to listen to each of their clients individually.” Whether that’s a phone call, email, text… speak to your broker! By and large, make sure your broker is also communicating with you! It’s all a two-way street!
• Just because your commodity broker is making commissions doesn’t mean they don’t care or don’t have an interest in your overall financial future! Everyone in your commodities and futures corner wants to see you succeed.

Final Thoughts

• The futures and commodities market is extremely lucrative, with plenty of profit potential but with large risk involved.
• Even a self-directed futures account will need guidance and advice from a futures broker.
• Trade smart, and be sure you’re in the hands of a trustworthy futures broker who has your best financial interests at heart!

Contact us today to schedule a consultation with a highly experienced commodities broker and find out how Cannon Trading can help you achieve your commodities trading goals. Contact Us