How to Trade Commodities from Home

Besides enjoying the comfort of trading commodities from home, it can also be extremely rewarding. Just think about it; instead of setting the alarm for some out-landish hour so you can chug some coffee and race out the door to join the rush hour rat race, you can rise when you wish, stay in your jammies and take breaks whenever you want. And at the end of the day, you’ll hopefully feel good about your work. That is the best-case scenario that ends up with a nice fluffy bank account. However, it takes work to get to that point. Hard work, which begins with learning everything you can, following successful online traders and subscribing to blogs and newsletters. Read everything you can get your hands on about the supply and demand of commodities that you will be trading. Once you feel confident about how to trade commodities, you can get started making some real deals.

Finding a Broker

After you’ve educated yourself, find a reputable (and successful) commodity broker that specializes in online trades. Compare commission rates and services offered, such as charts, strategy analysis, order entry and quotes. Fill in the forms required for opening an account, which usually include a statement of your income, your net worth and your credit standing. Everyone wants you to succeed, but in case of a shortfall, the broker doesn’t want to be left holding the bag. Ask your broker if you can use a trial account to get some experience before actually committing money. With proper training and chances at simulations, you’ll become more comfortable with placing orders for real. Once your account is set up and you feel like you’re ready to take the next step, you need to fund it. Consult with your accountant about the amount you should begin with, taking your own comfort level and degree of risk tolerance into account.

How Much to Invest

The normal rule when investing in a futures contract or in a futures margin is that you will put up somewhere between three to fifteen percent of the total value. You’ll have greater leverage here than with stocks, which require more like fifty percent. If you want to head for success and keep yourself in the game, try trading less on the contracts than what is required by the margins. There is such a high leverage factor involved with commodities that it’s easy to get in too deep too quickly. Just make sure you close futures contracts previous to the first notice day. You should get this notice several weeks before the end of the contract, so you’ll have ample time. Hopefully if you do forget to do it, your broker will remind you.

Making Commodity Trades

You have great training, experience with a trial account, a trustworthy broker and funds, so now you can get your feet wet with your first commodity trades. Exercise caution, don’t overtrade and track your progress in journals so you can stay in the market for the long haul.