Full Service Commodity Broker
Many new and experienced traders use the Internet in order to find a full service commodity broker that will fit their needs. As you search on the Internet, you will find numerous options for full-service brokerages, some with a physical presence and others who are strictly Internet based.
Your options will seem almost limitless and you may not know what to look for. Many investors will find that searching for the best full service commodity broker takes time and involves trial and error. Once an investor thinks he/she has found a good full service broker to work with, they will open an account to begin what they hope will be a lucrative relationship with their new broker.
The investor will monitor how much attention their broker gives them, how easy it is to get a hold of him or her, the quality of advice and education that is given, the ease of use of their trading platform, and customer service.
You will find that the best full service commodity broker will devise a conservative trading plan that utilizes sound risk management techniques and trading strategies that maximize profit potential. A good broker will not jeopardize your entire account balance on one trade and will genuinely be concerned with increasing your account size.
A good full service commodity broker is interested in developing a long-term investment relationship with his/her clients. Your broker should be well versed in the fundamental analysis of global economics, world news, and geo-political events that can affect the markets you trade.
Your broker should also be able to analyze the market technically, identifying entry and exit points for trades, identifying support and resistance levels in both the long and short term, and being able to extensively analyze trends in the market. A full service commodity broker will require a minimum deposit to open an account.
They will base the commission they charge you on both volume and frequency of trading, the size of your account, and the type of trading strategies that will be used for your account. When you are interviewing brokers, be sure to ask questions on the commissions they charge: Why do they charge that amount? What do they charge their other clients? What are you getting in return for paying their commission?
Unfortunately, there are a few commodity futures brokerage firms out there that run “boiler room” operations. These types of operations are just looking to use high-pressure sales tactics in order to get an account opened. These brokers will often illegally guarantee profits and claim there is a once in a lifetime opportunity right now in the markets.
Be aware that nothing is ever guaranteed in futures trading, or investing in general, and these types of brokerages are after you to make a quick buck. You want to find a full service commodity broker who is honest, up-front, and patient with you.
Good brokers will “over-deliver” when it comes to customer service and provide you with an extensive education on what is happening in the markets.
THERE IS A SUBSTANTIAL RISK OF LOSS INVOLVED IN FUTURES TRADING AND IS NOT SUITABLE FOR ALL INVESTORS.
Slow Stochastics
Many traders see the slow stochastic oscillator as an essential part of technical analysis in the commodities market. The slow stochastic oscillator is based off of the fast stochastic oscillator and uses a moving average to smooth the volatility seen in the fast stochastic oscillator.
Dr. George Lane developed the original stochastic indicator. He reasoned that when a market is in an up-trend, prices will have a tendency to close near their high, and in a down-trend, prices have a tendency to close near their low. Furthermore, at the end of an up-trend, prices will close further away from their high, and at the end of a downtrend, prices tend to close away from their low.
Slow stochastic indicators help traders and investors find changes in market momentum. The indicator will assist traders in finding high and low points in a market at different times, showing if a commodity is “overbought” or “oversold”. The slow stochastic oscillator is compromised of 2 lines, the %K indicator line and the %D signal line, and oscillates between 0% and 100%.
If the slow stochastic indicator is seen above the 80% line, it shows an “over-bought” market, and would typically be considered a signal to sell. When the indicator reads below the 20% line, the market shows it is “over-sold”, and is considered a signal to buy. The percentage levels used to indicate buy and sell signals are debatable, as some traders prefer to use 75% and 25%, and other traders prefer the 70% and 30% ranges.
It is important to note that no indicator is “fool-proof”. The slow stochastic oscillator will give its fair share of false signals, and a trader relying on a single indicator may find that he or she will experience many pitfalls in identifying entry and exit points.
It is advisable to always use multiple indicators when attempting to predict a change in the trend of a market. Using multiple indicators will allow a trader to confirm the signals he or she receives from the slow stochastic oscillator. Along with trend analysis, a trader can gain an advantage in being able to identify quality entry and exit points when trading the commodities markets.
THERE IS A SUBSTANTIAL RISK OF LOSS INVOLVED IN FUTURES TRADING AND IS NOT SUITABLE FOR ALL INVESTORS.
Option Spreads – Important Aspects of Entering Option Spreads
When using option spreads, especially as a novice trader, it is important to establish a trading plan for yourself. You must know up-front exactly what type of spread you are doing, what the goal of that spread is, and you must know how to execute the trade for that spread. In this article, we will focus on the trade set-up of a spread and why it is vital to both your potential profit and risk.
One of the advantages of being able to work with a professional futures broker in option spreads is “legging” into a spread. What this means is that your broker is able to place one “leg” (or side) of the spread in at a time, this way you are able to get the best prices possible for each leg of the spread. There is always a possibility of the market moving against you as you are legging in, which is why it’s imperative you allow a professional to do this.
Many investors are also curious to know which is the best order type to use when setting up option spreads. A general rule of thumb is to always use a limit order when entering option spreads. A limit order ensures you will get your desired price (or better) or you will not get filled at all. This is essential considering a spread has a fixed amount of risk and limited profit potential. If you are unable to get the pricing you would like, you have the ability to simply opt out of the trade.
An important aspect of finding strike prices for option spreads is finding option strikes that have enough liquidity. Liquidity is measured with both open interest and volume. When a market is more liquid, you will have better pricing to choose from when entering your trade. This pricing directly effects the amount of risk you intend to take on along with the profit potential your are hoping to achieve.
THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES TRADING AND IS NOT SUITABLE FOR ALL INVESTORS.