Commodity educator Gary Fullett recently discussed several things to look for when choosing a commodities broker.
Active traders often see commodities as major assets to their investment folders. Commodities, as explained by commodity educator Gary Fullett, are agricultural products or raw materials. Examples of commodities include crude oil, soybeans, or cattle. Gary Fullett recently described several things to look for when choosing a broker to help you buy and sell commodities.
The function of a commodities broker is to assist the client in buying and selling futures contracts. Gary Fullett explained that commodities brokers are typically paid a commission for facilitating and managing trading operations. He explained that it’s important for investors to thoroughly research brokers before choosing the one right for them.
“There are several characteristics of an excellent commodity broker that can help you determine which one will suit your needs,” Gary Fullett said. “First and foremost, any broker you use should be licensed.”
Gary Fullett explained that under the statutes of the Commodity Exchange Act (CEA) of 1936, all commodities brokers must be licensed with the NFA. He added that in addition to licensing, investors should do enough research to ensure a broker is reputable. It’s important to know how long a broker has been in business and if there are any complaints against him or her. It’s best not to work with a form that is undergoing recent judgments or ongoing litigation.
“Visit the NFA database and run a Background Affiliation Status Information Center search to uncover a broker’s industry standing,” Gary Fullett said. “You’ll quickly learn if a broker is in good standing with the NFA and CFTC.”
Gary Fullett added that you will want to ensure your broker is competent before allowing them to trade commodity futures for you. They should have plenty of industry experience, keen attention to detail, and a specific knowledge base in this market. A broker’s ability to clearly answer your questions can be a good sign of his or her competence.
“Commodity futures are no longer traded in in-person auction form,” Gary Fullett said. “They are now almost entirely digital. You’ll want to choose a broker who is extremely tech-savvy and uses all of the latest software trading platforms to compete in this marketplace.”
Gary Fullett finished by stating that choosing a broker in which you feel confident can greatly improve your experience in the market. Choose a broker who is reputable, knowledgeable, and proficient in the latest trading technology, and you’ll be one step closer to success.