How to become a commodities trader

Julie Brownlee, Fsp Invest, 20 May. 2014

Tags: commodities trader, trade commodities, commodity, commodities, trading, commodity trader, commodity trading basics,

If you want to turn your attention to the commodities’ markets, then you may want to consider becoming a commodities trader. But before you go any further, you need to ensure that you understand that this isn’t anything like investing in shares. So how can you invest and trade in commodities? What do you need to do to start trading commodities? Let’s take a closer look…

Your first step towards becoming a commodities trader

You need to open an account with a suitable metals broker. Many of these brokers will only deal with customers willing to trade in very large amounts. So you need to find a broker that will deal in the amounts you want to deal in.

Once you have opened your account, you need to decide on the type of account for you. There are two types, the research team at the Resource and Scarcity Report explain:

Top Secret Report

It’s no state secret that gold’s price is soaring into historic territory...

However, the unreported super-driver that’s all but guaranteed to push gold to $3,000 or more in the near future IS a state secret – literally.

I’m talking about China’s covert master plan to dominate world gold supplies.

You won’t read about this plan in The Wall Street Journal, hear about it on Fox News, or see it on CNBC, CNN or Sky News...

But you can get all the details right here in this MoneyMorning exclusive.

Allocated accounts
This type of account buys, holds, stores and insures the commodity at an all-in cost. A specific amount of gold will be ‘allocated’ to you from a holding at a bank or other institution.

Your metals brokers will tell you the number on the gold bar. Brokers will normally charge you for this type of account on a quarterly basis.

Unallocated accounts
This is a cheaper type of account than an allocated one. The main difference is you have a claim to a pool of gold held with a gold broker or gold depository.

You’ll know where the gold is. But if you want to sell it or take physical delivery, the financial institution holding it is responsible for delivery.


“For over ten years we’ve been searching for a way to make our readers even more money from gold. And at last, I believe we've found it.”
-FSP Invest Group Publisher, Annabel Koffman

Click here for more

How much money do you need to trade commodities?

To get an account open and start trading, you need to have at the very least around $20,000. That’s about R209,000.

Your trading strategy should focus on making small regular profits. For instance, this could mean the price of gold only moving $10 to $15 an ounce.

You shouldn’t put more than 10% of your investable wealth into gold and other precious metals. And don’t forget, you can gain exposure to gold through gold-backed exchange traded funds (ETFs) and Kruger Rands too.

So there you have it, how to become a commodities trader.

Related QA

Assnith asked:
Dear Timmon, I see that ETF NewGold lost ground compared to the beginning of the year. Is it really worth to hold on to this asset? 10% of my [read more]
Published at 05 Nov. 2016 in: Commodities Etf newgold investment prospects 1 Answer
Assnith asked:
Dear Timon, Surrounding MoneyMorning article on gold, would ETF NewGold also fall under these South African gold shares which should be avoided? [read more]
Published at 18 Jun. 2016 in: Commodities Online commodities 3 answers
Gwalaht asked:
If I want to trade with R200 how can I trade [read more]
Published at 16 Jan. 2016 in: Commodities 1 Answer
Steven asked:
I know that the majority of commodities haven’t been doing too well, but are there any opportunities in the sector? [read more]
Published at 30 Nov. 2015 in: Commodities Investing in commodities Opportunities with commodities 1 Answer
Anna asked:
I see the copper price is down a lot, is it worth putting a trade on this for the rise in price? [read more]
Published at 27 Nov. 2015 in: Commodities Copper Copper price Rising copper price 1 Answer

Related articles: