Online Commodities Trading

Commodity Trading Online - Without a Broker

Commodity trading systems put many tools at a trader's fingertips: historical data on the movement of commodity prices; charts; news relevant to commodities markets; technical analyses by so-called experts; and other things that can convince the unwary rookie that he knows what he's doing. But some of the commodity trading systems you find online are scams.

The U. S. Commodity Futures Trading Commission (CFTC) has issued several warnings about fraudulent commodity trading systems that give flatly wrong advice designed to make investors lose money to the benefit of the scam's originators. Beware of any offer that "guarantees" you will make money. There are no guarantees in commodity online trading!

Commodity trading software is available from vendors such as Triple Point Technologies; TechNova; OrbitSoft; Gecko Software; Brady PLC; and others. Most of these vendors allow you to download a trial version of their software that will let you do everything except actually execute a live trade.

Trading commodities online is less expensive than the traditional broker-mediated method. There are commissions to be paid on every trade, but they are lower because there is no human broker to pay. For example, a complex trade involving futures and options might cost you $150 in commissions through a human broker, but only $30 if you do it yourself online. There is no delay in executing trades online, whereas your broker does need to leave his or her desk occasionally.

The dangers of commodity online trading are the complements of its benefits. First, you have no mentor, no second opinion upon which to fall back. Whatever decision you make, you must rely only on your own knowledge. (Of course, most brokers will urge you to make a trade no matter how ill-advised it may be; that's how they make money.) Second, low costs mean you are inclined to trade more frequently, running up commission bills and quite possibly trading when you should have held your position.

Online commodities trading is not for compulsive gamblers. They just throw away money on commissions and usually miss profits by trading on impulse instead of knowledge. It is best to study your chosen market for a few months; plan a sensible investment strategy that involves holding your position(s) for several weeks to months; execute your trades according to plan; and then forget about them until the planned time to cash in comes.

"The Zurich Axioms" is a book written by the son of Swiss bankers, Max Gunther. It is a pithy collection of investment advice that is so popular among the market-wise that used copies often go for several times the new cover price. It is very useful for online commodity trading, and for non-financial life guidance as well.

Do you participate in online commodities trading? Post a question or comment about your experience...