How To Become a Commodity Broker

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While a stock broker buys and sells shares and securities, a commodity broker deals with commodity contracts. Commodity brokers are licensed professionals that provide financial services to trade with commodity contracts. Commodity contracts deals with actual commodities like agricultural and building products, precious metals, food, tradable financial contracts or futures, currencies and energy. Commodity brokers may be an individual or firm that will manage the sale or purchase of commodity contracts for their clients and earn commissions from the transaction. There are probably more stock brokers than commodity brokers, which mean there are more opportunities for you to excel in this field if you should choose this direction. You will have to be registered and licensed with the National Futures Association or NFA, and seek employment at brokerage firms who deal with commodities trading. 

  1. Take and pass the Series 3 exam. Study and prepare for the Series 3 exam. Get as much materials and information as you can about commodity trading. You can enroll at review centers or study under a tutor. Take the Series 3 exam and pass. The test will be two and a half hours long and will have 125 questions. The test has two parts wherein the first will cover your general knowledge on futures contracts, futures market, underlying assets, options and everything that deals with trading. The second part will test your knowledge on the rules and regulations of the market. This part will touch on how you treat your clients. 
  2. Fill up the National Futures Association’s 8-R form. You will be providing information about your work history for the past 10 years as well as your five year residential history. It will also ask for criminal records if any and if you’ve had other licenses from other financial professions. This information will be used along with a background check with the FBI and a fingerprint record from a local police station by the National Futures Association before they issue you a license.
  3. Look for work at a brokerage firm. You need to find a brokerage firm that trade commodities because not all brokerage firms trade or specialize in commodities trading. You can start at small brokerage firms and work your way up to bigger firms as you gain enough experience to become a successful commodity broker.

As a commodity broker you need to learn all the aspects of commodity trading. You need to be sensitive to market trends and know where good trades will be made. Put your client’s best interest always at the top of your priority list.


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