If you are new to commodity trading you should leave this page and go watch the movie Trading Places because you are not ready for commodity trading. Most advanced commodity traders or respectable ones will tell you be prepared to lose a pile of money very quickly, if you don't think so watch another movie Cocktail or Rogue Traded based on a true story.
First off if you are using full-service for your commodity trading and paying over $50 per contract you are being robbed. A broker's job is to earn commission. Right or wrong in the trade the broker still gets paid. So he or she will give the investors ideas to put the money to work. Is their research any better then what you can read all over the web???? Probably Not. Other main goal of a full service broker is to try and keep you around or try to preserve your equity, which means you may end up being moved around quickly from one market to another, generating commissions or also called churning. That is something to keep a watch for and if it happens to you close your account and move on.
Full-Service Commodity Trading Things to watch out for when opening a Commodity Trading Account
1. High Commissions $50 per contract or higher and even $30 seems to high for full-service
2. Being Moved Around Quickly the market is not looking good lets go into this because so and so is going on, right after you got in the trade
3. Broker asking for more money within the first few weeks of setting up the account Called Loading a Client
4. High Pressure Sales Tactics You have to move now etc.., there is always opportunities up, down, sideways or whatever.
Also before opening a Commodity Trading Account you will want to do a background check on your commodity trading broker and commodity trading firm.
The National Futures Association has a basic search by Name or by Commodity Trading Firm which can be done at this link
National Futures Association Basic Search by Name or National Futures Association Basic Search by Firm.
Also information found on the Regulatory Body's Site the Commodity Futures Trading Commission can be helpful.
CFTC Customer Protection Links and Helpful Information
Part of the C.F.T.C's mission is to protect market users and the public from fraud, manipulation, and abusive practices.
Note the above statement does not guarantee you will not get burned in trading commodities. Here are a few examples.
1. What did the CFTC do with the dramatic run in Crude Oil to $150 per Barrel. That's B.S. to think the move was based on fundamentals. It's not rocket science to figure out the large investment banks were behind that move. The drive higher cost the American people not only in gas and heating their homes but also ripped up companies not able to pass on the additional fuel costs. Creating Job losses and severe damage not only to the U.S. Economy but the global economy as well. That's one of the greatest ripoff's in history and they have done nothing, take from everyday people and transfer their cash into Wall Street Bonuses. Another Ponzi Scheme Win for Investment banks.
2. Enron before they went under. Rolling brown outs in California and Cash Market Prices for Natural Gas spiking to $70 per btu for imm. delivery. Who got ripped off from that and did the residents of CA and the small speculators trading Natural Gas get any money back.
3. Recent CFTC Actions
*Here is a pile of commodity and forex cases from Jan. 2011 to April 2011, with all these cases no wonder so many lose money, fraud scams etc..
* April 1, 2011 NFA permanently bars Georgia firm, Clash Financial LLC maximized commission and deceptive sales, result barred for 3 years
* Oct.,8 2009 Pennsylvania Resident runs a Ponzi Scheme from 1995 to 2008, 50 Million from atleast 76 investors. Why did it take so long??
* Oct.,8 2009 Chicago Floor Broker defrauded customers and illegal trading practices. This is a dam floor broker working on the exchange. How many other Floor Brokers are doing the samething or worse? I would love to see the floor brokers in the energy pit checked on.
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