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Ultimate Guide to Commodity Brokers 2020

Know everything about commodities broker and how to choose a commodities broker.
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Author: Edith Muthoni
Last Updated: February 20, 2020
P2P Investments
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What are commodities broker

A commodity broker is a worldwide operator that enables you to buy and sell financial products related to commodities.

For a detailed list of what are commodities, check our guide here.

Depending on your needs, you may want to choose one firm over another. Some are focused on low fees, whereas others give more weight to their educational content. More experienced traders may want to work with brokers that give them higher leverage or a wider choice of investments.

How to choose a commodities broker

There are a great number of commodity brokers in the market, so how do you choose the best one for you?

To help you out, we have reviewed plenty of CFD brokers, comparing their features and identifying the pros and cons of their platforms.

On this Page:

    Our Recommended Trading Platform 2020:

    • Trade Stocks, Forex, Crypto and more
    • Only $200 Minimum Deposit
    • Fully Regulated
    • Easy to Use Trading Platform
    75% of retail investors lose money when trading CFDs with this provider.

    Best Commodities Broker

    Most of the commodity brokers in the market operate through CFDs.

    CFD stands for “Contract For Difference”, and are basically financial derivatives that enable retail investors to speculate with the price movement of stocks, bonds, and commodities, without owning the underlying asset.

    CFDs typically allow investors to increase their exposure to the asset by leverage. Bear in mind that CFDs are complex products with a high risk of losing or gaining money quickly. Between 74-89% of retail investor accounts lose money when trading CFDs. Please, consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

    We have reviewed plenty of well-known brokerage firms with extensive product offerings and broad geographical operating territories.

    Investors can read our reviews to decide which brokers offer specific features most important to them. In addition, all of these brokers have detailed websites that can answer many of your questions.

    Regulation: Commodities broker license 

    Before investing in commodities, or any other financial derivative for that matter, you should research that your online commodity broker is fully regulated.

    Brokers have to adhere to financial rules established by government agencies, which include customer safeguards like fund protection, maintaining capitalization or being subject to regular audits.

    Your online broker should also have some sort of license from one of these agencies, which guarantees a higher level of reliability.

    Opening an account with an unregulated online broker is assuming a great deal of risk, as these brokers could potentially do whatever they want to customer funds. As they operate online, they could be really hard to prosecute due to be located in hard-to-pursue jurisdictions.

    You should also keep an eye on plain fraudsters that claim to be licensed by fictitious agencies, always do your due diligence before investing money.

    Qualifications for commodities broker

    Depending on your experience and investment goals, some online brokers would be better than others.

    Beginners may want simplicity and easy-to-use interface, while others may want lower fees and higher leverage.

    Other traders may want a wider number of investment options, advance charting or responsive customer service.

    Recommended: Best commodities traders

    1. eToro – Best Overall

    eToro was the first online broker to establish a social trading platform.

    The firm was also the first to allow traders to do copy-trading, by which traders can easily copy the trades and strategies of leading traders on the platform.

    eToro, which was founded in 2006, offers CFDs on commodities, cryptocurrencies, stocks, indices, and ETFs.

    Minimum deposit is set at $50.

    The firm offers traders a demo account and access to 24/5 customer support in several languages. eToro has about 5 million customers worldwide and operates in more than 60 countries.

    Disclaimer: Transacting in virtual currencies is subject to various risks, such as price volatility, and is therefore not suitable for everyone. Your capital is at risk. eToro offers only Crypto (real crypto no CFD) so only buy with no leverage, later on this year eToro will also offer real stocks for trading.

    2. Plus500 – Best for variety of commodities

    This leading global CFD brokerage firm provides traders with an easy-to-use platform and good risk management tools.

    Plus500 account holders can trade a large number of CFDs on a variety of different asset classes including commodities, indices, forex, cryptocurrencies, shares, and options.

    You can explore the platform with their free demo account and access to 24/7 email and live chat support in several languages.

    Plus500 operates in more than 50 countries.

    3. City Index – Best for a longstanding reputation

    City Index’s parent company is one of the most experienced trading platforms in the market, it has been established for over 30 years, and today this platform offers customers the ability to trade CFDs and forex and perform spread betting.

    Traders enjoy access to more than 10,000 markets across commodities, forex, shares, and indices.

    Their customer support is available 24 hours during weekdays via live chat, email and phone and in multiple languages.

    City Index operates in over 150 countries with access to demo accounts for both of the platforms (MT4 and City Index) being unlimited.

    4. easyMarkets – Best for versatility of their platforms

    easyMarkets offers customers CFD trading in a variety of asset classes including commodities, forex, indices, and cryptocurrencies.

    This unique trading platform is renowned for its “deal cancellation” tool which allows customers to cancel a trade one hour after it was placed.

    It also has a 24 hours customer services during weekdays via email, phone, fax, and live chat support is available in a variety of languages.

    easyMarkets is available in more than 150 countries.

    Our Recommended Trading Platform 2020:

    • Trade Stocks, Forex, Crypto and more
    • Only $200 Minimum Deposit
    • Fully Regulated
    • Easy to Use Trading Platform
    75% of retail investors lose money when trading CFDs with this provider.

    FAQs

    What does a commodity broker do?

    Commodity broker. A commodity broker is a firm or an individual who executes orders to buy or sell commodity contracts on behalf of the clients and charges them a commission.

    What is a commodity broker salary?

    According to a compensation analysis report published by the HC Insider in 2013, commodity traders with less than three years experience earned an average base salary of $100,000 to $150,000. Traders with more than five years experience had average base salaries of $200,000 to $350,000.

    How do commodity brokers make money?

    Compensation for commodity brokers is generally on a commission basis; this means they receive a percentage of the gross commissions from the trades placed by their customers. Commissions are the fees associated with the execution of buying and selling orders.

    How do I become a commodities trader?

    Step 1: Complete a Bachelor's Degree Program. The first step to becoming a commodities broker is to earn a bachelor's degree. ... Step 2: Complete Job Training. ... Step 3: Attain FINRA Licensure. ... Step 4: Become Certified. ... Step 6: Advance with Experience and Education.

    Which is an example of a commodity?

    Grain, precious metals, electricity, oil, beef, orange juice, and natural gas are traditional examples of commodities, but foreign currencies, emissions credits, bandwidth, and certain financial instruments are also part of today's commodity markets.

    How do I buy commodities?

    There are four ways to invest in commodities: Investing directly in the commodity. Using commodity futures contracts to invest. Buying shares of exchange-traded funds that specialize in commodities. Buying shares of stock in companies that produce commodities.

     

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    All trading carries risk. Views expressed are those of the writers only. Past performance is no guarantee of future results. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate. This website is free for you to use but we may receive commission from the companies we feature on this site.
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    Edith is an investment writer, trader, and personal finance coach specializing in investments advice around the fintech niche. Her fields of expertise include stocks, commodities, forex, indices, bonds, and cryptocurrency investments. She holds a Masters degree in Economics with years of experience as a banker-cum-investment analyst. She is currently the chief editor, learnbonds.com where she specializes in spotting investment opportunities in the emerging financial technology scene and coming up with practical strategies for their exploitation. She also helps her clients identify and take advantage of investment opportunities in the disruptive Fintech world.

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