How To Get Started Trading Futures and Commodities

For those new to trading, or the futures markets, we've provided a brief guide to help you get started.

The area of "Education" goes far beyond the scope of this outline, however we believe it worth pointing out that any web search of general terms relating to futures trading will return hundreds if not thousands of results - the majority of which will prove commercial in nature, each with a product or service to sell.

Over the years, we have found the various exchanges to be a reliable source of factual data refreshingly free of outlandish claims. The majority of publications tend to deal with specific trading vehicles however, there are several broad educational resources available including (but by no means limited to) the following:

(Additional exchange-provided educational resources will appear at the end of this guide)

Education aside, whatever prompted your interest in futures trading, most of us enter the markets with some general concept of WHAT we feel we want to trade initially. Should this be the case, the following two-steps will help in setting up your initial trading experience.

1. SELECT YOUR MARKET

Determine which of the exchanges your preferred vehicles trade upon and familiarize yourself with their unique characteristics including contract specifications. Once these basic variables are known, it becomes a simple exercise in math to determine how many contracts your available trading capital will support.

2. SELECT YOUR TRADING METHOD

Determine the most efficient means of order entry for your preferred market(s):

  1. ONLINE TRADING: Pure electronic order entry using a compatible trading platform provided by your clearing firm
  2. BROKER ASSISTED TRADING: Telephonic broker or trade desk order entry
DORMAN DIRECT STRATEGY RUNNER ROLFE & NOLAN QST NINJA ZEN-FIRE TT X_TRADER CQG
CME/CBOT Agricultural
Commodities
Equity Indicies
Financials
FX Futures
Interest Rates
NYMEX/COMEX Metals
EUREX Fixed Income
Equity Indicies
ICE Energies
KCBOT Wheat
MINNEAPOLIS Grains
NYBOT Coffee
Sugar
Cocoa
US$ Index
FUTURES Pit
Electronic
OPTIONS Pit
Electronic

3. Full Service, Broker Assisted, or Self Directed?

We suggest you give some thought as to how you prefer to deal with your clearing firm. By this we mean whether your current level of comfort or expertise might cause you to seek out a full-service futures broker or to direct your own trading.

The costs associated with each type of relationship generally reflect the level of service requested or required and are negotiated directly with the chosen service-provider. Thus full-service brokerage can be expected to carry a higher commission rate simply because brokers work closely with their clients, make trade suggestions and upon approval, place orders on the client's behalf either electronically or direct to the floor, as well as monitoring open positions, suggesting exit points and updating the customer as to economic and/or market news items and their anticipated effects.

We believe this to be an effective way to gain knowledge over time with the secondary goal of changing the relationship from "full-service" to "broker-assisted" (at a commensurate reduction in commission rates), ultimately graduating to the "self-directed" category wherein the client actually takes full responsibility for his trading which, in turn, offers the lowest possible cost structure.

For additional details on each service level, please learn more about our Self-Directed, Broker-Assisted, and Full-Service programs.

Once these questions are under consideration, Jaypee will gladly accept prospective clients to make final decisions and negotiate commission quotes.

Regulatory Agency online Tutorial: CBOT® and Northwestern University Course Offerings: