How to Go About Commodity Trading Online

By Taipan

Commodity trading online has become much more of an interesting business endeavor with real time commodity quotes and live charting services now offered by a number of Internet based commodity futures brokers.

Amazing advances in Internet technology has made the type of commodity trading services previously reserved for the professional trader available to even smaller traders who have limited amounts of risk capital to trade. However, whenever you trade commodities the risk of sudden adverse price movements are still present, so even with great trading software, charts, smarts, and other facilities a commodity trader should always protect his capital by using well placed stop loss orders.

As always, great trading platforms or not commodities should only be traded with true risk capital. By that I mean funds that if lost would not impact your standard of living at all. No one likes to lose money but if you lose risk capital your life would go on without missing a beat. If you disregard this advice and risk your mortgage payment money you will almost certainly lose.

Commodity trading online makes the collection of commodity information, up to date prices, weather forecasts, USDA and CBOT reports, and commodity charts so much more convenience to access compared to old before the Internet trading days. However, greater convenience doesn't mean that it is easy to become a successful commodity trader. Commodity trading requires skill sets and discipline that some people just don't have.

One good thing about online commodity trading is that most online commodity brokers offer demo trading accounts that will let you try out their trading platforms without risking real money. While trading a demo account is not the same as trading your own funds, believe me, the emotional factors are different, you can still get a good feel for what is required in order to be successful and if online commodity trading is for you.

There are so many commodity futures contracts that you can trade it is easy to at first become confused. Each commodity futures contract is a bit different and has specifications unique to that commodity. In getting started it is best to limit yourself to just one or two futures contracts.

There are commodity futures contracts in the precious metals, like gold, silver, and platinum.

Contracts in the base metals like copper, aluminum, nickel, zinc, and tin are closley tied to industrial demand.

The "soft" commodities like sugar, cocoa, and coffee often trade in cycles that go from highs to lows every few years.

The grains have a lot of interest and price action this year and are subject to ongoing weather influences. Record prices were established this year in corn, soybeans, rice, and wheat.

The big daddy market of them all would be crude oil and the entire energy complex including natural gas and heating oil. With crude oil in a tremendous bull market and trading above $130 a barrel new trading price records seem to be made every few days. There is plenty of excitement, profit potential, and risk in the energy complex for even the most seasoned commodity trader.

Commodity trading online can be a fantastic business for the well informed trader who takes the time to develop the necessary skill sets to trade well consistency. Commodity trading is not for the lazy who rely on luck for trading profits. Chances are their money will not last long in the extremely competitive trading environment offered by the commodity markets.

If you have an interest in online commodity trading you can run a Google search for "commodity trading online" and find a number of commodity resources. To find online brokers run a Google search for "online commodity brokers" and you will find plenty of firms to research.

When researching online commodity brokers make sure that they are members of the NFA and are registered with the CFTC. By dealing only with firms who are NFA members and registered with the CFTC you will have at least some measure of protection as to how your trading funds are handled. You can be sure that your orders will be filled accurately according to your instructions.