It is a very simple process unless and until you understand the intricacies and educates yourself about all important terms and effective strategies. Hence you need to put a lot of hard work initially and then only should you step into this field!
Traditionally, there used to be a commodity broker who used to place orders and then contact you back to hand over papers with filled order rates. This method was very inefficient and a lot of fraud and cheating overruled the markets.
Today, we have super cool transparent online trading platforms where you yourself can decide on your trading commodities, your strategy and hence execute accordingly.
- Choose a good commodity broker
Today, almost all commodity brokers have online trading platforms. Some of them are experts in their job and specialize in online trading. They are versatile and help you generate charts, quotes, your strategy analysis and even order entry. Some good online trading platforms specialize in excellent services, good product comparisons and are one of the cheapest commodity brokers.
- You need to complete paperwork for Commodity Account Creation
To open an account, every broker needs to submit certain documentation. It is compulsory and there is no way out. Everything is legal. It needs:
- Disclosure of financial information
This step is not so simple. Commodities are one of the highest leveraged assets. You can face a loss of money more than money earlier invested.
- Identification of risks involved in trading commodities.
Post all application submission, you cannot be sure enough to be granted the rights of becoming a commodity trader. They need to pass on the scales of good sufficient income, good trading experience, and last, no huge credits should be there on the head. Then only you would be granted your account creation.
- Fund the account!
After you have selected your commodity broker, you need to deposit money in the account to start trading. The amount is completely your choice and depends from person to person. The amount which you can easily invest without any personal harm as well as your capability to risk that much money is factors that decide your complete account finance.
- Make a well thought and researched trading plan!
This step is extremely important as most of us, as soon as the account is created with commodity brokers rush to start trading without any formed strategy. With technology being enhanced, good commodity brokers also offer simulators to their members to practice trading in artificial money. Once you become confident enough and understand the different factors, then only you should start trading with real money.
One advice for all new beginners is never done overtrading! It is the joy and confidence sometimes which makes you wrong and the hurry forces you to take risks. There you face losses and makes your earlier trading life worse. So, move slowly and steadily just like the tortoise in the story of “The Tortoise and the hare”. Slow and Steady wins the Race!