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Commodities are a widely traded asset class. They are contracts that are valued based on an underlying asset. These assets might be an agricultural product such as cotton or wheat or fossil fuel resources such as oil and natural gas. There are various commodities trading jobs that can be found in major stock exchanges, large firms or small, independent brokerage houses.
Trading commodities is a highly specialized profession. In order to become a trader, a level of certification and licensing must be achieved based on the region in which the commodities are traded. A trader in the United States, for example, must pass the Series 3 exam to become a licensed commodities trader in the futures market. Futures are a type of commodities contract that is valued based on a preset price and that trades on a commodities exchange, such as the Chicago Mercantile Exchange Group.
Some commodities trading jobs are performed in the trading pits or floor of an exchange. Trading specialists, for example, could work on the floor of a major exchange. These professionals connect buyers of commodities contracts with sellers of the contracts. These traders earn commissions based on the way they trade, and most all of them adhere to a trading strategy.
Typically, traders select strategies that they are most comfortable applying in any type of market condition, whether prices are rising or falling. By sticking to a technical strategy, traders can avoid some of the pitfalls that often accompany emotion-based trading. Floor specialists are employed by trading firms that are members to a major exchange, which gives these professionals the ability to work on the trading floor during trading hours. Member firms typically select several of many traders to physically work on the floor of an exchange, and therefore these are not the most prevalent of commodities trading jobs.
A commodity broker is employed by either a full-service brokerage firm or a discount brokerage firm. Full-service commodities trading jobs can be lucrative and are largely tied to commissions and bonuses. Commodities investing is volatile by nature, and investors pay large fees to full-service brokers for sophisticated trading advice. Discount brokers provide a level of advice for lesser fees.
There is a lot of paperwork involved with trading commodities. As a result, administrative occupations are another form of commodities trading jobs. A sales assistant, for instance, takes buy and sell orders from a more senior commodities broker and is responsible for writing trading tickets and entering the data into a computer. Assistants also handle any paperwork related to a new account.
The Series 3 is the broker's license. A broker primarily solicits funds and trade orders. Trader and Commodity Trading Advisor registrations are handled separately by the National Futures Association.
I have held the Series 3 broker license myself and I always had to explain to people that I was not a trader.
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