Commodity trading involves contracts based on underlying assets like agricultural products and fossil fuels. Traders require certification and licensing, and can work on the floor of an exchange or as brokers. Administrative roles, like sales assistants, also exist.
Commodities are a widely traded asset class. These are contracts valued against an underlying asset. These assets can be an agricultural product such as cotton or wheat or fossil fuel resources such as oil and natural gas. There are a number of commodity trading jobs that can be found at major stock exchanges, large companies or small independent brokerages.
Commodity trading is a highly specialized profession. To become a trader, it is necessary to achieve a level of certification and licensing based on the region in which the goods are traded. A trader in the United States, for example, must pass the Series 3 exam to become a licensed commodity futures trader. Futures are a type of commodity contract that is valued at a predefined price and traded on a commodity exchange such as the Chicago Mercantile Exchange Group.
Some commodity trading jobs are done in the trading pits or on the floor of an exchange. Trading specialists, for example, might work on the floor of a major exchange. These professionals connect commodity contract buyers with contract sellers. These traders earn commissions based on the way they trade and most of them stick to a trading strategy.
Typically, traders select strategies that suit them best in any type of market condition, whether prices are going up or down. 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 of a major exchange, which gives these professionals the ability to work on the floor during regular business hours. Member firms often select several of the many traders to physically work on the floor of a stock exchange, and therefore these are not the most prevalent jobs in commodity trading.
A commodity broker is employed by either a full-service brokerage or a discount brokerage. Full-service commodity trading services can be profitable and are largely tied to commissions and bonuses. Commodity 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 lower fees.
There is a lot of paperwork involved in commodity trading. As a result, administrative occupations are another form of work in commodity trading. A sales assistant, for example, receives buy and sell orders from an older commodity broker and is responsible for writing trade tickets and entering the data into a computer. Assistants also handle any paperwork related to a new account.
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