One of the most important decisions that an investor will make does not include purchasing an option or future; this decision is choosing a commodity broker. Understanding the dynamics involved in choosing a commodity broker is as much about understanding yourself as it is getting to know the commodity broker. Since commodity trading can be more involved than trading stocks, it is more important to select the right commodity broker than it is to select the right stock broker.

About Commodity Futures and Commodity Brokers

By definition, a commodity market is the location where sellers and buyers are about to conduct business in futures trading. A commodities trading contract is a legally binding agreement that defines an asset, the quantity of that asset to be delivered and the month when it will be delivered. A margin is invested to purchase the contract and the full balance of the contract is only required if the buyer takes delivery. If a commodity contract is purchased, the correct term is to “take delivery” and if a futures contract is sold, it is referred to as “making delivery.”

Commodity future contracts can be written for any type of commodity such as gold, lumber, livestock, currency, and many others. There are several different futures markets that handle specific types of commodities, such as the CME (Chicago Mercantile Exchange), NYBOT (New York Board of Trade), CBOT (Chicago Board of Trade) and others.

Futures exchanges are regulated by strict guidelines, both imposed by the government and internally, and they are require that trading is done “in the pit”, which means that transactions are handled by commodity brokers that are licensed and have paid to be in that position. These commodity brokers serve as the connection between buyers and sellers. Such an important link requires that you select someone that is not only an excellent commodity broker but someone that can identify your investment shortcomings and help to overcome those flaws.

Two Types of Commodity Brokers

There are two types, or levels, of commodity brokers and the level of service they provide is based on the needs of the investor: full service and discount. Each type of commodity broker has advantages and disadvantages that should be considered when making a decision.

Full Service Brokers

This type of commodity broker is usually recommended for new or inexperienced investors, or for those investors who invest in numerous markets. Full service commodity brokers usually provide more information, advice and help to their clients; they often work with investors to create personalized investment strategies. The fees charged by these commodity brokers are generally higher because of the extra level of service they provide. Full service brokers that specialize in trading commodities are also known as Introducing Brokers.

Discount Brokers

This type of commodity broker typically works better for more successful traders. Discount brokers can charge less for the services that they provide since they provide a smaller range of services.

How Do You Find the Right Commodity Broker?

Finding the best commodity broker for you is more a product of knowing your tendencies than anything else. Remember that your ultimate investment philosophy is to make money and your commodity broker’s job is to help you do that. Some of the traits that you should seek in your commodity broker are:

Experience

Chances are if your commodity broker doesn’t have much experience, the results you receive will be spotty at best. You don’t want your commodity broker to learn how to invest at your expense. Not only is experience in general important, but experience in the commodities where you want to trade.

Support

While a commodity broker may tell you about world-class support, what you get after you sign on is what’s important. If you are considering a particular commodity broker, call and ask for an explanation of the difference between bull call spread and a bear put spread; the level of response you get may be a good indication of the support you will receive after you open your commodity account.

Trial Period

Many commodity brokers will give you a free trial to “test drive” their service. Take advantage of this offer and see what happens. Remember that part of sampling something is trying to find out if it is good, no just trying to find out if it’s bad.

Conclusion

Choosing your commodity broker is one of the most important decisions you will make during your investing career. Successful trading can be the result or the victim of a commodity broker decision. Find a reputable broker that meets your needs and compensates for your shortcomings and you are on the road to investment success.

The online stock brokers play a significant role in online stock trade for those who want to invest but do not possess a good amount of amount to play. They are different from the traditional stock brokers in terms of investing and managing money.

Significant Role Of Online Stock Brokers

In the world of financial ups and downs, it has become a difficult task to know the best method of investing your money. Stock exchange has always acted as a platform between the stock traders and the companies in the form of buyers and sellers respectively. The invested money of the investors is always utilized by the company in further expansion of the business to increase profits.

In the traditional method of stock trade, the investors were assisted by the stock brokers in the process of buying and selling of stock and in building the financial portfolio of the investors. But since the discovery of internet, a new easy method of stock trade has come up which is known as online stock trade and it only requires the turning ON of your computer. The online stock brokers play a significant role in the market of finance by helping the online traders to hit their financial goals.

There are numerous online stock brokers in the stock market but the most commonly used ones are Ameritrade, ETrade Financial, Fidelity, and Schwab. These stock brokers work in a very systematic way as they estimate the financial condition of the investor, they execute the financial plan, and assist the investors in investing in the stocks.

Online brokers keep on updating the investors with the updated and latest news and information in terms of stock quotes, performances of each stock, and company’s financial status via online accounts created through online brokers. This information really helps the investors in investing and coming out with the profitable results.

How To Select Online Stock Brokers

The online stock trade has proved to be very much beneficial with the assistance of online stock brokers. But it is in your hands to choose the best stock broker in order to be on the bright side in the world of finances. Therefore, you should consider the following points while choosing your online stock broker.

1 - It is always recommended to begin with a full service broker for the beginners in order to become confident and knowledgeable in the market of finance therefore you should not consider “discount” as the standard requirement if you are a beginner.

2 - You should keep on checking the website performance especially during the peaks hours so that you should be very much familiar with the site in order to clear the confusions else it may lead to mistakes.

3 - You should always opt for the broker who can be accessed by some different modes other than internet. For e.g. via telephone, fax, etc.

4 - It is always suggested to have a proper survey of the finance market in order to get an apt stock broker.

5 - It is recommended to go for the brokerage firms that require a minimum deposit for opening an account. There are many firms that do not possess any minimum deposit at all therefore you can enjoy the liberty of depositing and withdrawing amount according to your wish but the account will remain open.

6 - You should prefer to open an account with the broker offering lowest commission cost.

7 - You can opt for the broker who not only deals in stock market rather offer other financial services like CDs, municipal bonds, mutual funds, gold or silver certificates, etc so that you can withdraw profits from these financial services also.

8 - You should confirm beforehand that the brokerage firm in with which you are going to deal with should possess 24 x 7 hours customer care service in order to assist you every time whenever required by you.

Therefore, anyone can enjoy the thrill of online stock trade but should always begin this business of finance with the assistance of a good brokerage firm in order to be on the profitable side of the stock market.

Most option traders are like you and I, average people doing business on the stock market.

But what separates the professional option traders from the beginners is that the professionals keep it simple whilst the beginners are still finding their way and often are overcome by their emotions....or greed that usually results in them making losses.

It's true that if one could predict the directional movement of the markets on a regular basis then this person would be extremely wealthy.

What many traders don't realize though is that to make a great living with option trading you don't have to predict the direction of the move, something that is akin to gambling at the best of times.

Many professional option traders make a huge income by forecasting the "size" of an options price movement whether up or down or even if it is trading in a range by using volatility and probability analysis .

Now this is why many people get scared and run away at the mention of Volatility and Probability Analysis to trade in options.

In the years past you would have to have the great mathematician Archimedes to help you calculate volatility and probability, it could be the reason why only a select few were making money trading options.

But not now with powerful software that you can purchase from various online traders you only have to input the 20 days price history of an option you want to trade in and then "voila"! In an instant you have your answer of the likely movement of that options price.

You can also use standard deviation to calculate probability and with a quick glance you can simply look at a simple chart (no not one of those complicated ones, but the shaded area under a bell curve) and you can spot a 95% winner in an instant!

Yes this method is the method that many successful professional option traders have been using for years to make huge profits from trading in options.

In fact many successful global large financial institutions that trade in options use this very same method.

With basic knowledge in option trading and a relatively inexpensive piece of software you can now trade and profit like the professional option trader.

What is more, all you have to do is simply enter the 20 day historical prices of an option you want to trade in and the probability is given immediately.

You can even work out likely "scenarios" by using "what if" a price was such and such at an given time to work out your strategy.

Volatility and probability formulas are not simple formulas, you could do them on a calculator or in a spreadsheet like excel but for a small investment why bother working like an Elephant when you can sit down and concentrate on trading.

The discovery of internet has made the methods of doing businesses very easy and comfortable. It has also taken the market of stock to the heights as the large percentage of population has opted the method of trading stock online.

Tools To Start Trading Stocks Online

The method of trading stock online has been proved as the most convenient and successful method of trading stock. It is also very easy for anyone to start trading stock online by just possessing 3 important tools which are:

1 - Computer: If the whole procedure of trading has to be done online, then it is obvious that the main foundation of this trade is the computer. If anyone wants to start with online stock trading then he should possess a fast computer with Windows XP as its operating system.

2 - Internet: It is the major component of online trading as it will connect you to the various companies of the stock market. It is always suggested to go for a high speed cabloe or broadband internet connection.

It is always recommended to have an internet back up even if you possess a good net connection as there are the chances for the net to get down. You should always possess an access to a telephone line if, in any case, your system gets disrupted and you want to exit the trade then by using telephone you can inform the broker regarding the same.

3 - Brokers: In order to enjoy the excitement of trading stock online, one has to require a broker through whom you will be involved in online trading. There are many online brokerage firms possessing different fees and offering different services. You should always opt for the online broker that proffers good stock trading and charting software. You should always select that online brokerage firm which offers market data and the updated information to all its clients.

Before going to have the tools for online stock trading, you should jot down the things which will be required by you from each and every tool.

Tips To Make Money In Trading Stocks Online

There are many people who have been successful in making out huge amounts from the online stock trading. The following 5 tips will really help the online traders to make out dollars from online stock trading.

1 - Chart reading in stock trading is the most beneficial step for the traders to trade efficiently. By becoming skillful in the activity of reading charts, you can easily judge out the stocks that will move up.

2 - It should be habitual to set stop loss orders whenever you make trade else your entire account will get smashed. You should always proceed in the game by scraping down your losers early and by allowing the winner to continue. Basically, this is one of the tactics of the trade.

3 - You should never purchase the stock which is dropping down with a perception that it will increase suddenly after you will purchase it. You should always opt for the stock that is constantly moving up and will keep on touching the heights. Therefore, you should get rid of a myth "buy low and sell high" from your mind.

4 - You should never give an importance to the media personalities rather it is recommended to work independently while trading online. This is so because there are frequent ups and downs in the stock market and by the time information of the media persons reaches you, it becomes too late. Therefore, it is always recommended that you should always work with your brain instead of trading by using someone else’s brain.

5 - You should always search for the brokers whose commission share should be low else your profits will be spent in paying the commission to the brokers.

These five tips will really help everyone to hitting the jackpot while trading stock online.