Once you decide that you would like trade commodity futures, you will have to find a commodity broker in order to trade. You won’t find a commodity brokerage office on every corner, so you will have to look around.
There are roughly 1,500 commodity brokerage firms in the U.S. There is a high concentration of commodity brokers in the Chicago area. New York, California and Florida also have a good portion of the commodity brokers. Most stockbrokers are not licensed to deal in commodities, so it is likely you will have to find a broker that specializes in commodities.
Local Commodity BrokersThe obvious choice to look for a commodity broker is to open the phone book. Some commodity traders might like the personal attention of having a local commodity broker, but it is not necessary. In fact, most traders solely use the phone or the Internet to conduct their commodity trading business, especially if you are seeking an online discount commodity broker.
It is always a plus though if you are able to meet a commodity broker before you open an account, as they are a few rotten apples out there. Meeting someone face to face might help you figure out if you are dealing with a slick salesman or someone who really knows what he or she is doing. Be sure to avoid high-pressure commodity brokers.
Online Commodity Broker DirectoriesThere are some online directories where you can find hundreds of listings of commodity brokers. CommodityBrokersOnline.com may be the best place when you are searching for a commodity broker. The site lists more than 700 commodity brokers with addresses, phone numbers, websites, complaint histories, years in the business and some background information.
Commodity Broker AdvertisementsYou can find advertisements for commodity brokers in trading magazines. The most common commodity and futures magazines are Futures Magazine, Stocks and Commodities Magazine and Stocks, Futures and Options Magazine (SFO). Most brokers will offer to send you some type of freebie, so they can have the opportunity to speak with you or at least get your contact information.
The Internet has become the more popular place for many commodity brokers to advertise. You can find advertisements on most commodity portal sites – Futuresource.com, FuturesBuzz.com and INO.com.
Parting Thoughts on a Commodity Broker SearchI would search my local area first and then try to contact several others around the country. If you are looking for a full service broker to help with managing the account, it is imperative that you find a broker who can trade well. Unfortunately, many cannot. If you are looking to strictly trade commodity futures online, then you will probably want to focus on brokerage commissions and the trading platform.
You may see ads from the same commodity brokers all over the place. Don’t confuse that with quality. There may be a reason why they need to advertise so much – such as a large turnover of clients because they lose money. However, some commodity brokers have large offices and need to feed a lot of brokers with leads.