What is commodity trading?

Commodity trading is the exchange of different assets, typically futures contracts, that are based on the price of an underlying physical commodity. With the buying or selling of these futures contracts, investors make bets on the expected future value of a given commodity.

How to open a commodity trading account?

To open a commodity trading account, the first step is to choose a commodity brokerage firm. This company will hold your account and execute your trades. There are many full-service brokers and discount online brokers to select from. You need to determine the best fit based on your specific requirements.

How does a commodity trading agreement work?

When opening a commodity trading account, the agreement generally stipulates an understanding for arbitration to resolve any disputes. This process tends to avoid high legal fees. The approval process for opening an investment account for commodity futures trading is necessary, as trading commodity futures is risky for both you and the brokerage firm.