Steps to purchasing commodities in commodities market

Written By Steps To Faculty Published May 20th, 2010

The stock market is highly volatile. The fluctuation during the trading is hour is quite common. It’s not uncommon for prices to wildly fluctuate in general also. This is the main reason for which you should understand how to purchase commodities in commodities market. The brokerage firms have certain requirements when it comes to buying commodities. Following are the steps you can take to start purchase commodities:

Step 1 Open an account

The first thing which you need to do is to open an online trading account. Open an online trading account at scottrade.com, There are many online commodity brokerage firms, such as schwab.com, which provide different ways to complete the information of buying the commodities.

Step 2 Download the approval form

You can start online share trading. Prior to this, however, you have to just fill the online form by downloading it and completing it, then mail is back to the brokerage firm. Then wait for the approval.

Step 3 Get futures contracts

You should always purchase commodities through online broker through future contracts. These are agreement which usually involves sellers who deliver commodities to buy and contract them online. The commodities are sold to buyers at a pre-determined date. You can purchase different types of commodities, which includes, precious metals and agricultural. You can also purchase gold, as they are regarded as Precious metals and have a good value. The agricultural is comprised of soybeans, sugar, milk and grains. The energy market consists of crude oil, natural gas.

Step 4 Consider RTFs

Make it a point to purchase the commodities by buying shares of RTFs. This financial vehicle is tax friendly and easy to follow.

Remember, the commodities market is equally as volatile as the stock market. Track general economic trends prior to investing. For example, if the economy is in a recession then gold is a good investment. Likewise, oil may be down given the recent BP oil spill.


Roger Due

Investing in Your Destiny® & Coaching Program - Wealth Building Summit Dallas, Texas

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