Commodities Trading Rules

Written by Michael Federico
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The Commodities Futures Trade Commission (CFTC) has established a set of rule by which all traders must adhere. These rules, however, continue to change as new technology and other outside elements affect the market. A full set of rules can be obtained from the CFTC, but the language is dense and written mainly in legalese.

The one rule that individual investors should be aware of has to do with risk. Before anyone trades commodities futures he must confirm that he has been made aware of the risks involved. In the past, two signatures (the investor’s and the broker’s) were required. However, that rule has been amended, and now only one signature is needed. This has allowed people to trade commodities online without the assistance of an investment firm. However, many commodities trades will still be broker-assisted even if they are made on the Internet.

Rules for Trading Commodities Successfully

There is another set of rules when it comes to trading commodities. However, this set is not federally mandated. Instead, it is a collection of guidelines and techniques that have been used by traders over the years to successfully take on the commodities market. Many people claim that the rules they trade by are flawless, and that anyone who sticks to them will make money. This, of course, is not true, but there are certain strategies that can help a person limit losses and increase his chances of making profitable deals.

A person should not subscribe to the first strategy that he comes by. Traders who consistently make money are flexible. They use strategies that are liquid, so when certain conditions arise on the market, they can adjust their position. New traders often get discouraged when they don’t start making money right off the bat. It can take time to find a set of trading rules that works, so it is important to keep taking new approaches. Even after a person has found a technique that fits he should use the rules as a guideline, but he should never let them stand in the way of making a profitable trade.


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