Commodity Futures Trading Commissions

Written by BK Shaw
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It's hard to get away with trading in this fun marketplace and not have to pay commodity futures trading commissions. There are different kinds of commission structures and you should be very careful to understand how a brokerage firm is charging you before you work with them. Transaction fees can mean multiple charges: first of all the National Futures Association will charge a small fee per transaction. There may also be small administration charges charged per transaction by the brokerage, which could add up.

Generally there will be commodity futures trading commissions charged per transaction. You should be sure that you understand if you are being charged for buying and selling. If time has run out on your options and they are worthless, obviously it is not worth selling them. You might as well save yourself the fees charged on the way out of the trade by letting the options expire worthless.

Obviously, if you are trading futures contracts you can expect to pay half the commission going into the trade, and the other half coming out. Brokerages call this a "round-turn." Be careful of commissions when considering futures trading, because you will make many more trades with futures contracts than with options, as a general rule of thumb.

Things to Watch for When Comparing Commodity Futures Trading Commissions

Commodity Futures Trading Commissions should never attribute for more than 30 percent of the entire transaction cost in my opinion. Make sure you understand exactly what is being charged, and double check how the brokerage is calculating your premium. Technology is allowing for expeditious trading at low costs, so do your homework before filling out your application.


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