A hard-working person can learn the basics of commodities trading in a couple of months, but it can take a lifetime to master the ins and outs of these futures markets. Because there are so many things a newcomer to the markets has to be able to understand and execute, setting a timetable can help you monitor your progress.
The One-Year Mark
The first year is the most critical for a commodity futures trader. Many new traders try to make big profits quickly, but a short-term orientation can cause trouble. Remember that many people who trade commodity futures lose money.
The first year of trading commodities should be all about learning how to trade. There are important lessons to absorb when it comes to approaching markets, executing trades, and controlling risk. Expect many setbacks.
Achieving break-even at the end of year one should be considered a victory. Many traders who can at least break even after one year of buying and selling commodity futures will go on to become profitable traders in the years that follow.
The Three-Year Mark
It often takes about three years of trading before someone can become consistently profitable. Traders must internalize lots of fundamental and technical knowledge before achieving this level of competency.
It helps to learn the craft as an apprentice, from a commodities trader who is already successful. If someone is willing to impart their experience to you, your learning curve will be much shorter. While there are trading schools and courses available online, you should choose carefully, asking many questions and closely comparing and contrasting your options.
In the beginning, trade slowly and carefully and read as many commodity trading booksas possible to learn from people who have already reached a level of success. Become an international newshound: Commodities are global markets, and political, economic, and weather events around the world can have a direct impact on the prices of commodities.
If after three years, you're continuing to struggle, you must re-examine your trading plan and techniques. There is no perfect path for success in commodities, and all traders experience periods of losses, but those losses must give way to net profits in a reasonable about of time to make trading worth the effort.
The most successful traders learn the mechanical tools necessary to trade from other sources but develop their own proprietary methods for deciding when to buy and sell. Success will depend on your ability to develop a plan and a strategy that accentuates your strengths and minimizes your weakness.
The Secrets of Long-Term Success
You can learn the basics of the commodities markets by reading and studying. However, as any successful trader will tell you, you learn something new and face new challenges every day. The most successful commodity futures trader is flexible and thrives under pressure.
Because of the vast amounts of knowledge necessary to become a skilled trader and the various factors that can influence commodity futures prices, you must be a political analyst, an economist, and a risk manager all rolled into one.
The two most important things to remember for any commodity futures trader are discipline and perseverance. Discipline is the risk management side of the undertaking: Never risk more than you can afford to lose, and always set profit and loss targets when you enter a trade. Perseverance involves always striving to learn more, realizing you don't know everything, and being unafraid to act on new ideas.
FAQs
A hard-working person can learn the basics of commodities trading in a couple of months, but it can take a lifetime to master the ins and outs of these futures markets.
How hard is commodity trading? ›
Key Takeaways
Commodities are considered risky investments because the supply and demand of these products are affected by events that are difficult to predict, such as weather, epidemics, and natural and human-made disasters.
How long will it take me to learn trading? ›
For learning swing trading, it takes at least 6 months and for intraday trading, at least a year. So don't get discouraged by the time required because this is a skill that will make you money for the rest of your life. There is no retirement in trading as you can trade from your home even when you're 80.
What education is needed for commodities trading? ›
To become a commodity trader, you need at minimum a bachelor's degree in business, economics, or finance. A master's and even doctoral degree makes you a more competitive candidate.
How do I start a career in commodity trading? ›
How to become a commodities broker
- Earn a degree. Consider degrees in business, economics, accounting or finance. ...
- Get a licence and certifications. ...
- Build your skills. ...
- Gain work experience. ...
- Apply for jobs.
The first introduces the four big commodity traders – Archer Daniels Midland (ADM), Bunge, Cargill, and Louis Dreyfus – which are the focus of this study. Collectively, these trading companies are often referred to as 'the ABCD companies' because of the coincidence of their initials.
What is a commodity trader's salary? ›
The average salary is $98,041 a year $93,000 - $103,999. 13% of jobs. $114,000 is the 75th percentile. Salaries above this are outliers. $104,000 - $115,499.
How long does it take to learn a trade? ›
Trade school programs vary by length of study. Most trade school diploma programs take between three months and one year. Though associate degree programs will usually take a bit longer - between 18 and 24 months to complete - there are also programs that are incredibly short.
Is 25 too late to learn a trade? ›
The journey of continuous learning and skill acquisition never ends. Embracing this mindset opens up endless possibilities, making any time the right time to start anew. The stories of countless individuals who've pivoted to new careers around age 25 are a testament to the power of resilience and learning.
Is 35 too late to learn a trade? ›
It's Never Too Late for a New Career
A fresh career can be pursued at any time. Taking advantage of education at any age allows you to follow your passions and opens doors to new opportunities and personal improvement.
How do I start trading commodities? First, choose from 35 commodity markets, or commodity-linked stocks and ETFs. Next, decide whether to speculate on market prices by going long or short. And finally, you'd need to open a live account with a provider who offers commodity trading.
How long does it take to learn commodity trading? ›
It often takes about three years of trading before someone can become consistently profitable. Traders must internalize lots of fundamental and technical knowledge before achieving this level of competency. It helps to learn the craft as an apprentice, from a commodities trader who is already successful.
Can you make a living trading commodities? ›
Trading commodities for a living is a dream of many aspiring traders, but only a small number of people can make this a reality. Although it is a difficult process, there are several things you can and must do in order to make this a profitable and lasting venture.
How to become a commodities trader with no experience? ›
Here is how you can begin your career as a commodities trader:
- Get an education to increase your career potential. ...
- Earn a position with a commodities trading company. ...
- Register and test for a commodities trading license. ...
- Gain experience as a commodities trader to advance your career.
It's a great education and the companies groom you to end up in a trading firm. However, getting such an opportunity is like buying a lottery ticket. There are hundreds of applicants every year and only a few openings. So the competition is tough!
How to break into commodities trading? ›
If you want to be a commodity trader, there are three main paths into the industry:
- Start at a large bank in a commodity-related group within sales & trading. ...
- Join a physical trading shop or natural resource company in an operations, “scheduling,” or middle-office role with a pathway to becoming a trader.
Commodities traders often have very stressful jobs due to the large amounts of money they may deal with.
Do commodity traders make a lot of money? ›
The salaries of Commodities Traders in The US range from $73,918 to $762,812, and the average is $166,453.
Is commodity trading still profitable? ›
While profits were down from 2022, 2023 remained a strong year for the industry. Commodity traders have built up large cash reserves. Credit: BHP. Commodity traders had their second-best year on record in 2023, with profits of around $100bn and large cash accumulations.
