Difference between commodity trader and broker
Funnily enough, commodity brokers deal in physical commodities. Essentially, these expert traders broker commodity contracts on behalf of companies. Typically working for investment banks, clearing houses and broking companies, they trade financial derivatives based on commodities such as oil, gas, metals and food products. On a day-to-day basis, commodity brokers are responsible for surveying international markets, conducting difference between commodity trader and broker and keeping up-to-date with the latest financial news.
They then get stuck into trading commodities for their clients. Commodity brokers also provide expert advice to their clients, as well as implementing hedging strategies for them.
Furthermore, commodity brokers spend a large difference between commodity trader and broker of their time visiting suppliers, meeting with clients, and overseeing logistics arrangements for them. Finally, they are also responsible for building relationships with potential clients and developing new business opportunities. Brokers are also usually given sizeable bonuses and commission payments based on performance.
Aspiring commodity brokers should be ready for a career with lots of stress and pressure. Expect early starts and late finishes. Different markets operate at different times, and this will therefore have an impact on your specific working hours. Investment banks, commodity broking companies and clearing houses only tend to recruit the very best graduates. Candidates with a degree in any subject can enter this line of work. If you study a relevant subject, such as business studies, economics, maths, statistics, operational research or accounting, you may stand a better chance of securing an entry-level position.
Completing an internship or work experience placement with an investment bank or clearing house is a great idea, and pretty much essential for entry difference between commodity trader and broker this competitive area of work. Many difference between commodity trader and broker brokers start their careers as part of a graduate scheme. These training programmes tend to last around two years.
If you are accepted onto a graduate scheme, the majority of your training will be done whilst on the job under the supervision of senior brokers. You will also have the opportunity to attend in-house training sessions from time to time. Commodity brokers must be registered with the Financial Services Authority before they can start trading, which means passing a number of exams. As you gain more experience and move up the career ladder, you will become an associate and then a senior associate.
Some people eventually move into director-level roles. The international nature of difference between commodity trader and broker means that you may also get the opportunity to work abroad at some point in your career. What about all the good times we shared? Ok, before you go, just tell us one thing….
Cancel account I've changed my mind. Working hours Aspiring commodity brokers should be ready for a career with lots of stress and pressure. You may also be required to travel internationally from time to time. Entry Investment banks, commodity broking companies and clearing houses only tend to recruit the very best graduates.
United Futures Trading Company, Inc. Suite Chicago, IL The act of an option holder in electing not to exercise or offset an option. The policy under which all futures positions owned or controlled by one trader or a group of traders are combined to determine reportable positions and speculative limits.
Any bank, stockyard, mill, storehouse, plant, elevator or other depository that is authorized by an exchange for the delivery of commodities tendered on futures contracts. The simultaneous purchase and sale of similar commodities in different markets to take advantage of a price discrepancy. The process of resolving disputes between parties by a person or persons arbitrators chosen or agreed to by them.
NFA's arbitration program provides a forum for resolving futures-related disputes between NFA Members or between Members and customers. An option whose strike price is equal—or approximately equal—to the current market price of the difference between commodity trader and broker futures contract.
The difference between the spot or cash price of a commodity and the price of the nearest futures contract for the same difference between commodity trader and broker a related commodity.
Basis is usually computed in relation to the futures contract next to expire and may reflect different time periods, product forms, qualities, or locations.
A market in which prices are declining. An expression of willingness to buy a commodity at a given price; the opposite of Offer. A market in which prices are rising. A member of a futures exchange, usually a clearinghouse member, through which another firm, broker or customer chooses to clear all or some trades.
The actual physical commodity as distinguished from the futures contract based on the physical commodity. Also referred to as Actuals. A place where people buy and sell the actual commodities i. See also Forward Cash Contract and Spot. A method of settling certain futures or options contracts whereby the market participants settle in cash payment of money rather than delivery of the commodity. Stocks of a commodity that have been inspected and found to be of a quality deliverable against futures contracts, stored at the delivery points designated as regular or acceptable for delivery by a commodity exchange.
In grain, called "stocks in deliverable position. The use of graphs and charts in the technical analysis of futures markets to plot price movements, volume, open interest or other statistical indicators of price movement. See also Technical Analysis. Excessive trading that results in difference between commodity trader and broker broker deriving a profit from commissions while disregarding the best interests of the customers.
A system of trading halts and price limits on equities and derivatives markets designed to provide a cooling-off period during large, intraday market declines or rises. The process by which a clearinghouse maintains records of all trades and settles margin flow on a daily mark-to-market basis for its clearing members.
A corporation or separate division of a futures exchange that is responsible for settling trading accounts, collecting and maintaining margin monies, regulating delivery and reporting trade data. The clearinghouse becomes difference between commodity trader and broker buyer to each seller and the seller to each buyer and assumes responsibility for protecting buyers and sellers from financial loss by assuring performance on each contract.
A member of an exchange clearinghouse responsible for the financial commitments of its customers. All trades of a non-clearing member must be registered and eventually settled through a clearing member. A range of prices at which futures transactions took place during the close of the market.
A fee charged by a broker to a customer for executing a transaction. The federal act that provides for federal regulation of futures trading. The federal regulatory agency established in that administers the Commodity Exchange Act. An enterprise in which funds contributed by a number of persons are combined for the purpose difference between commodity trader and broker trading futures or options contracts. The concept is similar to a mutual fund in the securities industry.
Also referred to as a Pool. An individual or organization which operates or solicits funds for a commodity difference between commodity trader and broker.
A person who, for difference between commodity trader and broker or profit, directly or indirectly advises others as to the advisability of buying or selling futures or commodity options. A statement sent by a Futures Commission Merchant to a customer when difference between commodity trader and broker futures or options position has been initiated.
The statement shows the price and the number of contracts bought or sold. Sometimes combined with a Purchase and Sale Statement. A board of trade designated by the CFTC to trade futures or options contracts on a particular commodity. Commonly used to mean any exchange on which futures are traded.
Also referred to as an Exchange. Also referred to as Delivery Month. The tendency for prices of physical commodities and futures to approach one another, usually during the delivery month. A short call or put option position which is covered by the sale or purchase of the underlying futures contract or physical commodity. Hedging a cash commodity using a different but related futures contract when there is no futures contract for the cash commodity being hedged and the cash and futures market follow similar price trends e.
The futures contract which matures and becomes deliverable during the present month. Also called Spot Month. An order that if not executed expires automatically at the end of the trading session on the day it was entered. A speculator who will normally initiate and offset a position within a single trading session.
The failure to perform on a futures contract as required by exchange rules, such as a failure to meet a margin call or to make or take delivery. The distant delivery months in which futures trading is taking place, as distinguished from the nearby futures delivery month.
The transfer of the cash commodity from the seller of a futures contract to the buyer of a futures contract. Each futures exchange has specific procedures for delivery of a cash commodity. Some futures contracts, such as stock index contracts, are cash settled.
A financial instrument, traded on or off an exchange, the price of which is directly dependent upon the value of one or more underlying securities, equity indices, debt instruments, commodities, other derivative instruments, or any agreed upon pricing index or difference between commodity trader and broker. Derivatives involve the difference between commodity trader and broker of rights or obligations based on the underlying product but do not directly transfer that product.
They are generally used to hedge risk. See also Self-Regulatory Organization. The statement that some CPOs must provide to customers. It describes trading strategy, fees, performance, etc. An arrangement by which the owner of the account gives written power of attorney to someone else, usually the broker or a Commodity Trading Advisor, to buy and sell without prior approval of the account owner.
Also referred to as a Managed Account. An order placed difference between commodity trader and broker without the use of a broker either via the Internet or an electronic trading system. Systems that allow participating exchanges to list their products for trading electronically.
These systems may replace, supplement or run along side of the open outcry trading. The action taken by the holder of a call option if he wishes to purchase the underlying futures contract or by the holder of a put option if he wishes to sell the underlying futures contract. Generally the last date on which an option may be exercised.
It is not uncommon for an option to expire on a specified date during the month prior to the delivery month for the underlying futures contracts. The first day on which notice of intent to deliver a commodity in fulfillment of an expiring futures contract can be given to the clearinghouse by a seller and assigned by the clearinghouse to a buyer. Varies from contract to contract. An individual difference between commodity trader and broker executes orders on the trading floor of an exchange for any other person.
An individual who is a member of an exchange and trades for his own account on the floor of the exchange. A contract which requires a seller to agree to deliver a specified cash commodity to a buyer sometime in the future, where the parties expect delivery to occur.
All terms of the contract may be customized, in contrast to futures contracts whose terms are standardized. An account carried by a Futures Commission Merchant in the name of an individual customer; the opposite of an Omnibus Account.
A method of anticipating future price movement using supply and demand information. An individual or organization which solicits or accepts orders to buy or sell futures contracts or commodity options and accepts difference between commodity trader and broker or other assets from customers in connection with such orders. A legally difference between commodity trader and broker agreement to buy or sell a commodity or financial instrument at a later date.
Futures contracts are normally standardized according to the quality, quantity, delivery time and location for each commodity, with price as the only variable. An international electronic trading system for futures and options that allows participating exchanges to list their products for trading after the close of the exchanges' open outcry trading hours. A Guaranteed Introducing Broker is an IB that has a written agreement with a Futures Commission Merchant that obligates the FCM to assume financial and disciplinary responsibility for the performance of the Guaranteed Introducing Broker in connection with futures and options customers.
A Guaranteed Introducing Broker is not subject to minimum financial requirements. The practice of offsetting the price risk inherent in any cash market position by taking an opposite position in the futures market. A long hedge involves buying futures contracts to protect against possible increasing prices of commodities. A short hedge involves selling futures contracts to protect against possible declining prices of commodities.
The highest price of the day for a particular futures or options on futures contract. An option that has intrinsic value. A call option is in-the-money if its strike price is below the current price of the underlying futures contract. A put option is in-the-money if its strike price is above the current price of the underlying futures contract. The amount a futures difference between commodity trader and broker participant must deposit into difference between commodity trader and broker margin account at the time an order is placed to buy or sell a futures contract.
A firm or individual that solicits and difference between commodity trader and broker commodity futures orders from customers but does not accept money, securities or property from the customer. The last day on which trading may occur in a given futures or option. The ability to control large dollar amounts of a commodity with a comparatively small amount of capital. To sell a previously purchased futures or options contract or to buy back a previously sold futures or options position.
I have an interview with this commodity brokerage firm that focuses on OTC markets and especially crude oils. I have a few questions. What are some of the possible exit opportunities? Is it also going to be automated just like traders? Brokers do not take positions themselves; they only communicate markets between different dealers. You should search the internet if you want more explanation on principal vs agent functions.
To answer your other questions though, there are virtually no direct exit opportunities from interdealer brokering. There is a very high risk of automation as well, even more than in trading functions in difference between commodity trader and broker. Furthermore, commodities trading is struggling at most banks, and this will create headwinds for brokers who serve those businesses.
While banks recruit from Ivy League schools, brokerages tend to pick random people based on personality more than anything. Brokering is a customer management business.
The sell side trader answers the call or IM from the buy side and quotes him a price…. Done at Y dollars a share. Both the buy side and sell side then fill out a difference between commodity trader and broker trade blotter or their assistants will - share price and number of shares - for the back office to book into their system. In my honest opinion, trader job is a dead end job unless you are programming stuff difference between commodity trader and broker have full discretion over your books…BUT traders at these IB brokerage firms do not have such discretion…They do however have inner network of fellow sell side and buy side traders….
The traders are putting in the trades but they are following orders from either a senior analyst or PM or CIO from the buyside. Skip to main content. Be prepared with Kaplan Schweser. It is the best forum. Charterholder 1, AF Points. The world worships the original.