Category: Trading Information

With the popularity of trading commodities futures online greater than ever it is important for the prospective trader to be sure that he is dealing with a reputable firm involved with Internet commodity trading.

The National Futures Association (NFA) is the industry wide, self-regulatory organization for the U.S. futures industry. The NFA develops the rules, programs and services that safeguard market integrity, protect investors and help their Members meet their regulatory responsibilities. While the NFA is a self policing industry organization it works closely with the US government’s Commodity Futures Trading Commission (CFTC) to provide protection to the investor from fraudulent practices.

One of the first things any investor should do before trading futures is conduct a background check on the firms and individuals offering these products. Using NFA’s Background Affiliation Status Information Center (BASIC), investors can quickly and easily check the registration status and disciplinary history of every firm and individual conducting futures business with the retail public.

Just a few minutes spent at the NFA website may save you whatever amount of risk capital that you have set aside for commodity futures trading. However, you should be aware that any commodity firm that has been operating for a long time and that has a large customer base will likely have a few complaints filed against it from customers who lost money while trading with the firm. The losses may be from the poor trading methods of the customer and not from improper behaviour on the part of the commodity trading firm.

Commodity reference prices quotes are easy to keep up with on the Internet. A service with 15 minute delays is offered by CNN.

While in the fast moving world of commodities these quotes are not good enough to trade with they will give you a quick indication as to how a market is trading.

For up to date quotes you can open an account, even a “practice” account, with one of the many online brokers. Your better brokers now offer free data feeds and trading platforms that would have been quite expensive to set up even a few years ago.

If you are a first time trader it is highly recommended that you set up and use a practice account before jumping into the commodity trading business using real money.

The Commodities Futures Trading Commission was created by the United States Congress in 1974.

The purpose of the Commodity Futures Trading Commission (CFTC) is to protect market users and the public from fraud, manipulation, and abusive practices related to the sale of commodity and financial futures and options. In addition, the CFTC fosters open, competitive, and financially sound futures and option markets.

In recent years, due to the number of increasing fraudulent operations, the CFTC has also placed companies involved in the trading of foreign exchange contracts under review. The CFTC and the National Futures Association ( NFA ) have by working together brought the forex trading industry largely under control.

Before opening a commodity trading account it is a good idea to check the record of the company you are considering trading with against the records of the CFTC. If the company has a record of serious regulation and operating problems the CFTC will probably have a report on that firm that will be of interest.

By taking this one simple step prior to opening an account you may well vastly increase the odds in your favor of avoiding a fraudulent trading operation.