# Commodities Brokers



## tom82 (10 March 2012)

Interested in trading commodities, what brokers are available to trade commodities?
Who do you trade with, suggestions, comments etc.
Is there a list somewhere? Maybe list them here.
Look forward to your replies, thanks.


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## tom82 (19 March 2012)

Also what is the best way to trade commodities, as CFDs, as futures or some other way?


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## Starcraftmazter (19 March 2012)

If you want to use CFDs, IG Markets has everything.


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## Trembling Hand (21 March 2012)

tom82 said:


> Also what is the best way to trade commodities, as CFDs, as futures or some other way?






Starcraftmazter said:


> If you want to use CFDs, IG Markets has everything.




Absolutely CFDs are by far the worst way to trade commodities.

If you want to trade commodities use futures. If you cannot afford to trade the size of contracts then go into the city, buy yourself a nice coffee and cake then walk into your CFD providers office and hand every cent of your too little capital over to them in cash.

At least that way you end up having a nice coffee and cake.....


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## Timmy (21 March 2012)

Trembling Hand said:


> Absolutely CFDs are by far the worst way to trade commodities.
> 
> If you want to trade commodities use futures. If you cannot afford to trade the size of contracts then go into the city, buy yourself a nice coffee and cake then walk into your CFD providers office and hand every cent of your too little capital over to them in cash.
> 
> At least that way you end up having a nice coffee and cake.....




:

mmmmm ........... cake


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## blue0810 (21 March 2012)

Trembling Hand said:


> Absolutely CFDs are by far the worst way to trade commodities.
> 
> If you want to trade commodities use futures. If you cannot afford to trade the size of contracts then go into the city, buy yourself a nice coffee and cake then walk into your CFD providers office and hand every cent of your too little capital over to them in cash.
> 
> At least that way you end up having a nice coffee and cake.....




Good point. I like coffee without sugar.  Just black no milk.


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## tom82 (21 March 2012)

Some brokers do not charge commissions on their commodity CFDs.
Wouldn't this be helpful?



Trembling Hand said:


> Absolutely CFDs are by far the worst way to trade commodities.
> 
> If you want to trade commodities use futures. If you cannot afford to trade the size of contracts then go into the city, buy yourself a nice coffee and cake then walk into your CFD providers office and hand every cent of your too little capital over to them in cash.
> 
> At least that way you end up having a nice coffee and cake.....


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## Trembling Hand (21 March 2012)

tom82 said:


> Some brokers do not charge commissions on their commodity CFDs.
> Wouldn't this be helpful?



 Yeah thats nice of them. Wonder why? Could it be that they have a 50 cent spread while futs have a 1 to 5 cent spread and brokerage cost of 1-3 cent.

Which one you want?


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## tom82 (21 March 2012)

So who are some of the futures brokers?

When you refer to futures do you mean the OTC futures or the futures that are linked to the underlying commodity on an exchange?

I have found some brokers with spreads down to 2pips.



Trembling Hand said:


> Yeah thats nice of them. Wonder why? Could it be that they have a 50 cent spread while futs have a 1 to 5 cent spread and brokerage cost of 1-3 cent.
> 
> Which one you want?


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## Timmy (21 March 2012)

tom82 said:


> So who are some of the futures brokers?
> 
> When you refer to futures do you mean the OTC futures or the futures that are linked to the underlying commodity on an exchange?




Interactive Brokers is a futures broker, for example:
http://individuals.interactivebrokers.com/en/main.php

On a futures exchange Tom; here is a link to a Wikipedia page which lists futures exchanges: http://en.wikipedia.org/wiki/Futures_exchange
and exchanges covered by Interactive Brokers:
http://individuals.interactivebrokers.com/en/general/whyib/PDF-GlobalOfferings.php


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## tom82 (26 March 2012)

Don't futures have higher margin requirements?


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## Trembling Hand (26 March 2012)

tom82 said:


> Don't futures have higher margin requirements?




So? Why does that matter?


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## tom82 (26 March 2012)

Then more of the account will be used for margin requirements.



Trembling Hand said:


> So? Why does that matter?


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## Trembling Hand (26 March 2012)

tom82 said:


> Then more of the account will be used for margin requirements.




If you think that then I would humbly suggest that you are not ready to trade a very volatile instrument. What you need in your account has little to do with minimum margin. Especially at the expense of CFDs vs Futs.


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## tom82 (26 March 2012)

I am trading forex with no problems.

What should one think?

Why would it not have anything to do with it?



Trembling Hand said:


> If you think that then I would humbly suggest that you are not ready to trade a very volatile instrument. What you need in your account has little to do with minimum margin. Especially at the expense of CFDs vs Futs.


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## sinner (26 March 2012)

tom82 said:


> I am trading forex with no problems.




forex is probably half or a quarter the volatility of commodities.


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## Trembling Hand (26 March 2012)

tom82 said:


> Why would it not have anything to do with it?




Because position size has nothing to do with margin. If my broker gives me access to commodities @ 10% margin and yours give you assess @ 2% margin would that effect the position size you take?

Would you take 5 time greater size position?


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## tom82 (26 March 2012)

I never said anything about position sizing.



Trembling Hand said:


> Because position size has nothing to do with margin. If my broker gives me access to commodities @ 10% margin and yours give you assess @ 2% margin would that effect the position size you take?
> 
> Would you take 5 time greater size position?


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## Trembling Hand (26 March 2012)

tom82 said:


> I never said anything about position sizing.




Well then why would the reduced margin of CFDs be of any benefit then?


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## tom82 (26 March 2012)

I never said it would be benificial.

If futures have a higher margin requirement, that means more of the account is set aside for margin requirements.

Dont people prefer lower commissions?



Trembling Hand said:


> Well then why would the reduced margin of CFDs be of any benefit then?


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## Trembling Hand (26 March 2012)

tom82 said:


> If futures have a higher margin requirement, that means more of the account is set aside for margin requirements.



 But why does that matter when you have to have more than the minimum margin to cover an adverse move without being stopped out.

Show us how you position size a trade, if you cannot see why margin doesn't matter I will then show you why.


tom82 said:


> Dont people prefer lower commissions?




Oh dear!! CFDs do not have lower commissions. They have extremely high *hidden *commissions


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## tom82 (26 March 2012)

Cant see why they would be hidden.

Most brokers have a list of their cfds with their respective commissions on their website and they have available any other information regarding fees and charges and any formulas that may be required.

They also have PDS and FSG.



Trembling Hand said:


> Oh dear!! CFDs do not have lower commissions. They have extremely high *hidden *commissions


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## Trembling Hand (26 March 2012)

tom82 said:


> Cant see why they would be hidden.
> 
> Most brokers have a list of their cfds with their respective




Ok mate. go ahead. we just seem to be going in circles here. Go off and trade gold for "free" and pay 50 cent spread  and I'll stick to gold futs paying 1 tick of commission and 1 cent spread.

LOL!!


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## sinner (26 March 2012)

Trembling Hand said:


> Ok mate. go ahead. we just seem to be going in circles here. Go off and trade gold for "free" and pay 50 cent spread  and I'll stick to gold futs paying 1 tick of commission and 1 cent spread.
> 
> LOL!!




For the record TH, and I'm not saying this to dispute the useful advice you've given, I read on Bron S (from Perth Mint) recently stating that in the OTC bullion bank market, the spread is in fact 50c, a fact I found rather interesting.


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## tom82 (26 March 2012)

That is a contradiction.

It can not be free and pay 50 cents for spread, something is either free or it is not.
In this case the spread is the fee.



Trembling Hand said:


> Ok mate. go ahead. we just seem to be going in circles here. Go off and trade gold for "free" and pay 50 cent spread  and I'll stick to gold futs paying 1 tick of commission and 1 cent spread.
> 
> LOL!!


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## tom82 (26 March 2012)

What useful advice? I  haven't seen any.



sinner said:


> For the record TH, and I'm not saying this to dispute the useful advice you've given, I read on Bron S (from Perth Mint) recently stating that in the OTC bullion bank market, the spread is in fact 50c, a fact I found rather interesting.


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## Trembling Hand (26 March 2012)

tom82 said:


> That is a contradiction.
> 
> It can not be free and pay 50 cents for spread, something is either free or it is not.
> In this case the spread is the fee.




FFS!! So you prefer a 50 cent spread which you have to cross twice with CFds to a total cost of 3 cents for futs (1-2 cent spread and 1 cent commission)

Thats some useful advice


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## tom82 (26 March 2012)

If you go long then the spread is payed when you enter, if you go short it is payed when you exit.

I never said I prefered a 0.50 spread.



Trembling Hand said:


> FFS!! So you prefer a 50 cent spread which you have to cross twice with CFds to a total cost of 3 cents for futs (1-2 cent spread and 1 cent commission)
> 
> Thats some useful advice


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## tom82 (26 March 2012)

What futures brokers can you reccomend so I can do more research?


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## Trembling Hand (26 March 2012)

tom82 said:


> I never said I prefered a 0.50 spread.



Well buddy which one do you prefer? 50 cent cost or 3 cent cost?

try,

https://www.interactivebrokers.com/ibg/main.php


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## sinner (26 March 2012)

tom82 said:


> If you go long then the spread is payed when you enter, if you go short it is payed when you exit.




I'm pretty sure this is wrong?

You can never cross the bid/ask so you always exit disadvantageously. No matter what your entry, it takes N+1 ticks movement in your direction to exit advantageously, where N is the spread.

If you trade an exchange traded market like futures, stocks, even forex ECN you can often exit advantageously *on entry*, 0  or 1 ticks movement required. The mechanics of this are precisely what's hidden by CFD brokers. Sometimes this is ok, sometimes not. It undeniably detracts from your edge by increasing trade cost.


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## skyQuake (26 March 2012)

Just to make it absolutely clear, with a cfd provider, YOU are ALWAYS PAYING the spread


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## Trembling Hand (26 March 2012)

skyQuake said:


> Just to make it absolutely clear, with a cfd provider, YOU are ALWAYS PAYING the spread




Unfortunately newbies just have no idea that their is an alternative let along the cost of crossing a large spread. :sheep:


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## Starcraftmazter (26 March 2012)

I might as well chuck a somewhat related question in here.

I like the asx200 cfds, which have a spread of 1 point 10-4, and between 3 and 5 overnight.

How would the SPI futures compare to this? I can understand there being less liquidity in the evening and night, but is it better if you want to trade during evening and night hours?

Obviously one can trade the euro markets instead, but say you already have open positions with our index and you might want to either close or increase them depending on overnight action, etc.


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## Pager (15 April 2012)

tom82 said:


> What futures brokers can you reccomend so I can do more research?




A few reply’s here and the consensus is to use futures and I would agree, stay well clear of CFD,s, you could also look at ETF,s particularly those traded in the USA they seem to have gained popularity and there are some that are commodity specific, like Gold, Crude Oil, Natural Gas etc but IMO still the best vehicle is futures but you need to be well capitalised to trade a basket of markets, at least $50K.

For brokers, I use Macquarie here in Sydney but on a no advice basis, its execution only and have found them very good, cover a huge range of exchanges globally with good reporting, service and a 24 hour desk, not as cheap as IB but unless your an experienced high frequency trader I would steer well clear of IB, yes there rates are low but you are well and truly on your own particularly if there’s a problem even if its not your fault, dealing with IB and there desk is very frustrating and for the sake of a few dollars cheaper commission per contract it really isn’t worth the hassle unless your trading VERY frequently, im not and hold positions for months sometimes, also with futures you need to be aware of first notice days and if in a position you need to roll from one contract to another, in this regard and IMO the full service broker is a better broker to use, they will let you know if a position is about to enter the first notice day period and you can leave instruction to roll positions at the open/close or in the roll market without having to be online trying to do it yourself, your broker probably does it very regularly so will be far more experienced doing a favourable roll for you.

Other brokers here in Australia are Halifax or Bell Potter to name 2 and have also heard RJ Obrien are pretty competitive with rates and good service but there US/Canadian based.


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