Becoming a commodity broker is a choice. If you’re bored of overworking at your office, it’s time for you to change your profession.
There are two questions that might be on your mind. First question is “How much money can you make?” and second question is “will you enjoy working in the futures industry?”
Commodities brokers make a very good living. Brokers with less than three years of experience made a base salary of between $100,000 and $150,000 as of 2013. On the other hand, you have to be willing to put in the time and effort to become good at it, and you need to pass a tough licensing application process.
According to thebalance.com, these are things you have to consider before you take the chance.
The Basics
You will enjoy working as a commodity broker if you have a strong interest in trading commodities and you have sales skills. Sales are an important consideration as you will have to open accounts and build a book of business.
Commodities brokers operate in a more specialized field than stockbrokers or registered securities representatives, and there are far fewer of them.
Becoming a Licensed Commodity Broker
Every commodity broker must be licensed and registered with the National Futures Association (NFA) as an “associated person.” To get that license, the applicant must pass a test called the Series 3 examination. The outline form for the test can be found on the NFA website.
The exam has one section that tests general futures market knowledge and a second covering the rules and regulations. Do not take this part of the test lightly. It deals with “treating the customer properly” issues.
An applicant also is required to fill out an 8-R form with the NFA. This form covers the applicant’s employment history for the last 10 years and residential history for the last five years. Reporting any criminal history is a must as well as any disciplinary actions which impose in other financial professions.
Where to Work as a Commodity Broker
ost stock brokerage firms do not trade commodities, so you should look for a firm that specializes in commodities. These are typically called Introducing Brokers or just IBs.
You can also work directly for an FCM, or Futures Commission Merchant. Most FCMs are located in Chicago or New York.
