A commodity broker perfect for selling commodity options. Many are using Think Or Swim (TOS), a trademarked software platform from TD Ameritrade. It is one of the most popular option trading platforms in the USA. Some features that users appreciate:
- Easy to Use
- Excellent Tech support with articles, videos, and live phone help
This is a trademarked symbol for illustration only. This website has no affiliation with TOS or TD Ameritrade.
- Terms friendly with small and medium account sizes
- Competitive Discount Commission Rates
- Simple to Advanced Features – all in one easy-to-use platform
- No charge for Quotes/Data Services
- Free Paper-Trading Account that uses real quotes and all program features
What Are Discount Commodity Broker Commissions?
There are two parts to commission charges for options: 1) The actually commission, and 2) exchange fees where the option is traded. I consider paying $5.00 or less (including exchange fees) to be discount commissions. Just so you know, a full service broker fee can range from $25 to $65 and up. Most discount commodity brokers are charging under five-dollars ($US). A “beginner mistake” you can avoid is shopping only for the cheapest rates you can find. A trader has to consider many things when choosing a discount broker. It is really no bargain at all if you don’t like the software; before you open an account, you should definitely test-drive the software. Some of the super discount brokers will have you paying monthly data (quote) fees. Others will have you pay to use their trading (software) platforms, or other add-ons. Some commodity brokers charge high fees to transfer money in/out of your account. You might rather pay $3.75 per option trade, instead of a fee structured like this: $6.50 fee + .75 per option. If you are a high volume trader the “$6.50 + .75” might be the best deal, but if you are just learning and trading in low quantities, the $3.75 will probably work best for you. Just so you know, once you start trading in higher volume, it is quite usual to phone your customer service and negotiate a lower rate.
The Importance of a “Paper-Trading” Account Feature
Selling Options required some practice and a great commodity broker. New traders are learning about the terms of contracts on commodities like corn, wheat, soybeans, crude oil, and gold. Even if you have experience trading stock options, there is a learning curve to switch to commodity options. Each commodity contract has very specific contract values, and these are not all the same as when you trade stock options -always on 100 shares. Corn has 5,000 bushels per contract, crude oil contacts are for 1,000 barrels, and natural gas contracts are for 10,000 MMBtu. Commodity and commodity option quotes are different for each of these contracts. The value of each :tick” depends on the value of each different contract.
There are two ways to learn the unique features of each contract. One is to try to do them all at once; this is not advised as confusion is usually the result. Most commodity traders will probably not trade more than half a dozen different markets, so there is no need to learn them all. The tick sizes and units are uniform for the grains: corn, wheat, oats – and soybeans, although technically soybeans are oil seed, not grains. Each penny represents $50 because corn, wheat, oats, and soybeans are all traded in contracts that have 5,000 bushels each. So when the quoted price in cents per bushel changes one penny ($0.01), the value of the contract of 5,000 bushels changes: (5,000 x $0.01) = $50.
Here is the most valuable hint I can give about learning to trade commodity options: Use the paper-trading account to learn how to trade these options. Using and learning your trading software is easy IF YOU PRACTICE USING IT. It is like a flight simulator, you won’t “crash and burn” in the simulator – and doing it over and over again will make you proficient and fast at it. You will learn more than ten time faster if you actually “learn by doing.” Plus, it’s a lot more fun. If you like, think of it as a “video game that will pay you money.” Watch the videos furnished by your broker – and the webinars on how to use your software. They are free and you’ll be surprised at how fast you can learn this way.
Domestic & Outside USA Accounts:
Cannon Trading also has great services for USA accounts and is set up to handle Foreign/ Outside USA accounts:
Due to the laws in many countries, there are various requirements to open and trade an account. One of the brokers I have worked with is Cannon Trading. I have know John Thorpe since 2003, so I phoned him and found he has everything most domestic and international traders will need including low commission and a great paper-trading account. Getting a broker that has deep discounts and SPAN minimum margins (the lowest available) is very important. Cannon Trading’s e-futures.com is one of these. They have a free trial of the software for paper-trading for USA and Foreign accounts.
Here’s the link to CANNON TRADING to register for the free demo version of the platform:
https://ibportal.gainfutures.com/DemoSetup?WLID=20&BrokerID=12&SCodeID=13
E-Futures Int’l DEMO your demo is good for 14 day’s.
Contact Name: John D. Thorpe
Senior Commodity Broker
john@cannontrading.com
Domestic Toll Free: 800-454-9572
Direct: 310-859-9572
International: 310-859-9572
Facsimile: 866-390-1505
ThinkOrSwim TD Ameritrade Contact Info:
In the USA phone: 800-454-9272 or email: clientservices@tdameritrade.com
Here’s a link to open an account and/or download the free paperMoney(r) account:
https://www.thinkorswim.com/t/innovation.html
