Commodity Trading Accounts
2 Types of Commodity Trading Accounts
In recent years retail commodity has grown hugely in popularity and the demand for different types of commodities trading accounts has grown. There are many different commodity account types available to any commodity trader who wants to invest in the online commodity market - Commodity Account Explanation.
The commodities trading market is a highly commodity leveraged market for speculating on commodity instrument valuations. Commodities traders can purchase large amounts of commodity units using leverage - Commodity Trading Leverage is what makes commodities trading attractive to many online commodity traders - with commodity leverage a trader can make more profits or losses because they use less of their capital and borrow the rest.
There are different types of commodity accounts available to help investors better manage their commodity account capital as well as their commodity trade transactions.
How a Real Commodity Trading Account Looks Like
It is therefore important that the traders consider what they want to get out of their commodity, before deciding on the commodities trading account type to open.
Below is a comparison of the two types of commodity accounts commonly used to trade commodity. The commodity account types review below explains the different features of each of the types of commodity accounts.
1. Standard Commodity Accounts Explained
Commodity Account Meaning - Standard Commodity Trading Account. A Standard Commodity Trading Account is denominated in US Dollars and commodity trade transactions are placed using standard lots. One lot is also known as one contract. Minimum opening capital - at least $10,000 USD.
1 contract refers to the minimum size of a single commodity trade transaction. This commodity account option is the most suitable for commodity traders with enough capital to invest in commodity - this commodity account option requires $10,000 to $50,000 dollars in starting capital, For this standard commodity account the trader will not be undercapitalized and with good commodity money management guidelines and commodity money management strategies, this standard commodity account option has the best chance for profitability because it is not undercapitalized. Under capitalization is what makes most traders in commodity not profitable.
It is not recommended to open a standard commodity account unless you have an account balance of at between $10,000 minimum and $50,000.
Professional Money Managers recommend $50,000 Dollars minimum to open this standard commodity account and only opening trades with only 2% of the trading capital you have in your commodity account. However, most online commodity brokers will still open this standard commodity account for you if you have more than $10,000.
With commodity leverage of 100:1, you will borrow from your commodity broker (with commodity leverage of 100:1, your commodity broker gives you $100 dollars for every $1 dollar that you have in your commodity account, therefore if you have $1,000, the broker will give you $100 dollars of commodity leverage for every $1 dollar you have, meaning after commodity leverage you will have $1,000*100=$100,000 which you can then use to trade commodity trading).
2. Micro Commodity Account Explained
Commodity Account Meaning - Micro Commodities Trading Account. Micro Commodity Trading Accounts use lot sizes of only equivalent one-hundredth that of a commodity standard lot. These Micro commodity accounts are often appropriate for commodity traders without a lot of commodity capital and can sometimes be opened with only a $5 minimum balance.
This Micro commodity account option allows the trader to open trades in micro lots. 1 commodity micro lot is one-tenth of a commodity mini lot and one-hundredth of a commodity standard lot.
This Micro commodity account option is generally best suited for commodity account equity balances that are between $1,000 and $5,000
In commodities trading, one commodity standard lot is the standard transaction minimum of a given commodity instrument traded in the commodities market. But many commodity brokers offer fractions of this commodity standard lot to enable more retail commodities traders to access the commodities market. Being able to offer commodity micro lots reduces the minimum commodity trade transaction size thus giving the beginners and also those commodity traders without a lot of commodity capital to start trading and get a feel of the commodity market without investing a lot of commodity capital.
There are learn commodity online tutorials that a trader can read even before opening a real commodity account, and to get extra practice in commodity before opening a real commodity account a beginner commodity trader should open a practice Commodity practice trading practice account with a broker - so as to practice placing commodity trade transactions before opening a real commodity account and investing with real money.
During the commodity training period using the commodity practice trading account, the beginner commodity trader will learn the key factors needed to succeed in commodity such as: commodity education, commodity money management, commodity plan and commodities trading systems.
The types of commodities trading strategies used and the skills required for any of these 2 commodity accounts are essentially the same - those commodity skills and commodity strategies required for the Standard commodity account or Micro commodity account are the same the only difference to be adjusted are the commodity money management guidelines for each commodity account type.
