Learn To Trade Futures | Commodities Futures Trading Course

Archive for March, 2009

We’ve already talk about selecting a futures trading broker, so now I’d like to talk about selecting the right commodity options broker. What’s the difference you ask? A lot if you plan to trade commodity options more frequently than usual.

When selecting the right online commodity options broker, you should take in some considerations on order placement using the platform of your online futures and options broker.

Not all futures brokers online are geared for trading options on futures online. Why? Many times you may want to trade a commodity option spread, which is usually how lots of advance traders trade options on futures. If so, your online commodities futures broker must have the capabilities to handle spread options orders using limit orders.

This is especially true of the market is quite liquid as you would like it to be. Although slippage is part of trading futures and options on futures, you always want to try for the best fills. Many times to achieve good fills, you must use limit orders.

Entering a spread order for instance, using an online options trading platform should have features that you can use to trade multiple options or spread options. These spreads are sometimes called "legs"

These spread options orders go to the commodities trading floor as spreads and need to be filled as spreads to limit your risk. If you don’t use limit orders on these types of options spreads, you can intake massive slippage especially if the markets aren’t well liquid.

A feature such as the ability to create multiple "legs" of options using drop down menus on your commodity options broker. The ability to select strike prices and enter in limit orders for these legs of options; and the ability to have these advance features but keep it simplicitic enough so that your new options traders can understand how to place complicated option spreads as easy as possible.

The best one to perform this feat in my opinion is OptionsXpress™. OX allows you to trade both commodities and stocks using the same platform. It may not be the cheapest when it comes to commissios, but without the kind of features that OX offers, it could be costly if you don’t have these features to trade options properly and honestly.