Commodity Trader: Job Description, Duties and Requirements
Commodities traders or brokers purchase and sell product and securities futures on the exchange markets. Traders manage accounts for clients and may be responsible for providing financial and investment advice. Depending on the type of commodities traded, the level of authority and particular job functions, one or more licenses and registration may be required.
Job Description of a Commodities Trader
Commodity traders buy and sell orders from customers through a firm's trading department and may provide investment advising services. Traders typically find work at discount and full-service brokerage firms, investment banking institutions or financial management companies. Commodities traders may be paid on commission and handle a variety of financial instruments, such as stocks, bonds, mutual funds and derivatives. The types of commodities a trader may manage include currency and financial options, agricultural futures, metals and energy sources.
Commodities Trader Duties
Commodities brokers must typically keep a keen eye on the market in relation to product and investment pricing, trends and demand. Some traders receive purchase and selling instructions, meeting with other commodities traders to negotiate transactions. Others may take client orders over the phone, performing deals via computer to a firm's trading department or directly on the floor of a stock exchange. Additionally, commodities traders provide financial advice, often meeting with clients to plan, review or update an investment portfolio.
According to the U.S. Bureau of Labor Statistics (BLS), the employment of securities, commodities and financial services sales agents is predicted to increase by 11% between 2012 and 2022, which is about average compared to all occupations. In May of 2013, the BLS estimated that these financial professionals received a median yearly salary of $72,640.
Requirements of a a Commodities Broker
Academic requirements of commodities and securities traders are based solely on industry standards and individual employer requirements. Typically, a minimum of a bachelor's degree is recommended, though master's and doctorate degree-holders are not uncommon. Applicable fields of study at both the undergraduate and graduate levels include economics or finance, though programs emphasizing agriculture, banking and other social sciences may offer a strong background in specific commodities trading. Students may receive practical experience via internship opportunities at brokerage houses and investment firms through a school's relevant degree program.
Licensure and Registration Requirements
According to the Financial Industry Regulatory Authority (FINRA), registration with the organization is required to give advice, buy, sell or exchange commodities. While there are no prerequisites, applicants must be sponsored by a brokerage or investment firm. FINRA offers several levels of licensing dependent on the type of trading and the services provided by the trader. Exhaustive testing is required for each type of transaction.
Per the Commodity Exchange Act, aspiring commodities traders must take the National Commodity Futures (Series 3) examination and register with the National Futures Association (NFA) (www.nfa.futures.org). Additional examinations and registration may be required for traders participating in currency exchange, investment advising or solicitation. Those responsible for management of commodities and futures traders are also subject to further testing.
Continuing Education Requirements
To maintain a FINRA license, commodities traders must participate in continuing education programs offered by the organization. Classes may be provided through universities, regional and Internet-based workshops and training events, conferences and online learning. A minimum of 12 continuing education hours must be completed every three years. Registration through the NFA does not require continuing education, though traders must keep updated records.
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