How to start?
- commodityexpose
- Jun 2
- 3 min read
Updated: Jun 11
If you need a more concrete approach and speed up the learning process while avoiding unnecessary mistakes, it's recommended that you take a look at the services that we offer under "Services & Pricing" at the top of the page in the menu.
Summary
Requirement | Description |
Knowledge | Learn futures, risk, and indicators |
Broker | Choose a licensed futures broker |
Capital | Use margin requirement from your broker and your performance to know the capital needed for your to start. |
Platform | Trading software with charting tools |
Discipline | Stick to strategy and risk rules |
Detailed version
1. Understand What Commodity Trading Is
Commodity trading involves buying and selling raw materials or primary agricultural products such as:
Energy: Crude oil, natural gas
Metals: Gold, silver, copper
Agriculture: Corn, soybeans, wheat, coffee
Livestock: Cattle, hogs
You can trade futures contracts, options, ETFs, CFDs, or physical commodities, depending on your strategy and capital.
2. Learn the Basics
You need to understand:
Futures contracts: Agreements to buy/sell at a future date at a predetermined price.
Tick size & tick value: Minimum price movement and how much it’s worth.
Margin & leverage: Amount needed to control a position (e.g., $5,000 controls $50,000 with 10x leverage).
Settlement: Most contracts are cash-settled or physically delivered.
Resources:
CME Group Education Center
Books like “Trading Commodities and Financial Futures” by George Kleinman
YouTube or professional trading courses
3. Choose a Market or Instrument
Pick a focus based on interest, volatility, and capital requirements:
WTI Crude Oil (CL)
Gold (GC)
Corn (ZC)
Silver (SI)
Natural Gas (NG)
You can also trade mini or micro contracts (e.g., Micro Gold, Micro Crude) with lower capital needs.
4. Select a Broker(Brokers listed are not the only ones available nor are they recommendations so it's up to traders to pick the one that they like best)
Choose a commodity futures broker offering:
Access to exchanges like CME, ICE, or NYMEX
Competitive commissions & margin rates
Good trading platform (e.g., NinjaTrader, Thinkorswim, Interactive Brokers)
Strong risk management and customer support
5. Open and Fund a Trading Account
Complete KYC and identity verification
Choose the account type (individual, corporate, retirement)
Fund with sufficient margin capital for the instrument of your choice
Trade in a simulator until you understand the software fully and can apply your strategy without making mistakes
Trade the Micro of the instrument of your choice if available after transferring from simulator to live account in order to make sure that there's no big discrepancy between your results from simulator and live account; any mistake made will be less expensive than trading the standard contract.
6. Use a Demo Account First
Most brokers offer paper trading to simulate real trades without risking money. This lets you:
Understand order types (market, limit, stop)
Practice technical analysis and execution
Test trading plans. DO NOT TRADE SOMETHING YOU HAVE NOT TESTED AND TRADED IN A PAPER ACCOUNT FIRST!
7. Learn to Read Commodity Charts
Use technical analysis tools such as:
The different chart types and the data that they show
Candlestick patterns
Moving averages (MA, EMA)
Relative Strength Index (RSI)
MACD, Bollinger Bands
Support and resistance levels
Also study fundamental drivers, like:
Supply & demand reports
USDA reports (for agri)
EIA inventory data (for oil/gas)
Geopolitical and weather factors
8. Develop a Trading Strategy
A strategy includes:
What to trade
Entry and exit rules
Risk/reward ratio
Stop-loss and take-profit levels
Examples:
Trend-following
Mean reversion
Breakout trading
News-based trading
9. Manage Your Risk
Risk management is essential to survival:
Use past performance from your trades taken in simulator to know max dollar/percentage loss per day
Use stop-loss orders
Do not trade strategies/techniques you have not tried/tested in a simulator before!
Avoid overleveraging
10. Stay Informed and Keep Improving
Keep a trading journal
Mark down the mistakes made and the suggested solution(s) to avoid such mistakes and practice those in a simulator in order to build muscle memory
Review trades regularly(Take screenshots of the charts you used to take the trade and any other piece of information used at the time of the trade.)
Learn from losses and adapt