| Futures are also sometimes called commodities. They | | | | most discount brokers merely buy or sell what is |
| are traded on the stock exchange in the form of | | | | requested. |
| agreements made by the buyer to purchase a | | | | You can trade with a futures broker online or at a |
| commodity at some date in the future for today's | | | | traditional brokerage firm. Typically, the online traders |
| price. The buyer is assuming that the price of the | | | | will charge lower fees, but their support services may |
| commodity will be higher on that future date, | | | | be more limited. It would be beneficial for those |
| meaning that their purchase will be below market, | | | | considering the use of an online service to take the |
| and if then sold on that date, he will make an | | | | time to educate themselves on what futures are and |
| immediate profit. Futures brokers execute the buy | | | | how the futures market works prior to investing. |
| and sell orders placed by clients. | | | | A full service futures broker typically offers more |
| Futures are not the same thing as options. As the | | | | personalized service. He or she will keep clients |
| name implies, options are instruments that give the | | | | informed of news that might affect the client's |
| client the option to purchase at a predetermined | | | | trading position. The broker will keep clients apprised |
| price. Futures, on the other hand, are obligations, and | | | | of the latest market research, the balances in their |
| the buyer must fulfill that obligation. His broker may | | | | accounts, and makes recommendations. |
| liquidate his position prior to that date, if the client so | | | | Some, but by no means all, of the types of items |
| desires, by selling the client's position to someone | | | | traded with a futures broker include gold and silver, |
| else. If the client chooses to hold his investment, the | | | | food crops such as soybeans, oat, wheat, and corn, |
| broker will finalize the trade. | | | | and livestock such as cattle and pork. Cotton, lumber, |
| A futures broker may or may not have a seat on | | | | orange juice, coffee, cocoa and sugar also fall under |
| the trading floor. If he does not, he will utilize the | | | | his expertise. Foreign currency, energy, and many U.S. |
| services of the broker in his firm who does have a | | | | Treasury bonds or notes can also be handled by a |
| seat. Information received from the futures broker | | | | futures broker. |
| will be executed by his co-worker who is licensed to | | | | A futures broker usually has a degree in finance, |
| trade "in the pit" on the stock exchange. | | | | economics, or business. In addition, he or she should |
| A discount futures broker will execute the orders | | | | have communication skills, sales aptitude, and |
| received from a client. Few discount brokers include | | | | research skills, along with the ability to perform in a |
| any other services for the client, at least without a | | | | fast paced and stressful environment. Futures |
| separate fee. Those who use a discount broker will | | | | brokers must also pass the Series 3 exam, or the |
| seldom have access to any market research or | | | | National Commodities Futures Examination. They must |
| advice that is tailored to the client's situation. Instead, | | | | also register with the National Futures Association. |