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