Things You'll Need:
- Checkbook Wallets
- Telephones
- Computers
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Step 1
Understand the nature of agricultural commodities futures: they are contracts to buy or sell corn, wheat or other commodities at a specified time and price.
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Step 2
Decide how much you can afford to lose. Futures are highly complex and risky, and because trades are done on margin, investors stand to lose far more than they have on account.
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Step 3
Contact a broker who is registered with the National Futures Association (1-800-621-3570). Individuals can't trade futures; they must use registered brokers.
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Step 4
Ask about the broker's trading methods and style. Find a broker whose methods suit your views and interests.
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Step 5
Consider allowing the broker to make trades on your behalf in a "discretionary" account. If you set up a nondiscretionary account, you must authorize all trades personally, which can be time-consuming and tricky.
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Step 6
Set limits on the amount you will invest and on the amount of loss you are willing to accept.
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Step 7
Establish a margin account. This is cash you will deposit with the brokerage. The margin usually will be only a small percentage of your actual position; therefore, losses can far exceed the amount in your account.
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Step 8
Consider joining a commodity pool instead of trading through your own account. You and other investors buy a stake in the pool, and the broker buys and sells futures on behalf of the group.
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Step 9
Be prepared to boost the amount in your margin account on short notice. If your losses exceed specified limits, the broker might close out your positions.
