What is the commodity futures trading commission (CFTC)?

The Commodity Futures Trading Commission (CFTC) is an independent federal agency that regulates the derivatives markets, including futures contracts, options, and swaps, in the United States. Its goals include the promotion of competitive and efficient markets and the protection of investors against manipulation, abusive trade practices, and fraud.

What is commodity trading?

Commodity trading is the exchange of different assets, typically futures contracts, that are based on the price of an underlying physical commodity. With the buying or selling of these futures contracts, investors make bets on the expected future value of a given commodity.

How do I trade commodity futures?

“Traders can access these markets by having an account with a brokerage firm that offers futures and options,” says Craig Turner, senior commodities broker with Daniels Trading in Chicago. You will owe a commodity futures trading commission each time you open or close a position.

What are the different types of commodities contracts?

There are two kinds of contracts: forwards and standardized (or just “futures”). Both forwards and futures contracts bind the seller to deliver an agreed-upon amount of a commodity for an agreed-upon price at an agreed-upon date. In exchange for this obligation, the seller receives all or some payment upfront for the commodity.