Which Commodity Broker Is Best For You?

Commodity Brokers header

How Should You Choose an Online Broker?

The era of online trading has produced an embarrassment of riches for traders and traders. Hundreds of online trading firms operate in virtually every country in the world. Many of these firms promise low fees, free introductory trades and great customer support. Some firms promote their research and educational capabilities, while others lure customers with generous leverage or a large menu of products to trade. So how can traders sift through the seemingly endless list of brokers and features?

We try to sort these issues out by reviewing the top online brokers and comparing their features. Our goal is to highlight both the advantages and disadvantages of each of the platforms and let our readers decide which platforms best suit their goals and styles of trading.

Regulation: The Most Important Issue of All

The most important consideration in choosing an online broker is whether it’s regulated by a credible governmental agency with real enforcement powers.

A regulated broker must adhere to the rules established by the agency or agencies that govern it. These rules usually include important customer safeguards such as segregating customer trading funds in separate accounts, submitting regular audits to regulators and maintaining adequate capitalization.

Regulated brokers register with government agencies that issue them licenses. If the firms fail to adhere to the regulators’ standards, the regulators can revoke these licenses. Many regulatory agencies use fees from license to fund compensation schemes for traders. These schemes enable customers to recover funds in the event that a brokerage firm becomes insolvent.

An trader who opens an account with an unregulated broker is taking serious, unnecessary risks. An unregulated broker doesn’t answer to any authorities and, therefore, can do whatever it wants with customer funds. Since these firms operate online, it can be almost impossible to track them down if they defraud customers.

Prior to opening an account, traders should check a brokerage firm’s website for the licenses and registrations held by it. Reputable brokerage firms will provide the license numbers so traders can verify their authenticity with regulators.

Traders should beware of claims of regulation by bogus agencies. If an agency lacks an operating history, independence and the authority to fine or sanction offenders, then it probably offers no protections to traders. If a broker has no agencies that regulate it, traders should avoid opening an account with it at all costs.

The major agencies that regulate online brokerage firms include the following:

Regulatory Agencies

CountryAgency 
AustraliaAustralian Securities and Investments Commission (ASIC)
BelizeInternational Financial Services Commission (IFSC)
European UnionCyprus Securities and Exchange Commission

The Markets in Financial Instruments Directive
(governs the harmonization of securities laws in the European Union)
(CySEC)


(MiFID)
GermanyFederal Financial Supervisory Authority(BaFiN)
JapanFinancial Service Agency (FSA)
New ZealandFinancial Markets Authority(FMA)
South AfricaFinancial Services Board (FSB)
SwitzerlandFinancial Markets Supervisory Authority(FINMA)
United KingdomFinancial Conduct Authority(FCA)
United StatesCommodity Futures Trading Commission
Financial Industry Regulatory Authority
National Futures Association
Securities and Exchange Commission

(CFTC)
(FINRA)
(NFA)
(SEC)


What Features Matter When Choosing an Online Broker?

There is no one online broker that’s the best fit for every trader. Simplicity and ease of use may be important to some traders, while other traders may want low fees or the ability to employ a lot of leverage. Still, others may want the ability to trade the greatest number of products, create advanced charts or access reliable customer service any time of day.

Our reviews of online brokers cover the following 10 topics:

Broker Review Topics

 TopicQuestions We Answer
#1ReputationWhat awards, accolades and publicity has the firm received from the trading community?
#2HistoryWhen was the firm founded?
What were the major milestones in its history?
#3Operating TerritoriesWhich countries does the broker serve?
#4SafetyWhich agencies regulate the broker?
How do these agencies help protect customers?
#5ProductsWhat are the specific financial products traders can trade on the platform?
#6AccountsWhat types of trading accounts are available?
What are the features of each type of account?
#7FeesWhat spreads, fees and commissions does the broker charge its customers?
#8DepositsWhat is the minimum deposit required to open an account?
What methods can traders use to fund their accounts?
What deposit and withdrawal restrictions, if any, does the broker impose on its customers?
#9PlatformWhat are the most important features of the trading platform?
What does the platform look like?
What educational materials (e.g., videos, reports and tutorials) does the broker provide to traders?
Does the broker provide demo accounts and, if so, are there restrictions on using these accounts?

#10PromotionsDoes the broker offer promotions such as signup bonuses for new account holders?

We reviewed well-known brokerage firms with extensive product offerings and broad geographical operating territories. All of the firms we reviewed are regulated by one or more recognized and well-regarded government regulatory agencies.

Traders can read our reviews to decide which brokers offer the specific features most important to them. In addition, all of these brokers have detailed websites that can answer many of your questions.

The table below outlines the main features of each of the brokers we reviewed:

BrokerOur RatingThe GoodThe BadSign upRead our expert review
plus500logo
www.plus500.com
Easy to use platform and leading risk management tools.No phone support, only email and live chat.Start TradingPlus500 Review

www.eToro.com
Easily copy leading traders.$25 withdrawal fee is quite high compared to other brokers.Start TradingeToro Review
markets.comlogo
www.markets.com
Proprietary technical analysis features.Limited fundamental analysis features.Start TradingMarkets.com Review
Nadexlogo
www.Nadex.com
Allows US customers.Limited markets offered.Start TradingNadex Review
FXCM_logo
www.FXCM.com

N/AN/ANot recommended at this time. Please read the review.FXCM Review

Here is a brief overview of each of the brokers we reviewed:

  1. Plus500
  2. eToro
  3. Markets.com
  4. Nadex
  5. FXCM

Which Brokers Do We Recommend?

Plus500

This leading global contract for difference (CFD) brokerage firm provides traders with an easy-to-use platform and superb risk management tools. Plus500 account holders can trade a large number of CFDs on a variety of different asset classes including indices, commodities, forex, cryptocurrencies, shares and options. The firm offers a free demo account and access to 24/7 email and live-chat support in several languages. Plus500 operates in more than 50 countries.

eToro

 

eToro was the first online broker to establish a social trading platform. The firm was also the first to allow traders to easily copy the trades and strategies of leading traders on its platform. eToro, which was founded in 2006, offers CFDs on commodities, cryptocurrencies, stocks, indices and ETFs. The firm offers traders a demo account and access to 24/5 customer support in several languages. eToro has about 5 million customers worldwide and operates in more than 60 countries.

Markets.com

markets.com screenshot of website

This online broker offers retail customers CFD products on a variety of asset classes including bonds, commodities, cryptocurrencies, forex, indices, ETFs and shares. The firm is known for its impressive menu of financial products and its innovative trading platform. Markets.com offers its account holders access to sophisticated and proprietary technical analysis features and 24/5 customer support via email or live chat. The firm, which was founded in 2007, operates in most countries across the globe. Playtech plc, a publicly traded software company, owns Markets.com.

Nadex

Nadex (the North American Derivatives Exchange) is the first regulated exchange for trading binary options and spreads on forex, commodities, stock indices and economic events. The firm is the only binary trading firm regulated by the CFTC, and, therefore, is the only legal way for US citizens to trade binary options. Nadex, which was founded in 2004, operates in more than 40 countries. The company boasts a 99.9% uptime rate for its platform. Nadex offers customer support six days a week via phone or email.

Lawrence Pines is a Princeton University graduate with more than 25 years of experience as an equity and foreign exchange options trader for multinational banks and proprietary trading groups. Mr. Pines has traded on the NYSE, CBOE and Pacific Stock Exchange. In 2011, Mr. Pines started his own consulting firm through which he advises law firms and investment professionals on issues related to trading, and derivatives. Lawrence has served as an expert witness in a number of high profile trials in US Federal and international courts.
Start Trading Today atPlus500.com