Commodity Trader: Career and Salary Facts

What Is a Commodity Trader?

A commodity trader buys and sells financial products based on market predictions. They carry out trades of commodities such as gold or oil on behalf of clients and the firm they work for. Commodity traders might be employed by investment or commercial banks, hedge funds, or private equity groups. Their duties include making fast decisions about trades, contacting potential clients, and explaining available services. They also have to closely monitor financial markets, analyze the finances of companies, and review the costs and benefits of sales. The following chart gives you an overview about entering this field.

Source: *U.S. Bureau of Labor Statistics

What Would I Do As a Commodity Trader?

There are many types of commodities, and commodity traders - also called commodity brokers - may work with a specific market or a variety of products. You may need to do market research to determine the best commodities to trade and when to trade them in order to profitably buy and sell. In addition, you may spend time finding customers and cultivating relationships to broaden your client base. Commodities traders often have very stressful jobs due to the large amounts of money they may deal with.

What Type of Education Do I Need?

It is common practice for most commodity traders to have a bachelor's degree in business, international business, finance, economics or accounting in order to compete in the finance industry, but no degree is actually required to become a trader. Companies often provide on-the-job training that focuses on the products and services they offer.

What Licensing Do I Need?

While licensing for traders is required, the exact license depends on your firm and specialty. To obtain a broker's license, you must first obtain employment with a registered securities firm for at least four months before pursuing licensing. The National Commodities Futures Examination (also known as the Series 3) administered by the Financial Industry Regulatory Authority (FINRA) is the first test you should pass when entering into this field. Additionally, many states require tests depending on the area of your concentration and the types of products and services you are offering to your customers.

There are other exams that you may need to take in order to advance in this field, such as the Branch Manager Test (Series 30) and the Futures Managed Trust Test (Series 31). In addition, registration with the National Futures Association is required, along with taking continuing education courses to keep you aware of changes in the industry.

What Is the Job Outlook?

According to the U.S. Bureau of Labor Statistics (BLS), employment for all securities, commodities, and financial services sales agents is expected to grow by 4% between 2020 and 2030. As of 2020, the average yearly income in this industry was $96,540, reported the BLS.

What Are Some Related Alternative Careers?

Those interested in becoming a commodity trader might also wish to research some related alternative careers which require a similar skill set and education level. For example, financial analysts generally need to have a bachelor's degree to gain employment. They assess the performance of investments such as stocks and bonds and make investing recommendations to businesses and individuals. Financial managers work for a particular organization to ensure its long-term financial viability. They also need to have a bachelor's degree. Personal financial advisers work with individuals to give advice on financial matters such as insurance, mortgages, or retirement savings. Personal financial advisors also need to have a bachelor's degree in a related field.