Placing Futures Orders with a Commodity Broker

Call orders to your commodity broker.Before calling your commodity broker, or a futures trading desk, you should have a good idea of what you would like to do.

Naturally, if you are paying for her service you will be able to ask questions and request opinions in regards to the strategy and market speculation. You are paying for her expertise so you should be utilizing the services to the fullest. However, you also need to have an opinion and a plan of your own; after all it is your money not your broker's. 

You should also be aware of where the futures market is currently trading. Often times, commodity traders will place orders that are already "through their price", this either results in the equivalent of a market order, which is executed immediately; or it simply gets rejected by the exchange. It is also important to realize that if you are placing futures orders during times in which the market is closed you are at risk of being exposed to gapping prices on the re-open of trade.

Mis-communication causes confusion and can create costly errors for you and your futures broker. While your broker will be able to clarify your intentions and coach you along the way, it is a good idea to be aware of the proper procedures in an attempt to avoid negative consequences for both parties involved.

Calling Your Futures Broker to place a trade:

1. State your name and commodity account number
2. Specify whether you are buying or selling the futures contract, or option, and whether or not it is a spread
3. State the quantity of contracts you wish to trade
4. Specify the commodity market
5. Specify the month and, if applicable, the strike price (option order)
6. Specify the price and or order type (i.e. Limit, Stop, GTC, etc.)
7. Specify any contingency orders such as a stop loss once filled, limit orders once filled or OCO orders

* Not all commodity broker, or futures trading desks, accept contingency orders. This is something you should work out prior to the time you would like to enter the futures market.

Commodity Trade Placement Examples:

Hi this is John B. Good

"For account 36612, I would like to place an order to buy 1 September T-Bond at the market. Once filled, place a stop loss at 112'15"

"For account 36612, I would like to place an order to buy 5 July Corn 410 puts for 4 cents or better GTC"

"For account 36612, I would like to place an order to sell 3 December Live Cattle at 135.00 on a stop. Day only."

"For account 36612, I would like to place an order to sell 2 March Orange Juice at 110.00 GTC"

Tips and Tricks to Placing Futures Orders by Phone with a Commodity BrokerCorn Futures Trading

1. All futures, and options on futures, orders are assumed to be “day” orders unless otherwise specified as GTC (Good ‘Til Canceled).

2. Whether you are entering a futures contract, or exiting the position, the order is placed in the exact same manner. Nevertheless, a good commodity broker will recognize your current position to help ensure you are placing the order correctly relative to your open futures and options trades, but this type of service would be a bonus, not a guarantee, so make sure you are fully aware of your current holdings, intentions and commodity market prices.

3. Before entering a futures order with a commodity broker, it is a good idea to confirm there will be enough margin in the account to cover the desired position. Because futures markets move quickly and timely order entry is necessary to avoid unnecessary slippage or missing a trade altogether, commodity brokers will typically execute an order placed by a trader first, and assess margin later. In the case of a margin shortage, it might be necessary to offset some or all of the positions executed prior to the close of trade. Obviously, this is inefficient and potentially costly to ill-prepared commodity traders.


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