How to Become a Metals Trader

Commodities markets flourish during inflationary periods. Investors turn to precious metals, in particular, for wealth protection when equity markets are under pressure. Central banks in China, India and Mexico have made massive purchases of gold bullion in recent years. Many retail investors are also balancing their investment portfolios with precious metals. The metals market boasts a broad clientele and some of the most popular investment assets available. If you want to become a metals trader, follow these guidelines.


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    Obtain a license to become a metals dealer. In order to trade precious-metals futures, you must become licensed and registered with the National Futures Association, or NFA. The NFA is a self-regulating group that strives to protect the integrity of the industry in order to keep investors' trust. Aspiring commodities brokers must complete a rigorous series of personal and professional tests in order to become licensed, including:
    • Series 3 examination: This is a 2 part written examination administered by the NFA. The first part covers basic concepts in futures markets, including futures contracts, hedges, speculation, options, analysis and other principles. The second half centers on market regulations and forging productive broker/client relationships.
    • Complete an 8-R form: The NFA requires applicants to complete the form as part of its background check procedure. You will have to provide your work history for the last 10 years and your residence history for the past 5. You must list any arrests or major disciplinary actions taken against you while you were working in a licensed capacity.
    • Undergo a background check: After you complete the 8-R form, you will need to have your fingerprints taken at a police station. They will be sent to the NFA along with your 8-R. The FBI will then conduct a background investigation on you.
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    Find work as a precious-metals trader. You will need to target companies that specialize in commodities trading. Most of the leading firms are based in Chicago, where much of the world's commodities futures trade on the Chicago Mercantile Exchange and Chicago Board of Trade. There are 2 basic ways you can work as a licensed precious-metals trader.
    • Introducing broker, or IB: As an IB, you solicit buy and sell orders on metals and metals futures. IBs work as a liaison between the client and traders.
    • Futures commission merchant, or FCM: FCMs execute all futures trades and hold the money for trading futures contracts.
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    Choose to become an independent metals broker. Independent commodities traders don't face any of the licensing and regulatory hurdles that futures traders do because their work is limited to buying and selling physical precious metals. If you want to be an independent metals broker, connect with a recognized clearing firm that provides training, continuous mentorship, and clerical support. Highly regarded metals clearing firms will adhere to industry standards.


  • The NFA offers practice exams to help candidates prepare for the Series 3 examination.

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