Commodity trader

Commodity trader article illustration

Description

Commodity traders use negotiation techniques to sell and buy physical goods and raw materials such as gold, cattle, oil, cotton and wheat on the trading floor. They receive and implement purchasing and selling instructions and negotiate the terms of sale and delivery of commodities. Commodity traders do research about market conditions of specific commodities, their price trends and demand in order to inform their employers, they make bid offers and calculate the cost of transactions.

The duties of a commodity trader include, but are not limited to:

  • Tracking the market performance at domestic and international scales
  • Buying and selling goods at a price the client agrees on
  • Providing advice to clients about buying, selling or investing
  • Analyzing various reports about the market
  • Developing strategies for investment
  • Visiting shippers, producers or retailers in domestic and international settings
  • Operating tools and platforms for trading
  • Understanding and developing futures contracts
  • Communicating with clients throughout the trading process
  • Maintaining professional relationships with clients

Other titles

The following job titles also refer to commodity trader:

commodity handler
commodities traders
commodity exchange floor traders
commodities trader
commodities trading managers
commodity exchange floor trader
commodities trading manager
commodity handlers

Minimum qualifications

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.

Numerous traders eventually get a master’s degree in business administration (MBA), which is often a requirement for high-level positions in the securities and commodities industry. Because the MBA exposes students to real-world business practices, it can be a major asset for jobseekers. Employers often reward MBA holders with higher level positions, better compensation, and large signing bonuses.

ISCO skill level

ISCO skill level is defined as a function of the complexity and range of tasks and duties to be performed in an occupation. It is measured on a scale from 1 to 4, with 1 the lowest level and 4 the highest, by considering:

  • the nature of the work performed in an occupation in relation to the characteristic tasks and duties
  • the level of formal education required for competent performance of the tasks and duties involved and
  • the amount of informal on-the-job training and/or previous experience in a related occupation required for competent performance of these tasks and duties.

Commodity trader is a Skill level 3 occupation.

Commodity trader career path

Similar occupations

These occupations, although different, require a lot of knowledge and skills similar to commodity trader.

futures trader
commodity broker
foreign exchange trader
foreign exchange broker
securities underwriter

Long term prospects

These occupations require some skills and knowledge of commodity trader. They also require other skills and knowledge, but at a higher ISCO skill level, meaning these occupations are accessible from a position of commodity trader with a significant experience and/or extensive training.

securities analyst
investment analyst
business economics researcher
investment fund management assistant
corporate banking manager

Essential knowledge and skills

Essential knowledge

This knowledge should be acquired through learning to fulfill the role of commodity trader.

  • International trade: The economic practise and study field that address the exchange of goods and services across geographic borders. The general theories and schools of thought around the implications of international trade in terms of exports, imports, competitivity, GDP, and role of multinational companies.
  • Economics: Economic principles and practices, financial and commodity markets, banking and the analysis of financial data.
  • Financial markets: The financial infrastructure which permits trading securities offered by companies and individuals govern by regulatory financial frameworks.
  • Commercial law: The legal regulations that govern a specific commercial activity.
  • Financial jurisdiction: Financial rules and procedures applicable to a certain location, whose regulatory bodies decide on its jurisdiction

Essential skills and competences

These skills are necessary for the role of commodity trader.

  • Analyse market financial trends: Monitor and forecast the tendencies of a financial market to move in a particular direction over time.
  • Perform financial risk management in international trade: Evaluate and manage the possibility of financial loss and non-payment following international transactions, in the context of foreign exchange market; apply instruments like letters of credit.
  • Analyse economic trends: Analyse developments in national or international trade, business relations, banking, and developments in public finance and how these factors interact with one another in a given economic context.
  • Negotiate with stakeholders: Negotiate compromises with stakeholders and strive to reach the most beneficial agreements for the company. May involve building relationships with suppliers and customers, as well as ensuring products are profitable.
  • Negotiate sale of commodities: Discuss client’s requirements for buying and selling commodities and negotiate their sale and purchase in order to obtain the most beneficial agreement.
  • Analyse financial risk: Identify and analyse risks that could impact an organisation or individual financially, such as credit and market risks, and propose solutions to cover against those risks.
  • Handle financial transactions: Administer currencies, financial exchange activities, deposits as well as company and voucher payments. Prepare and manage guest accounts and take payments by cash, credit card and debit card.

Optional knowledge and skills

Optional knowledge

This knowledge is sometimes, but not always, required for the role of commodity trader. However, mastering this knowledge allows you to have more opportunities for career development.

  • Financial products: The different types of instruments that apply to the management of cash flow that are available on the market, such as shares, bonds, options or funds.
  • Banking activities: The broad and continuously growing banking activities and financial products managed by banks ranging from personal banking, corporate banking, investment banking, private banking, up to insurance, foreign exchange trading, commodity trading, trading in equities, futures and options trading.
  • Financial forecasting: The tool used in performing fiscal financial management to identify revenue trends and estimated financial conditions.
  • International commercial transactions rules: Pre-defined commercial terms used in international commercial transactions which stipulate clear tasks, costs and risks associated with the delivery of goods and services.
  • Statistics: The study of statistical theory, methods and practices such as collection, organisation, analysis, interpretation and presentation of data. It deals with all aspects of data including the planning of data collection in terms of the design of surveys and experiments in order to forecast and plan work-related activities.
  • Actuarial science: The rules of applying mathematical and statistical techniques to determine potential or existing risks in various industries, such as finance or insurance.

Optional skills and competences

These skills and competences are sometimes, but not always, required for the role of commodity trader. However, mastering these skills and competences allows you to have more opportunities for career development.

  • Trace financial transactions: Observe, track and analyse financial transactions made in companies or in banks. Determine the validity of the transaction and check for suspicious or high-risk transactions in order to avoid mismanagement.
  • Maintain records of financial transactions: Collate all the financial transactions done in the daily operations of a business and record them in their respective accounts.
  • Negotiate sales contracts: Come to an agreement between commercial partners with a focus on terms and conditions, specifications, delivery time, price etc.
  • Negotiate price: Arrange an agreement on price of products or services provided or offered.
  • Operate financial instruments: Work with financial instruments such as stocks, bonds, mutual funds and derivatives.
  • Forecast economic trends: Gather and analyse economic data in order to predict economic trends and events.
  • Negotiate buying conditions: Negotiate terms such as price, quantity, quality, and delivery terms with vendors and suppliers in order to ensure the most beneficial buying conditions.

ISCO group and title

3324 – Trade brokers


References
  1. Commodity trader – ESCO
  2. Securities, Commodities, and Financial Services Sales Agents : Occupational Outlook Handbook – U.S. Bureau of Labor Statistics
  3. Commodity Trader: Career and Salary Facts – Learn.org
  4. What Is a Commodity Trader | Indeed
  5. Featured image: By Katrina.Tuliao – Flickr, CC BY 2.0
Last updated on January 4, 2023

What do you want to do with this job?

You will be brought to the forum page

Requires a business account

Requires a business account

Thinking about your next career move?

Answer a few questions about your jobs and education, and we’ll give you suggestions about your best possible career move. It’s completely free!