What does a Discount Futures Broker do?

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  • Written By: C. Daw
  • Edited By: O. Wallace
  • Last Modified Date: 19 June 2019
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A discount futures broker executes the orders received from the client for buying and selling the futures. Futures are also called commodities that are traded on the stock exchange. The client will instruct the discount futures broker to purchase a commodity for some future date, at today's prices. The assumption is that the price of the commodity will be higher on the future date. By selling the commodity on that date, the client will make a profit. This is different from options, which gives the client the choice to buy at a predetermined price, if he so chooses.

Futures are obligations, and the buyer must fulfill his obligation by buying the commodity that they had instructed their broker to buy in the first place. However, they can get this position liquidated prior to the specified date by selling their commodities to someone else through the discount futures brokers. In case the client wants to hold on, the broker can finalize the deal. It is not necessary for the futures broker to have a seat on the trading floor in order to trade in commodities. They may operate through another broker, who does have a seat there. The broker in the pit of the stock exchange will execute the instructions received from the discount future brokers to buy or sell commodities.


The discount futures broker rarely provides the client with any other service without an additional fee. They will also not provide any advice or market research specific to the client's needs. Discount futures broker duties will be to merely sell or buy whatever is requested. However, a full service futures broker will offer a more personalized service for the clients. They will generally keep the client apprised of the situations that could affect the trading position, and will also inform the client about the latest market research, offer the best recommendations, along with information about the balance in their accounts.

There are various commodities that can be traded with the discount futures broker. This includes precious metals, food crops, energy, foreign currency, US Treasury bonds and notes. Among precious metals, gold, silver and platinum are the most common. Food crops may include wheat, corn, oats, soybeans, cocoa, sugar and coffee. Livestock is also traded with cattle and pork. Lumber, cotton, orange juice, and so many more items can be traded with a futures broker and can be done online or at a brokerage firm. A discount online futures broker charges a lower fee, but their services are likely to be limited as well.

A discount futures brokers job description requires them to be well educated and holding a degree in economics, business or finance. Most discount futures broker jobs require registration with the National Futures Association after passing the National Commodities Futures Examinations or the Series 3 examinations. Possessing sales aptitude, research skills, and communication skills are necessary for success as a futures broker. A discount futures broker will also need to perform in a stressful environment and at a fast pace.



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