Looking more for education than personal advice. I have always had an interest in commodities...but this market is intimidating lol. They do seem more simple and appealing than options: no theta, ruled primarily by supply & demand, taxed slightly better, etc... so just for the sake of conversation, how much money would one need to comfortably get started trading commodity futures?
Whatever contract(s) you trade, there will be plenty of leverage relative to margin. Suggest you not be thinking "maximum leverage possible", but rather "enough capital to sustain some degree of adverse moves against your positions". (Personally, I'm a long time trader... rarely leveraged even 2:1 on capital... and I'm still here.) High leverage is great when it works in your favor. However it can be "devastating in a blink" when it goes against. FWIW...
take the most popular crude, overnight at best is around $9k in ib, adding some 50% for drawdown, you can comfortably trade without losing sleep but you can loss money.
%% Most any amount one is prepared to lose; that leverage is great 'til on wrong side of it. But handy for checkin' the price of silver or Es benchmark
Contango aka arbitrage between time period is actually doable with a really small margin account if your broker sees it as market neutral. However margins increase rapidly by factor 2-4 if there is turmoil, so be aware.
Could dabble in the commodity ETFs until proven profitable. Most aren't good for daytrading. Quite a few to choose from. https://seekingalpha.com/etfs-and-f...SdS3_zI8r71P1e77BaiT6JVKfu0HNMgBoCdzEQAvD_BwE
my thoughts exactly. Too many horror stories of people getting wiped out instantly due to leverage. (long) Options have too much of this against them....small moves in the underlying can destroy your position so fast its not even worth rolling or closing most of the time. I am trying to get away from this.
It dependson the trader. Education, skill level, risk tolerance, discipline, etc. There are plenty of free educational resources to start learning how to trade futures. Micro futures are making it more accessible for traders with less capital. You can start learning on a simulator affordably. Generally, it seems the challenging part about trading small accounts(<$5,000) is the psychological impact created from leveraged drawdowns. I’ve known several futures brokers to say they wouldn’t try with less than $25,000. Probably for psychological reasons, butit depends. The correct answer depends on you.