Today my colleagues and I met with two derivatives locals i.e. individual dealers who trade for their own derivatives position with their own money. They are attached to a trading participant (derivatives broker) in terms of using the TP's office space and facilities. They do not need to pay any rental of office and computer as well as other office equipment. Their payment is in the form of minimum trading volume per month. In other words, the TP is making money from commission earned from their trading activities.
They are palm oil traders and trade based on fundamental analysis mainly but also look at technical analysis for major change of trend. Fundamental analysis is very important for trading commodity contracts as many fundamental factors are affecting the movement of price on a daily or even intraday basis. Some of the critical factors are supply and demand in terms of production, import and export of certain countries, seasonal factors, mother nature, alternative or substitute product, government policy and so on.
Personal development is very critical as well such as learn to read technical and fundamental indicators, computer skills such as algo trading, charting, and other form of programming. Networking is also very important as traders can share view and information. Two heads are always better than one. Of course, our visit to them enable us to gain lots of insight in the trading world as well as the commodity industry.
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