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The Series 3 exam, also known as “National Commodity Futures Examination, is broken down into two sections and each require a score 70% or higher to pass. First of the two sections is “Market Knowledge” and it covers general terms, theories, hedging, and calculations used concerning futures and options on futures. The second section tests your knowledge on futures market regulations. The Series 34 exam, also known as “Retail Off-Exchange Forex Examination”, requires that you pass the Series 3 prior to testing. The 34 also requires a score of 70% or higher to pass and covers many areas including regulations, calculations, risks, and market knowledge. There are many online sources for study material for these exams, and trust me, regardless of how good of a trader you are, you will need to study for BOTH of these exams. I have personal experience using Training Consultants, who offer multiple options for material. I selected the full package which includes a complete outline of the online course so you can follow along in the book as the creator reads the PowerPoint presentation to you, practice exams after each chapter, and multiple final exams that simulate the look and feel of the real thing. The lady who reads the PowerPoint is actually pretty entertaining and does so in a way that helps you retain knowledge. Some companies offer tutoring for the courses with a money back guarantee if you don’t pass the exams first try.

 Once you’ve passed those proficiencies, you can start the registration process. At this point you will need to decide which direction you want to start in. You can register as an Introducing Broker, which will allow you to have a direct relationship with clients, while delegating the work of floor operation and trade execution to another broker, also known as a Futures Commission Merchant. As an IB, you can collect a piece of the commission that the broker gets on every trade executed in a client’s account, but it doesn’t allow you to offer advice or discretionary trading accounts on behalf of clients. You could also register as a CTA, which opens up many opportunities for income as you are then permitted to advice clients on their own trading activity, offer signal services, work as a “money manager” or PAMM manager for a broker and exercising discretion on client accounts, including bona fide hedgers. A third popular option is to register as a CPO in combination with registration as a CTA. A CPO is like a hedge fund for commodities that can be traded for profit from speculation by gathering clients to invest into one large, single account. Each of these professions has their own unique benefits and regulation requirements, but you’ll learn all about that while preparing for your exams.

I wrote this to help you navigate what can be a complex path to pursuing a career in the futures and forex markets, but also so that you can more easily spot con artists or scams. If you are ever solicited for any service in this industry, please check for registration. Even if the company or person lives in another country, in order for them to solicit, they must be registered in that potential client’s country.

Be safe and happy trading!

Andrew Marshall
Chief Compliance Officer
Fx Investment Management LLC

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