How to close your FIRST physical commodity deal (mini-course)

Introduction

This tutorial aims to guide you through the process of closing your first physical commodity deal. As explained by expert trader Damien Würsten, this method will help you navigate the complexities of trading raw materials and ingredients. By following these steps, you will gain valuable insights into the commodity trading industry and learn practical strategies for successfully executing your first deal.

Step 1: Understand the Context of Commodity Trading

• Familiarize yourself with the current state of the commodity trading market.
• Recognize trends and challenges that traders face.
• This foundational knowledge will help you make informed decisions.

Step 2: Grasp the Core of Commodity Trading

• Understand the basic principles of trading commodities:
  • Supply and demand dynamics.
  • Price fluctuations and market volatility.
• Review the roles of traders and brokers within the market.

Step 3: Differentiate Between Broker and Trader

• Learn the differences between brokers and traders:
  • Brokers act as intermediaries, facilitating trades.
  • Traders buy and sell commodities directly for profit.
• Decide which role aligns with your goals.

Step 4: Analyze the Anatomy of a Trade

• Break down the components of a successful trade:
  • Entry point: When to buy.
  • Exit point: When to sell.
• Understand the importance of risk management and setting profit targets.

Step 5: Employ the Buyer-Led Start Method

• Begin your trading journey by focusing on buyers:
  • Identify potential anchor buyers who will drive demand.
  • Build relationships with these buyers to understand their needs.

Step 6: Find an Anchor Buyer

• Research and connect with key players in the market:
  • Use industry networks, social media, or trade shows.
• Ensure that the buyer is reliable and has a solid reputation.

Step 7: Understand the Current Trade Flow

• Study how commodities flow through the supply chain:
  • Identify the sources of supply and the routes to market.
• Recognize any bottlenecks or challenges that could affect your trade.

Step 8: Find a Reliable Supplier

• Source trustworthy suppliers for the commodities you plan to trade:
  • Check their credentials and past performance.
  • Evaluate their capacity to meet your buyer's needs.

Step 9: Assess Logistic Viability

• Analyze the logistics involved in your trade:
  • Consider transportation methods, costs, and timing.
• Ensure that the logistics align with your buyer's expectations.

Step 10: Validate the Product

• Verify the quality of the commodity:
  • Conduct necessary tests and inspections.
  • Ensure compliance with any regulatory standards.

Step 11: Secure Financing

• Explore financing options to support your trade:
  • Consider bank loans, private investors, or trade credit.
• Prepare a solid business plan to present to potential financiers.

Step 12: Execute the Trade

• Finalize the terms and conditions with all parties involved:
  • Confirm pricing, delivery, and payment details.
• Ensure that all legal and contractual obligations are met.

Step 13: Plan for Scaling

• Once you successfully close your first deal, consider scaling your operations:
  • Identify new buyers and suppliers.
  • Expand your product offerings or geographic reach.

Conclusion

Closing your first physical commodity deal requires careful planning and execution. By understanding the market context, sourcing reliable partners, and validating your products, you can navigate the complexities of commodity trading successfully. As you gain experience, consider scaling your efforts to maximize your opportunities in this dynamic field. For further assistance, download the worksheet provided in the video description to help you apply these steps effectively.