The Series 3 Exam for commodity futures brokers is split into elements – futures buying and selling principle and marketplace guidelines. Each element should be passed with a score of at least 70 percentage. You could have 2 hours and 30 minutes to complete the examination. There are one hundred twenty multiple choice and authentic/false questions. Most people take as a minimum 2 hours to take the exam, and a few do not finish in time, so ensure you screen time cautiously when sitting for the Series 3 examination. The check is administered by way of the National Futures Association (NFA).
Areas Covered on Series three Exam
Part 1: Basics of the Futures Markets
The first part of the Series 3 examination covers the basics of the futures markets. You’ll want to apprehend futures contracts, hedging, speculating, futures terminology, futures alternatives, margin necessities, styles of orders, basic fundamental analysis, primary technical evaluation, and unfold trading. The examination will check your know-how of idea and capacity to calculate the results of a exchange from a earnings and loss and margin perspective.
Most people have a hard time with hedging and alternatives. Futures alternatives are a problem for folks who by no means traded them earlier than. Stock alternatives are very similar to futures options, so if you apprehend put and phone options, you must be capable of translate that expertise to commodities futures.
Part 2: Market Regulations
The 2nd a part of the Series 3 exam consists of marketplace regulations. The NFA likes to get complex on this section. The underlying aim of the regulatory questions is to test the ability to behave in a proper and ethical way when it comes to clients. If you recollect that tidbit, it must help a lot with this segment. Many of the regulatory questions are open to interpretation and will cross either manner, so make certain you recognize the material in advance and carefully read and understand the questions before answering.
There are some rules, regulations, and numbers that you'll be wanting to memorize for this part of the exam. Don’t take them gently, due to the fact they don’t make this segment of the exam smooth for you. Be aware that the regulatory surroundings is continually changing and the NFA will take a look at on the brand new guidelines.
Studying for the Series three Exam
It doesn’t take a genius to skip the collection 3 examination, however you do need to examine for it. The take a look at may be very hard for someone with confined trading understanding or enjoy within the futures markets. Those who do have experience buying and selling commodity futures additionally want to be properly prepared, as they may probable see data that is usually issue to alternate, especially in terms of the marketplace regulations segment.
I believe that it is truly essential to observe with a Series three-direction guide with practice checks to prepare well for the examination. Prep instructions also are to be had in most foremost cities around the U.S. and the global earlier than you take the exam. I in no way took prep classes for any of my securities assessments, however for some human beings they can be extraordinarily helpful and the distinction between passing and failing. Once you're scoring at the least 80 – 85 percent on your exercise tests consistently, you must be capable of bypass the very last Series three exam.
Effects of Dodd-Frank
In the aftermath of the worldwide financial crisis of 2008 and passage of the Dodd-Frank legislation several years later, law has become stricter in all markets, which includes commodities. The Series 3 examination displays the adjustments within the legal guidelines. The CFTC has instituted many new rules and rules over current years. Regulation has turn out to be an iterative process, with modifications in standards and legal guidelines; the exam is continuously evolving to make certain that professionals inside the commodities commercial enterprise are informed approximately and in compliance always. The examination is given at a trying out center and is to be had via appointment everywhere in the United States and at places around the arena, typically in main towns.
While the primary a part of the examination exams for industry information from a realistic angle, the regulatory questions have come to be an area of cognizance for the National Futures Association, which administers the exam. Additionally, all those who skip the exam are required to take part in persevering with training which is to be had on-line.
As the exam is a -component affair, reading for the exam ought to be approached in the equal fashion. First, it is vital to apprehend the ins and outs of the commodities futures and options enterprise. Second, it's miles critical to realize completely the rules overlaying all professionals within the business. Make positive that you buy a cutting-edge route as guidelines alternate regularly. There are observe courses to be had on the net for self-instruction for the exam. For the ones greater snug in a classroom setting, numerous groups offer prep guides that you could attend in individual. The Series-3 examination is not difficult for folks that look at but taking it with none coaching is a recipe for failure.