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The Series 3 Exam for commodity futures brokers is divided into two parts – futures trading theory and market regulations. Each part must be passed with a score of at least 70 percent. You will have 2 hours and 30 minutes to complete the exam. There are 120 multiple choice and true/false questions. Most people use at least 2 hours to take the exam and some do not finish in time, so make sure you monitor the time when taking the Series 3 exam.

Areas Covered in the Series 3 Exam

Part 1. The first part of the Series 3 exam covers the basics of the futures markets. You’ll need to understand futures contracts. hedging, speculating, futures terminology, futures options. margin requirements. types of orders, basic fundamental analysis. basic technical analysis and spread trading.

Most people have a hard time with hedging and options. Futures options are a problem to people who never traded them before. Stock options are very similar to futures options, so if you understand them you should be in good shape.

Part 2. The second part of the Series 3 exam consists of market regulations. Oh, the NFA likes to get tricky here. The basis of the section deals with doing the right thing for your clients. If you remember that tidbit, it should help a lot with this section. Many of these questions seem like are open for interpretation and could go either way, so make sure you understand the material beforehand and thoroughly read the questions before answering.

There are some rules, regulations and numbers that you will need to memorize for this part of the exam. Don’t take them lightly, because they don’t make this section of the exam easy for you.

Studying for the Series 3 Exam

It doesn’t take a genius to pass the series 3 exam, but you do have to study for it. The test can be very difficult for someone with limited trading knowledge or experience in the futures markets. Those who do have experience trading commodity futures also need to be well prepared, as they will likely see information that is new, especially the market regulations.

I feel that it is absolutely necessary to have a Series 3 course manual with practice exams for you to prepare properly for the exam. You can also think about prep classes before you take the exam. I never took prep classes for any of my securities exams, but some people swear by them. I feel if you are scoring at least 80 – 85 percent on your practice tests, you should be able to pass the final Series 3 exam.