FxBrokerReviews.org – A later commitment to acquire or sell a specific asset or product is known as a futures contract. The initial purpose of futures markets was to assist farmers and other resource producers in hedging (offsetting or reducing) potential hazards. The “futures” in futures markets originate from this one.
Ten of the many online brokers we reviewed for our 2022 Review provide futures trading. Forex Broker Reviews evaluated pricing (such as contract fees and leverage rates) and the platforms themselves, including trading systems, information, accessibility, and offered order types, to identify the top futures trading platform.
What Is Futures Trading?
Buying futures trading is a way to predict how much an asset or product will cost in the future. An investor can purchase or sell an item using a futures market at a predetermined date and price.
How Much Does Trading Futures Cost?
For most commodities, futures trading costs are less than one dollar, but they can reach as high as $10 per transaction when trading futures contracts. Before choosing a futures trading platform, it’s crucial to consider all costs. In addition to royalty, some brokers charge customers platform and market information subscriptions.
To trade futures markets, a separate minimum deposit is needed with each online broker. The minimum payment for most online brokerages is lower than $1,000. Before engaging in futures trading, customers must apply for clearance to engage in financial markets.
How Can I Trade Futures?
Futures trading calls for a funded online broker profile with approved credit. Once everything is established, do your homework to choose the commodity you would like to deal with, complete out purchase ticket, and then execute the transaction.
Additional information: Note that the reserve requirements for each futures contract vary. Additionally, make essential to understand whether the agreement is genuinely handed or paid in cash when it expires. If users keep the stake until the contract’s expiry date for deals with distribution upon maturity, customers may be responsible for paying the extensive trading value (plus delivery costs).
Is A Margin Account Required To Trade Futures?
Yes, trading futures with an online broker requires having a margin account. Based on the trading instrument, different margins will be needed. For instance, margin requirements are typically lower for S&P 500 e-minis because they are the most traded and liquid futures instrument in the United States.
How Is Margin Determined While Trading Futures?
When your account is created, you must ensure you have adequate money to cover any margin needs (i.e., capital and operating margin). Ordinarily, each contract’s reserve need is a percent of the underlying asset’s price.
For more information, see Variation Margin. If the commodity’s price fluctuates significantly, customers may be required to post additional collateral or risk having the contract terminated prematurely. Hedgers reduce risk by shifting it to the users as speculation; therefore, trading as a speculator differs from trading as a general hedger or supplier of the asset.
Strengths And Drawbacks Of Trading Futures
- Increased market hours: The hours of operation for futures markets are far longer than those for the stock market. For instance, the futures markets at CME are accessible six days a week for around 23 hours each day.
- Many resources at our disposal: To speculate on the price of crude oil? Citrus juice? Bitcoin? Beverage? Euros? Do you want to forecast how interest rates will move? These are a few of the commodities for which futures contracts are available.
- Ample leverage: Much more so than the share market, the margin is a common element of futures trading. It is possible to control a sizable principal amount with a modest capital investment, which can be advantageous or disadvantageous.
- No lapse of time: Time decay, a feature in options trading, is the gradual loss of value experienced by options contracts as they approach maturity. There is no temporal decay since futures contracts show the actual value of the stock rather than the right to purchase it.
- Threat: The dangers involved in trading futures differ entirely from those involved in trading stocks or choices. Suppose you don’t understand what you’re doing while trading futures; it can be effortless to make a loss.
- Global events: Futures values can be affected by outside factors, and in some situations, this can result in significant losses for speculators. For instance, when oil demand fell midway through the COVID-19 epidemic, there was not enough room to store all of the oil indicated by futures contracts. Therefore, at one point, oil futures traded at a loss.
- Elevated leverage: Leverage can have beneficial or adverse effects, as was already mentioned. High power can translate tiny fluctuations in asset values into enormous movements in futures traders’ portfolios while exposing you to a high dollar worth of assets.
Is Trading Futures Risky?
Yes, trading futures comes with consequences and is not suited to everyone. In addition to using leverage (margin) and highly charged commodities, it also runs the risk of obligating the trader to produce or receive a shipment of the underlying securities and to settle the total trade value.
You can avoid having to personally deliver results or pay for the trade value in the currency as long as you cancel your trade before something expires.
Which Brokers Enable Trading In Futures?
Although the CFTC regulates over 334 brokers, most are not designed for ordinary customers. Ten future broker lists that assist regular investors were identified for our 2022 Review:
Both inexperienced and experienced traders can benefit significantly from NinjaTrader’s excellent trading environment. The vast array of available technical indicators is ideal for beginners using a sample account, and when you sign up, you can even get a 2-week trial version.
If you wish to use NinjaTraders software, you may lease the program or acquire it for nothing when establishing a trading account. Even if you download the apps for free, you will have exposure to graphs, virtual trading, and market research fundamentals of futures trading.
With the help of the distinctive trading platform Tickmill, you may trade in various assets, including futures on commodities, indices, currency, rare metals, and more. Signup for a Pro or Classic profile with a minimum investment of USD 100/GBP/EUR when you visit Tickmill to invest in futures. To gain access to MT4 or MT5, you must first authenticate your identification and finance the account. You can purchase whatever futures you wish to include in your trade.
Additionally, Tickmill offers $30 reward points just for registering. As you stock your account with commodities and other products, you may also receive monetary benefits for trading or sign up to participate in the Tickmill IB competition and win stuff.
Do you trade futures regularly? Consider Tradovate first. In terms of cloud-based services and commission-free trading, Tradovate takes a Streaming services strategy. You’ll receive a smooth, enhanced experience that you can use on any platform anytime.
The first online futures trading brokerage, Tradovate, combines flat-rate subscription fees with trimming innovation. You can access the technologically focused broker on any system and screen resolution.
4. Discount Trading
Several methods are available to futures traders seeking discounted rates, but few offer trading as easy and economical as Discount Trading. To begin with, Discount Trading provides not only reasonable commissions but also some of the lowest trading costs of any futures broker now available!
Your charge will be just 49 cents per party if you make one future deal per month. Nevertheless, your charge will only be 19 cents if you are an aggressive trader who flips more than 50,000 futures per month.
5. Optimus Futures
An affordable futures broker oriented toward both amateur and seasoned traders, Optimus Futures.
For those seeking to trade CME Group’s micro contracts with accessible venues and low-profit margins, Optimus Futures is the perfect option, thanks to its cheap account minimums, quick account confirmations, and simple financing and withdrawal processes. Buyers of Optimus have access to a team of professionals who are committed to helping you with your trading necessities at every stage, from opening an account and setting up your platform to providing continuous education and information to help you understand more about the futures markets through books, videos, webcasts, and publications.
6. Generic Trade
Generic Trade charges a flat commission of $0.59 per trade, which is among the cheapest of any futures traders. Generic Trade maintains lower pricing than other futures brokers by doing away with the requirement for sales associates and brokers.
According to the company, contemporary traders only require a firm to carry out their deals at the lowest price because they already have access to many data. Additionally, it doesn’t have a capacity of at least account balance limits, making it accessible to the majority of traders.
TradeStation provides two main types of investments: the entry-level TS GO account for novice traders and the complete TS Select account for more experienced traders seeking a full complement of tools and analysis choices.
A TS GO account can be opened with any amount of money in it. A $2,000 minimum deposit is required for TS Select accounts.
8. Interactive Brokers
For trading futures, Interactive Brokers provides outstanding, aggressive fees. Essentially, Interactive Brokers offers a lower margin fee in the market, ranging from 1.91 percent to 1.41 percent (the least rate is for customers with $1 million with Interactive Brokers). The price for trading futures and futures contracts is $0.85. For experienced traders, it provides an entirely customizable trading interface with more than 50 trading platforms.
9. TD Ameritrade
TD Ameritrade has a modest $1,500 account minimum requirement but charges $2.25 per side of each contract (plus exchange and regulatory fees). With simulated trading options, more than 60 futures contracts, or a bare everyday trade margin of 25% at TD Ameritrade. There is no denying that it offers several cutting-edge features while allowing for quick order entry and execution.
10. Charles Schwab
When you visit Charles Schwab’s website, it’s no wonder that the name Charles Schwab is often used interchangeably with the word “learning.” Admittedly, the title “Expert Advice” is bold and clickable on the website. If you trade futures, Schwab Trading Perspectives can be helpful, and the aggressive trader futures part of Schwab offers a wealth of possibilities to learn additional.
Benefits Of The Top Platforms For Trading Futures
Not all futures brokers will mark each of these requirements. However, the following are vital qualities to examine when you search for the top futures broker:
There are many futures commodities, low charges, a prosperous trading platform, and super customer care.
- Low (or no) account thresholds.
- Educational materials, particularly if you’re a beginner to futures trading.
- Other wonderful investment aspects you enjoy (like small shares of stock or no-transaction-fee common funds).
In conclusion, a futures broker feature important to one trader may be less or even more important to another, relying on the trader. For instance, every trader on a system may have a different preference. Not every trader will have the same choices for a broker’s platform. (Note that not every artist uses the same pen, and not every trader does. Some individuals don’t require all the lights and bells.)
Those annoying commissions and margin fees are possibly one item that generates the most warning signs. It might not be brilliant to select a broker based on price, but is it simple to overspend? Knowing precisely how much money will be made throughout each trade upfront is crucial.
Ultimately, the quality of the broker’s customer support can decide the outcome of a transaction. Please find the most refined futures brokers platform for you using our recommendations after determining your priorities.