Futures trading, originally conceived as a tool to shield commodity producers from production-related risks, has evolved into a versatile trading avenue accessible to a diverse range of traders across various asset classes. Despite its appeal, it’s important to recognize that futures trading is inherently leveraged, requiring only a fraction of the total position value to be posted as margin. Consequently, this characteristic amplifies both potential profits and losses relative to the capital invested. Thus, gaining a comprehensive understanding of the associated risks is paramount. To aid you in this journey, we’ve meticulously examined the best futures trading platforms and brokers available in 2023, empowering you to select the one that aligns seamlessly with your trading aspirations.
Exploring the Best Futures Trading Platforms of 2023
E*TRADE – Best for Futures Education
- Account Minimum: $0
- Commission: $1.50 per contract, per side (cryptocurrency futures $2.50 per contract per side); exchange, clearing, and NFA fees also apply
Why We Recommend E*TRADE E*TRADE earns our top spot for futures education, thanks to its extensive reservoir of educational resources. These resources are thoughtfully designed to empower investors to take charge of their trading journey, with a particular emphasis on futures trading.
Pros
- Support for multiple U.S. asset classes
- User-friendly platforms
- Exceptional educational materials
- Demo account for paper trading
Cons
- No access to international exchanges
- Higher margin rates for IRA accounts
Overview Established in 1982 and acquired by Morgan Stanley in 2020, ETRADE has consistently stood as a beacon of innovation in the online brokerage sphere. While traditionally associated with retail brokerage, ETRADE seamlessly supports futures trading, making it an attractive choice for both novice and experienced traders.
Professional traders might find platforms with more features, but ETRADE’s offerings provide a robust and intuitive futures trading experience. With desktop, web, and mobile platforms, all brimming with content for traders and market enthusiasts, ETRADE ensures accessibility and education. ETRADE mandates a 50% margin for day trades and 100% for overnight positions, with slightly higher rates for IRA accounts. Despite slightly higher commission rates compared to specialized futures brokers, ETRADE’s integration of futures trading into existing accounts is a convenience many customers value.
ETRADE’s futures page is a treasure trove of information, featuring market details, commissions, and insightful articles like “Five reasons why traders use futures,” “How can I diversify my portfolio with futures?,” and “How do I manage risk in my portfolio using futures?.” These resources, coupled with links to ETRADE’s information library, serve as valuable assets for novice futures traders seeking knowledge about expiration and settlement.
Empowering Professionals with interactive brokers
Interactive Brokers
Key Specifications
- Account Minimum: $0
- Commission: Ranges from $0.25 to $2.50 per contract ($5 for crypto futures); IBKR Pro customers pay on a tiered scale based on volume, while IBKR Lite customers pay a fixed rate
Why We Recommend Interactive Brokers Interactive Brokers (IBKR) stands as the paragon of choice for professional futures traders, offering an unparalleled range of markets through a single platform. Moreover, IBKR’s trading technology ranks among the best in the realm of online brokers.
Pros
- Widest range of markets on a single platform
- Robust backtesting capabilities
- Advanced trading strategies
- Competitive commissions for high-volume traders
Cons
- May be daunting for less experienced traders
Overview Founded in 1978, Interactive Brokers was an early adopter of handheld computing devices on exchange floors. Its relentless pursuit of delivering exceptional trading tools has earned it a prestigious place among international traders. While IBKR does cater to less sophisticated traders with IBKR Lite’s commission-free stock trading, it remains dedicated to providing advanced features for professional traders worldwide.
IBKR’ s advanced features encompass backtesting of trading ideas, intricate options analysis tools, a diverse array of order methods, and support for trading algorithms using various indicators. Traders can automate entry and trade management instructions for all markets, including futures. With exemplary order execution and the ability to route equity orders, IBKR ensures traders receive the best execution possible.
When it comes to best futures trading platforms, IBKR caters to larger traders with its higher margin requirements, serving as a risk management safeguard. These higher requirements indicate IBKR’ s focus on professional traders capable of handling price swings in the underlying stock, further solidifying its position in the market.
TD Ameritrade: Your Go-To for Mobile Futures Trading
Key Specifications
- Account Minimal$ 1,500 for periphery accounts,$ 25,000 net liquidation value( NLV) for withdrawal accounts
- Commission: $2.25 per contract round turn, plus exchange and regulatory fees
Why We Recommend TD Ameritrade TD Ameritrade secures its position as the premier choice for mobile futures trading, offering an intuitive yet potent mobile trading platform.
Pros
- Robust analytical tools
- Well-crafted platforms
- Abundant educational content
Cons
- Higher commissions compared to many futures brokers
- Lower customer service ratings for futures
Overview Founded in 1975 as a full-service online broker, TD Ameritrade continued its ascent in the industry, culminating in its acquisition by Charles Schwab in 2020. While Schwab and TD Ameritrade remain distinct platforms, a seamless transition of TD Ameritrade accounts into Schwab accounts is anticipated. TD Ameritrade’s award-winning thinkorswim® platform is poised to merge into Schwab’s platform, enhancing the trading experience.
While TD Ameritrade may not offer the lowest commissions in the futures trading arena, it serves as an accessible gateway for the 11 million customer accounts under its purview. Mobile thinkorswim, replete with user-friendliness, complements TD Ameritrade’s robust educational content. TD Ameritrade’ s margin rates and commissions may be slightly higher than specialized futures platforms, but its convenience as a one-stop platform is undeniably attractive for those eager to delve into futures trading.
TradeStation: Your Haven for Desktop Futures Trading
Key Specifications
- Account Minimum: $0
- Commission$1.50 per trade per side, plus NFA, exchange, and late position freights; for micro futures, the figure is only$0.50 per trade
Why We Recommend TradeStation TradeStation claims its throne as the optimal choice for desktop futures traders, offering a robust platform replete with exceptional charting, order entry, and position management tools, all accompanied by reasonable margin rates.
Pros
- Swift platform with excellent execution
- Support for multiple asset classes
- Simulated trading
- Advanced order types and trading automation
- Free data for non-market professionals
Cons
- Steep learning curve
- Subpar customer service
Overview Founded in Florida in 1982, TradeStation is engineered for the seasoned trader, offering unparalleled charting, analytics, and trade management. With competitive commission rates and lower margin requirements for intraday futures traders, it presents a compelling option for experienced traders. The platform may have a slight learning curve, but it quickly becomes intuitive for traders with prior experience.
In addition to futures, TradeStation embraces multiple asset classes, including stocks, ETFs, cryptocurrencies, options, and options on futures, offering free data for non-professional traders. While customer service might not be its strongest suit, Trade Station’s desktop platform, replete with robust backtesting and data availability, secures its status as the preeminent choice for desktop futures trading.
NinjaTrader: The Ultimate Choice for Dedicated Futures Traders
Key Specifications
- Account Minimum: $0 to open account; $50 is the minimum margin for trading
- with per side commissions of$0.25 for micro contracts and$0.99 for standard contracts; Continuance$ 1,499 one- time payment, and per side commissions of $0.09 for micro contracts and $0.59 for standard contracts
Why We Recommend NinjaTrader NinjaTrader secures its place as the optimal platform for dedicated futures traders, offering a plethora of low-cost pricing options, competitive margin rates, and a robust array of desktop, web, and mobile platforms that support direct trading from customizable charts.
Pros
- Exceptionally low intraday commissions
- Integrated desktop, web, and mobile platforms
- Superlative charting capabilities
- 24-hour support during the trading week
- Risk-free trading practice with simulation
Cons
- Market data purchase required
Overview Established in 2003, NinjaTrader primarily caters to active self-directed futures traders. In 2023, NinjaTrader introduced cloud-based, mobile, and web platforms, enabling seamless trading across all these channels. Its platforms are free, accompanied by simulated trading options. NinjaTrader distinguishes itself with customizable charting, real-time analysis, and the ability to trade directly from charts. Moreover, it supports numerous third-party add-ons.
Ninja Trader’s margin policy is notably aggressive, with intraday margins as low as $50 for equity index E-mini futures and $500 for standard futures contracts. The platform sets higher margins for positions established around key economic data releases, serving as a risk management feature. NinjaTrader excels in supporting active traders, and it stands out as an excellent choice for dedicated futures traders who prioritize low intraday margins.
While NinjaTrader doesn’t facilitate equity or options trading directly, it enables access through other brokers’ APIs, including TD Ameritrade and Interactive Brokers. Foreign exchange trading is also possible via FXCM. Live futures trading on NinjaTrader necessitates a data subscription, adding a minimal cost. Furthermore, the platform offers 24-hour support during the trading week, cementing its status as the premier choice for dedicated futures traders.
In conclusion, best futures trading platforms represents a dynamic avenue for traders to explore, offering a range of platforms tailored to diverse needs. By aligning your trading goals with the capabilities of best futures trading platforms, you can embark on a rewarding journey through the world of futures trading. Remember that while these platforms offer numerous advantages, thorough research and an understanding of the associated risks are essential for success in this exciting arena.
Frequently Asked Questions Best Futures Trading Platforms
Q: What Are Futures Contracts?
A: Futures contracts are legally binding agreements to buy or sell a specified quantity of a commodity at a predetermined time and price. While they were initially designed for agricultural goods like wheat and corn, futures now cover a broad spectrum of commodities and financial products. Each futures contract has specific criteria, including delivery terms, timeframes, and price increments. Some futures contracts settle in cash at maturity, while others involve physical delivery, depending on the underlying asset.
Q: How Does Futures Trading Work?
A: Futures serve two primary purposes: hedging and speculation. Producers and processors use futures contracts to manage price risks associated with their commodities. Additionally, speculators participate in futures trading to profit from price fluctuations, even if they don’t intend to take physical possession of the underlying asset. Speculators play a crucial role in providing liquidity to the futures market, which now extends beyond agricultural products to encompass energy, precious metals, and various financial instruments.
Q: Getting Started in Futures Trading
A: Trading futures is relatively straightforward. Begin by selecting a reputable broker that offers futures trading services. You can either choose a broker with existing futures support or open an account with a specialized futures broker. The account setup process typically involves signing a margin agreement, obtaining broker approval, and funding your account. Keep in mind that some brokers may require a substantial account balance before enabling margin trading.
Q: How Much Capital Do You Need?
A: While futures markets offer significant leverage compared to equities, it’s wise to have more capital than the minimum margin requirements. A minimum of $10,000 is recommended, especially for overnight positions. This ensures you have a buffer against market volatility. Margin rates vary depending on the specific futures contract, contract value, and market volatility, so having extra capital can help protect your positions.