Best Futures Broker
If you are looking to enter the exciting world of trading futures contracts, the first thing you will need to do is find the best futures broker. Costs, education, research, and a whole plethora of other factors come into play when dealing with a brokerage and to be well-prepared for day trading futures.
Top Futures Brokers
There are many futures trading brokers, and it can be overwhelming at first once you start your research. The bottom line is that finding the best one is vital as it can significantly influence profitability down the line.
In this article, we take a look at the most important things to consider before doing business at your new brokerage. Besides the costs, futures trading platforms, trading technology, and data feed, clearing firms play an essential role in a futures brokers comparison.
Table of Contents
1. Generic Trade: Best Discount Futures Broker
Generic Trade is based in Illinois, USA and offers a flat fee commission of $0.59 per side for futures contracts and options on futures. The support is available 24 hours a day by phone and chat through the Generic Trader Professional platform. There is no account minimum required to open an account. That makes Generic Trade an excellent choice for beginners.
In addition, they don’t charge any maintenance or inactivity fees and offer free access to the Generic Trader Online platform. Speed and reliability are crucial factors for trading infrastructure. Generic Trade offers a port-to-port latency to fewer than 500 nanoseconds using a co-location service in a CME Group owned datacenter in Illinois.
A free demo and live chat are available on Generic Trade’s website.
2. Tradovate: Best for Active Future Traders
Tradovate main strength is the commission-free membership. Traders paying $199 per month can execute trades completely free of commissions. You need to place significantly more than 1,000 trades per month to make it a cost-efficient case, but every trader who does save a lot of money.
The account minimum for standard futures is $2,000, while the Micro E-Mini accounts can be opened with $250. The day trading margin starts at $50 for the Micro E-Mini and $500 for the standard futures. The overnight margin is at about $5,800 per ES contract. Check out the detailed Tradovate review for more information.
3. Interactive Brokers: Best For Trade Automation
Interactive Brokers is Nasdaq listed stock with the stock symbol IBKR. IB has a market capitalization of about 26 billion and EPS of about $2. Traders can trade nearly every investment product with IB for a low discounted price. Trading futures contracts is possible with Interactive Brokers and the commissions per futures contract start at $0.85.
4. Optimus Futures: Best Futures Broker for Beginners
Optimus Futures is specialized in providing the best possible service to its traders. Their customer service is available by phone, email, and live chat 24 hours per day and seven days per week. Their customer support knows exactly what to do when problems arise.
Pre-defined automated trading systems can be executed, and the minimum account requirements are only $2,500 and $500 for Micro Trading. Traders can individually choose between various futures clearing merchants, data feeds, and trading platforms to ensure fast executions and the best real-time quotes. The commissions per futures contract start at $0.50 for less active investors and up to 20 trades per month, while trading over 500 contracts per month reduces the price to $0.20 per contract.
5. TD Ameritrade: Best Mobile Futures Trading
In 2019 Charles Schwab announced to acquire TD Ameritrade for $26 billion. TD Ameritrade and it’s trading platform Thinkorswim is still a separate brand. The acquisition pushed the value of Charles Schwab to a market capitalization of about 100 billion with an EPS of about $2. Like Interactive Brokers, TD Ameritrade clients can trade nearly all finance products, including futures contracts. The commission rate per contract is officially at $2.25, but active traders can easily negotiate a better rate.
6. E-Trade: Best Futures Trading Education Center
It was expected that more retail brokers would merge after the whole brokerage industry got disrupted when all retail brokers announced commission free trading. So it was not a surprise that Morgan Stanley announced in October 2020 that they acquire E-Trade for $13 billion. The acquisition bumps the market capitalization of Morgan Standley to a whopping $124 billion. E-Trade remains a stand-alone brand, and the commissions at E-Trade are between Interactive Brokers and TD Ameritrade at $1.50 per futures contract.
7. Ninjatrader Brokerage: Best for Custom Trading Strategy Development and Execution
NinjaTrader is a well-known trading platform primarily used by traders who code their own trading strategies with NinjaScript instead of executing pre-defined trading strategies. Their commission rates are competitive, and highly active traders benefit from higher commission discounts when buying the NinjaTrader platform.
8. Tradestation: Best Trading Platform Usability
Traders who are uncertain what financial product they will finally trade consider TradeStation. The costs are higher compared to Optimus Futures and NinjaTrader Brokerage, but traders can also trade stocks and options besides futures from one account. Day traders consider that TradeStation’s margins are much higher compared to Optimus Futures and NinjaTrader. Now let’s take a closer look at the most important aspects of the decision-making process.
Costs
The most important factor for active traders will be execution costs. While each exchange has its own trade fee structure, your broker will attach a commission for placing the trade as well.
This will become especially crucial if you are a day trader, as you will be placing several trades per day, and over several months or years, these costs will add up.
Comparison: Commissions ES E-mini S&P 500 Future
| Futures Broker | Total Costs* | Commission | Fees** |
|---|---|---|---|
| Generic Trade | $1.84 | $0.59 | $1.25 |
| Optimus Futures | $2.03 | $0.50 | $1.53 |
| Interactive Brokers | $2.10 | $0.85 | $1.25 |
| Tradovate | $2.13 | $0.79 | $1.34 |
| NinjaTrader | $2.69 | $1.29 | $1.40 |
| E-Trade | $2.75 | $1.50 | $1.25 |
| TradeStation | $2.75 | $1.50 | $1.25 |
| TD Ameritrade | $3.50 | $2.25 | $1.25 |
- * Commission per side per contract
- ** Exchange Fee, FCM & NFA Fee, Order Routing Fee
Let’s break down the fee structure in its parts:
Brokerage Commission
A commission is paid to the firm in exchange for technical support, customer service, education, etc. Many retail brokerages charge about $1 to $1.5 per side and contract. Introducing brokerages like Optimus Futures charge as low as $0,10 per side per contract for highly active traders.
Futures Clearing Merchant Fee
A futures clearing merchant fee has to be paid if the company where you open your account is an introducing broker (IB). An IB needs a clearinghouse for trade executions. Commissions and futures clearing merchant fees should always be added to enable you to compare correctly. A typical price range for FCM fees is $0.10 – $0.25.
Order Routing Fee
The order routing fee is being paid to a futures data feed provider like Continuum, or Rithmic, for routing the trade between the futures exchange and the trading platform. The costs are typically in the $0.10-$0.25 / trade and contract range.
Exchange Fee
Some may find it surprising, but the exchange fees that have to be paid to the futures exchange like the CME, are the highest fees associated with a trade. The CME, for example, charges $1,18 per side and contract when trading the S&P E-Mini.
National Futures Association Fee
$0.02 per side and contract has to be paid as NFA Assessment Fee. That equals $0.04 per round turn and contract. The current fee is effective since January 1st, 2018 https://www.nfa.futures.org/faqs/members/nfa-assessment-fees.html
Miscanalious Fees
As you can see, there are many more costs involved besides regular commissions. Depending on the chosen future contract, there can be other costs attached as well. One miscellaneous fee you should consider when choosing your broker is the one for the data feed.
It is crucial to have unfiltered tick data available to ensure fast executions and good order fills. Inactivity fees should also be considered since some brokerages charge up to $25 when no trades are made or if the trading platform was not used.
Features
Costs are important, but other features like the trading platform, the margin requirements, and add-on tools play an important rule as well.
Day Trading Margin
Day trading margin can be drastically different depending on futures broker that are involved with as well. For example, the typical initial margin for the E-mini S&P 500 futures contract is $6,930 through the exchanges.
We suggest referring to the CME exchange, where they post the maintenance margin for the ES. You should multiply the Maintenance Margin by 1.1 for a full overnight margin. The broker determines day trading margins while the exchanges determine the overnight margin.
Some brokerages will let you trade a contract with as little as $500 initial margin, under the concept that you are only holding the contract for the trading session itself and not overnight. The day session finishes at 5 PM EDT/4 PM CST.
For longer-term trades, there will be an overnight margin as well, so keep that in mind. This varies from brokerage to brokerage, so make sure that you check to see what the costs are going to be and how they line up with your trading strategy.
Worldwide Futures Trading Exchanges
Depending on the markets you wish to trade, some futures brokers will make more sense than others. For example, if you want to trade the Singapore futures exchange overnight, the broker needs to be able to facilitate those orders. What it will boil down to is the number of connections the broker will have to worldwide exchanges.
That’s why it is essential to decide what markets you want to trade before making your final decision regarding the broker. Typically, data feeds such as CQG, or TT will have multiple connection points worldwide that would allow you to connect to CME, Eurex, Euronext, ICE, ICE Europe, Hong Kong Futures exchange, and other liquid exchanges. Optimus Futures has these global Futures exchanges.
Research Tools
Most futures brokers offer research tools and information from industry insiders that can glean information about agricultural products, energy, or whatever else you are trading. This can lead to valuable insight as to the direction of the market based upon fundamentals.
By knowing fundamental drivers in the marketplace, you can adapt this to your trading strategy and outlook going forward. Having these industry experts do the research for you can greatly benefit your longer-term views on commodities that you are trading.
Futures Trading Platform
You should pay attention to the best futures trading platforms offered by a broker you are looking to do business with. These days, most brokerage firms will provide multiple platforms. There are a lot of choices out there, some of which are better at specific processes. Some are built for speed, some are developed for market analysis, and some have live newsfeeds built into them.
Popular Futures Trading Platforms:
- CQG (CQG Desktop, Q Trader) TT (Web based platform)
- CTS-T4 (low latency execution)
- SierraCharts
- AgenaTrader
- Optimus Flow (by Optimus Futures)
- R Trader By Rithmic (API in C# and C++)
The best platform for your trading is a highly personal thing. Free trials and demo accounts help you to evaluate what fits your needs the best to manage your positions.
Trading Systems
The lack of discipline is one of the main reasons that day traders fail in their business. Most time, everything is under control as long as the market is moving as projected. But the market is not rational. For that reason, sudden movements to the up- and downside happen every day.
Trading systems can be good protection against wrong decisions based on fear and greed.
Paper Trading
Most brokerage firms offer free paper trading accounts these days, which is the ability to place trades in a simulated environment without risking any money.
This allows you to try out your trading strategies and to make your first risk free steps with the trading platform. Most of the time, the broker will allow you to keep a simulated account once you start paying for services and deposit money.
Conclusion
There are a lot of different moving pieces when it comes to deciding which broker to use. Commission-free trading did not arrive at futures trading yet. And it will probably never arrive because the majority of costs comes from the exchange fees.
If you are still uncertain what financial assets you want to trade on exchanges of your choice, then a retail brokerage is a good decision. Most of them offer commission-free stock trading for people living in the United States and offer futures trading along as a side service.
Suppose you like to combine the benefit of a powerful futures trading platform for accurate and fast execution with the benefit of a well-educated customer service specialized in futures trading. In that case, an introducing broker like Optimus Futures is the right choice.
Any reputable broker can place an order for you, and most of them are pretty quick. Charting platforms differ, but it experienced trader can use any of them effectively, but obviously, there will be the preferred platform.
You must have access to your preferred tools, any research that you need, and of course, markets that you are interested in trading.
The industry has become so competitive over the last several years that, quite frankly, you should notice very little difference in execution speed, leaving it as a commoditized business, meaning that competition has been the best regulator of all.
Benefits of using introducing brokers such as Optimus Futures
- knowledgeable support team
- multiple trading platforms available
- low margin requirements
- low costs
- low account minimums
Benefits of using retail brokerages:
- Other assets like stocks and options tradeable from one account
- More tradeable markets available
- Paper trading modules & simulated trading tools are often free
FAQ
Which futures trading platform is best?
The brand new Optimus Futures platform is best for active trading, while NinjaTrader is excellent for custom trading strategy development.
How do I choose a futures broker?
It always makes sense to compare the best futures brokers to find the best futures trading platform where you can trade futures products. However, between discount brokers, you should focus on the quality of support, reliability, and security of funds. Those aspects have a higher value than 25 cents more or less of commissions. One thing that beginner traders overlook is the expertise of the futures broker in knowing and providing the right technology to their customers. A reliable futures broker will match you with the right technology, execution, and as you grow your skills grow as a trader, they will be able to consult what is the right solution for your expertise.
What are the best futures to trade?
Liquidity and low spreads are the keys to success for day traders. The most popular and liquid ones are the S&P 500 E-Mini (ES), 10 Year T-Notes (ZN), and Crude Oil (CL). If you wish to trade with small leverage, you can also try the Micro Stock Indices such as Micros Emini SP(MES), Micro NQ(MNQ), Micro Dow Jones (MYM), and Micro Russell (M2K).
What are the futures markets benefits?
The main benefit of buying and selling futures contracts is liquidity. The futures market provides a high liquidity level for all major futures contracts like the E-Mini ES or NQ. Online brokers vary from retail pricing to discount trading rates.
What online brokers are the best?
Retail investors have different priorities. Some consider customer support as important, while others prefer high-end trading tools or low commissions to efficiently buy or sell futures. Some prefer using a desktop platform, others the web platform or mobile app to trade futures markets. TD Ameritrade and TradeStation are a good place to start to trade futures. Traders with a higher trade frequency either negotiate rates at their favorite brokerage, while others go for a discount broker like Generic Trade, Optimus Futures, Interactive Brokers, or Tradovate.
What is the account minimum for future traders?
The account minimum for futures traders usually is pretty low since futures contracts can be traded on margin. Futures traders can buy or sell contracts with an account minimum deposit of as low as $400. Some brokerages allow clients to open an account with a minimum deposit of $0 to start trading futures products on paper. The best online futures broker is the one that fulfills the requirements of the individual futures traders.
How effective is day trading futures?
Day traders want to make money by trading futures contracts at the Chicago Mercantile Exchange within a short time window from a few seconds up to a couple of minutes. Since that often leads to high trading activity, low commissions, screening tools, easy to use platforms, and low margin rates become exceptionally important for futures trading. As a day trader, futures traders buy and sell futures contracts for low costs when focusing on those aspects.
