Best Futures Broker 2019
If you’re 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, something that over several years’ time can make the difference of thousands of dollars.
There are a seemingly endless amount of them available, so finding the best futures broker for your situation is vital as it can greatly 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.
The most important factor for 99% of traders will be execution costs. While there are other factors, without a doubt the most important thing that traders will pay attention to is the cost of placing a trade.
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 the course of several months or years, these costs will add up.
Most of you will find that doing simple research will point you in the right direction when it comes to execution charges.
Beyond that, some brokerages will charge you extra for data, while some won’t. It’s quite easy to imagine how your profitability can fluctuate by well over 10% due to these fees alone.
An example of fee structure:
Day trading margin
Day trading margin can be drastically different depending on futures broker that you’re involved with as well. For example, the initial margin for the E-mini S&P 500 futures contract is $6000 through the exchange.
However, some brokerages out there 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.
Obviously, there are plenty of levels in between that traders will be able to access as well. That being said, $500 margin for a fast-moving contract like this isn’t necessarily the smartest move. However, there’s no reason to pay the full initial margin that the exchange demands of its members if you don’t have to.
For longer-term trades, there sometimes will be an overnight margin as well, so keep that in mind. Obviously, this varies drastically 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.
Ultimately, after fees of execution, margin is a massive consideration to take into account.
Depending on the markets you’re wishing to trade, some futures brokers will make more sense than others.
For example, if you wish to trade the Singapore futures exchange overnight, the broker needs to be able to facilitate those orders.
For most traders, the Chicago-based exchanges will do the trick but there are other exchanges that are available out there such as the Osaka exchange in Japan.
If you find that you need to trade these exchanges, this will limit the amount of firms that you can deal with, but there are plenty of them out there available for the retail trader.
Most futures brokers offer research, quite often from respected industry insiders that can glean information about agricultural products, energy, or whatever else you are trading.
Quite often, this can lead to valuable insight as to the direction of the market based upon fundamentals.
After all, most of us don’t have the wherewithal or the means to examine crops across the United States to get a feel as to how the corn harvest may be, or access to industry insiders that can give us an idea as to how the outlook for crude oil demand is in the next quarter.
By knowing fundamental drivers in the marketplace, you can adapt this to your trading strategy and outlook going forward. By having these industry experts do the research for you, it can greatly benefit your longer-term views on commodities that you are trading.
Depending on the broker they use, you will be offered various platforms. Some traders prefer one platform over another.
If you fall in that camp, you should pay attention to the platforms offered by a broker that you are looking to do business with. These days, most brokerage firms will offer multiple platforms for their traders, and some of them are even free.
Ultimately, there are a lot of choices out there, some of which are better at specific processes. Some are built for speed, some are built for analysis, some have live newsfeeds built into them, and many other features.
The best platform for your trading is a highly personal thing, but there’s no point in paying for a brokerage firm that doesn’t offer your favor one.
There are plenty of free trials out there on the website of these platforms, so you can typically try them out before putting any money to work at your brokerage.
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.
Furthermore, another advantage of day trading futures is, as lined out above in section #2, the margin for one contract is comparatively low. Also, the fees per traded contract are low.
At least as long you are using a broker that's specialized in futures trading.
One company that's offering futures trading accounts along with trading systems is Striker Securities. Striker Securities was established in 1991 and they are based in Elmhurst Illinois.
They are registered with the Commodities Futures Trading Commission and Member of the National Futures Association, Managed Funds Association and National Introducing Brokers Association.
While you can open a futures brokerage account via Striker Securities, you can also open an account with one of the introducing brokers (currently 35) that are offering their futures trading systems.
In any case, if you decide to trade their futures trading systems, Striker Securities does all the executions is tracking 100% actual results based on live trading.
The Best Futures Brokers Offer 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 the platform, execution speed of the broker, and of course your strategies. In fact, so many offer paper trading now that there is no point in dealing with a broker that doesn’t offer it.
After all, if they are not willing to let you test drive the system before paying for it, that should raise red flags immediately.
In the futures world, most of the time the broker will allow you to keep a simulated account once you start paying for services and deposit money.
But before you do that most of the time the paper trading account will be limited to a set timeframe, such as two weeks or perhaps a month.
This is standard practice, and you shouldn’t hold that against any potential firms that you wish to do business with.
Best Futures Broker Conclusion
There are a lot of different moving pieces when it comes to deciding which broker to use, but obviously costs and access the markets will be one of the biggest deciding factor.
At the end of the day, 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.
One of the main things to consider when choosing the best futures broker is that in the end, they all send your orders to the respective exchange for the products that you are trading.
Futures Brokers will send the order to the exchange to put your money to work. However, depending on what you need as an individual trader there can be major differences. Define your needs based on: