Best Futures Broker 2020
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. Why? Because even the best free paper trading account is not sufficient anymore when it comes to live trading. Live trading can be a completely different world.
Costs, education, research, and a whole plethora of other factors come into play when dealing with a brokerage, something that over several years can make the difference of thousands of dollars.
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, also the clearing firms play an essential role in a futures brokers comparison.
1. Optimus Futures - Best for Self-Directed Futures Day Trading
Optimus Futures is specialized in providing the best possible service to its traders. Their customer service is available per 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.
2. Tradovate: Best for Active Future Traders
Tradovate main strength is the commission-free membership. Traders paying $349 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. Ninjatrader Brokerage - Best for Custom Trading Strategy Development and Execution
NinjaTrader is a well-known trading platform being 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 discounts on commissions when buying the NinjaTrader platform.
4. Tradestation - Best for Stock Trading With Options Trading as an Addition
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 during 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. 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 to $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 connections points worldwide that would allow you connecting 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. By having these industry experts do the research for you, it can greatly benefit your longer-term views on commodities that you are trading.
Trading Platforms
You should pay attention to the best futures trading platforms offered by a broker that 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. One company that's offering trading systems that can be executed with most futures brokers out there is Striker Securities. Striker Securities was established in 1991, and they are based in Elmhurst, Illinois.
Striker Securities
They are registered with the Commodities Futures Trading Commission and Member of the National Futures Association, Managed Funds Association, and National Introducing Brokers Association.
Click here to learn more about their futures trading systems and here to see the most current trading systems ranking. 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.
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.
If 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, then 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
Best Futures Broker Questions and Answers
- Which futures trading platform is best?
- How do I choose a futures broker?
- What Are the Best Futures to Trade?
Which futures trading platform is best?
The brand new Optimus Futures platform is best for active trading, while NinjaTrader is great 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 you many 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).
About the Author: Alexander is an investor, trader, and founder of daytradingz.com. After devoting many years to educating himself on powerful day trading techniques and effective investment styles, he started trading and investing more actively. In the past 20 years, he has executed thousands of trades. In 2015, he began writing articles about trading, investing, and personal finance. He is very passionate about sharing his knowledge and strives for success in himself and others. Alexander has been featured on Benzinga, Rockstar Finance, and ESI Money.