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Futures trading isn’t something you wake up one day and decide to have a stab at while you sip your coffee and watch a few YouTube tutorials. It’s serious stuff, and there’s plenty that can go wrong. You could easily stumble at the first hurdle by choosing the wrong futures broker.
Fortunately, help is at hand — here’s a breakdown of our top futures broker picks, along with some guidance about how to choose between them.
What Makes Future Brokers Different
As you probably know already, futures trading involves agreeing to a contract to buy or sell an asset at a set price in the future. In other words, they can be used in bullish or bearish markets. Futures offer a way to trade a strategy or your view of the future price of an asset. You can lock in (what you believe to be) a reasonable price today and (if all goes well and momentum is in your favor) sell or buy back to make a profit later on. Of course, it can backfire if you’re wrong, making it a risky business.
But this surface-level difference between futures and other kinds of trading isn’t the only thing that makes future brokers a little different.
One key difference is the fees structure. When you trade forex or CFDs (Contracts for Difference), the commission involved is the spread between an asset’s sell and buy price. For futures, you’ll also pay a fixed commission per contract plus the exchange fees.
Since futures trading is so advanced, brokers are subject to tighter regulation; in the US, they must be regulated by the National Futures Association (NFA). Plus, futures brokers are targeted at a more knowledgeable clientele than other financial products, meaning they’re less likely to have beginner-friendly resources or features. That said, most will offer charting packages which include the most common technical indicators.
Which Futures Broker Is Best?
Now you know what makes futures brokers different, you probably want to know what platform you can use to trade futures on. To evaluate which platform is right for you, carefully consider the following factors:
- Commissions and fees
- Account minimums
- Features for charting and analysis
- Customer service (and whether there’s dedicated futures broker support)
- Leverage offered
- Access to relevant reports and market research
- Diversity of assets
With that said, let’s take a look at our six favorite options.
Best for: Non-US traders
Account minimum: $0
Interactive Brokers focuses on providing a wide range of trading products for the lowest prices possible, and it’s won awards from everyone from Investopedia Online Brokers Awards to NerdWallet Best of Awards.
You’ll find a wide range of assets here (including thousands of mutual funds) and plenty of unique features, such as fully customizable columns and order types. One of the most significant advantages is the access to international markets and that traders from all countries can enjoy the platform.
The platform offers two account types IBKR Lite (no commissions, account minimums, or inactivity fees) and IBKR Pro (which offers a broader range of products for advanced traders). Both platforms charge $0.85 per contract for futures trading. Unfortunately, opening an account can get complicated for some people.
InteractiveBrokers is a registered Futures Commission Merchant regulated by the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA).
- Low commissions
- Suitable for people across the world
- A diverse range of assets
- Opening an account can be complicated
Best for: Commission-free trading
Account minimum: $0
TradeStation offers futures contracts on indices, currencies, bonds, commodities, and more. You can access the market around the clock in both the US and Europe, and it also has plenty of market data and customer support specialists to guide you further.
The platform does a great job of providing both advanced tools and commission-free, low-cost trading options — futures contracts start from $0.85. But what makes it unique is the e-mini futures offering (one-tenth the size of a regular contract), which you can trade from $0.5 per contract.
Unfortunately, there’s an inactivity fee of $50 a year.
The company has been around since 1982, and it’s regulated by the SEC, FINRA, and as a Futures Commission Merchant (FCM). The international variant is regulated by the Financial Conduct Authority (FCA), among others.
- Sophisticated tools
- Long history as a platform
- Can trade micro futures
- High inactivity fee
Best for: Mobile trading
Minimum deposit: $0
E*TRADE stands out for its product range; it offers more than 200 futures contracts to choose between, including derivatives, currencies, and metals.
You can also trade your futures on the go with user-friendly mobile and desktop trading platforms. Although a few other brokers offer this, the E*TRADE app stands out for its easy-to-use interface and full functionality.
It charges at least $1.5 per futures contract; reasonably average, but it puts it higher than some of the other options on this list. On the bright side, there are no fees for inactivity, withdrawals, deposits, or similar.
E*Trade is regulated by the SEC and FINRA. It offers futures products through E*TRADE Futures, which is a member of the NFA.
- Excellent mobile and desktop trading options
- Trade a range of assets
- No hidden or extra fees
- Commissions higher than some others
Best for: Beginners
Account minimum: $0
Charles Schwab is one of the better-known futures brokers on this list (and one of the most prominent US stockbrokers), and it doesn’t disappoint with its diverse offering.
Even though we’ve said futures trading isn’t suitable for beginners in general, this is one of the better options thanks to the vast amount of educational resources available, from both the Trading Insights section of the site and customer service. Experienced traders won’t be disappointed either, thanks to the access they’ll get to the latest market research and news.
However, futures cost $2.25 per contract, which is on the higher end. But with an account minimum of $0, you can at least try it out with small amounts and know you’re in safe hands. As you’d expect for such a well-known broker, Charles Schwab ticks all the right boxes for regulation.
- A diverse range of assets to trade
- Lots of educational and market research resources
- Established broker
- Higher costs
Best for: Advanced traders
Account minimum: $1,500
Another big name and established broker, TD Ameritrade, will give you access to more than 70 futures trading markets, where you can trade a range of indices, assets, and currencies.
The platform comes with some of the most sophisticated features you could ask for, pleasing even the most advanced traders. For instance, its unique ThinkBack feature lets you backtest your trading strategies to figure out if it’s suitable for your purposes.
Like Charles Schwab, TD Ameritrade charges $2.25 per futures contract. It also requires $1,500 in your account to start trading, making it more suitable for advanced traders than beginners.
The platform is regulated by the SEC, FINRA, and CFTC.
- Established platform
- Advanced tools
- Lots of asset types
- Higher costs than some
Best for: Micro futures
Fees: $0.10 to $0.50
Minimum deposit: $500
Optimus Futures isn’t necessarily the right platform for everyone, but what it does, it does well — and that’s discount and micro futures. As you’d expect for a discount futures choice, it also has low fees. Plus, you’ll get an extra discount for high volume, with some commissions going as low as $0.1 per trade, though this goes up to $0.5 for a single contract.
There are no inactivity fees but withdrawal fees that can get quite steep. Another drawback is that there’s no mobile platform, which most of the other options here offer.
The platform is regulated by the US Commodities Futures Trading Commission and the NFA.
- Low prices
- Access micro futures
- Discounts for trading in volume
- No mobile platform
- High withdrawal fees
What’s the Best Futures Broker for Scalping?
Various brokers allow you to scalp futures. However, TransAct Futures is a broker explicitly built for this purpose, so it’s worth checking out.
What’s the Best Futures Broker With API Trading Functionality?
InteractiveBrokers allows you to trade futures using its web API, and it’s a great option since it’s smooth and has all the features you need, including market data access and the opportunity to view positions.
What’s the Best Futures Broker for Beginners?
We recommended Charles Schwab for beginners as it’s regulated and has plenty of educational resources.
What Is a Futures Commission Merchant vs. Broker?
A futures commission merchant (FCM) allows traders to buy or sell orders for futures contracts, meaning they collect margins and ensure the asset is delivered. They can either be a clearing FCM or a non-clearing FCM — but if they’re non-clearing, they must use a clearing FCM to complete trades. FCMs must be registered with the NFA, but any broker registered with the SEC limits its activities to futures, and related activities can register.
As you can see, there are a few great brokers for futures trading — while there are undoubtedly wrong choices (i.e., platforms without the proper regulatory approval), there’s not a single correct choice. The only thing I’d urge is to be sure that futures trading is suitable for you before you get stuck in.
However, once you know what you’re doing and you’ve chosen the right broker, futures trading can certainly be a rewarding (and profitable) experience. Just make sure you watch out for those pesky commissions and exchange fees!
This post originally appeared on Wealth of Geeks.
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