The concept of futures trading is complicated. The process of finding a good brokerage to use for this kind of trading more difficult than if you were just trying to look for a broker to help you with mutual funds. You don’t just have to think about contract fees and trading platforms. You also have to look for a broker that gives you the best up-to-date data and quotes, charting and screening tools, an intuitive trading platform, research, technical indicators, and the ability to leverage your account with reduced day-trading margin requirements. On top of all of this, you still want great customer service and low costs.
At this point you may be thinking, there is no online broker out there that is able to do all of those things. However, we have compiled a list of some possible options you might want to check out. Before going into the list, remember that investing in futures comes at more of a risk than other types of investing strategies. You make a bet that the market is going to go a certain way, and many times one can’t tell for certain that the outcome is going to do what you want it to do or even what it looks like it will do. The most you can do is to do a lot of research, be confident, and be ready and stable enough to lose a lot of money in a short time period.
With that being said, here is the list of the best online brokers for futures trading and commodities as of now.
E*TRADE is one of the most popular online brokers out there right now. They offer low commissions and a strong trading platform as well as many resources one can use to brush up on one’s investing knowledge. The pros include an advanced mobile app, great customer service, a wealth of research, commission-free stock, options, and ETF trades, a large investment selection, and easy-to-use tools. One downside is that people found their websites difficult to navigate.
2. Interactive Brokers Futures
Their IBKR Lite is a great option for people who trade a lot. They offer international trade capabilities, no stock-trading commission, and a high-quality trading platform. They also offer a large investment selection, strong research and tools, and over 4,300 no-transaction-fee mutual funds. Some cons are that their website can also be difficult to navigate and they have inactivity fees on IBKR Pro.
3. TradeStation GO Futures
This online broker is a great choice for people who are active investors in stocks, options, and futures and thus rely on a high-quality trading platform, extensive research, and up-to-date analytical tools. In addition, trades of up to 10,000 shares are commission-free. Some cons are that they have no transaction-fee-free mutual funds, plans and pricing can get confusing, and free trading on the advanced platform requires you to have TS Select.
This online broker is a great platform for both advanced traders and beginners. They offer an extensive collection of technical analysis tools and they offer a 2-week free trial when you register. You can get the software for free when you put money into a brokerage account or you can just lease the software. You then get access to simulated trading, charts, market analysis–essential for futures trading. They are the only platform powerful enough to run the Diversified Trading System and they offer a wide variety of data feed options, free demonstration options, and a flexible interface. The minimum opening balance is only $400, commissions start at $0.09, and the margin requirement is $500 per contract.
If you are an active futures trader, this might be the best platform for you. They offer commission-free trading, cloud-based solutions, flare rate membership pricing, next-generation technology, and the ability to get the services on any platform or screen size.
6. Generic Trade
This broker has some of the lowest commission fees at a maximum of $0.59 per trade. They are known for their transparency and they keep their prices lower than other futures brokers since there is no need for salespeople and brokers. They also don’t have volume requirements, minimum account balances, and they have some of the lowest latency for executing trades because of advanced technology.
7. TD Ameritrade
They require an account minimum of $1500, but it’s only $2.25 per contract per side. Their day trade margin is 25% with a $15,000 minimum with virtual trading capabilities and over 60 futures products. They also have a ThinkBack feature that lets users backtest strategies and their free platform, Thinkorswim. They also have extensive research and data, great customer service, and free seminars.
This platform gives frequent traders volume discounts. They also offer low pay-per-share commissions, direct access to ECNs and exchanges, and traders are allowed a free practice account. Contracts are reasonable at $0.25 to $0.60 per contract and there is no base charge. They charge a monthly software fee of $100 for Lightspeed Trader, $275 for RealTick Pro, $130 for Sterling, and $0 for WebTrader. It is probably best for traders who are going to trade on a daily basis and have at least $10,000 available for the minimum opening balance.
9. Charles Schwab
This online broker offers an extensive wealth of research, insights, free stock reports from S&P Capital IQ, Thomson Reuters, Credit Suisse, and more. You also have access to their Equity Ratings which cover around 3,000 U.S. stocks. However, they have high margin rates which is something to keep in mind.
The best online broker for you comes down to what kind of trader you are. The best platform for an active, advanced trader is not going to be the best platform for the beginner investor all the time. Some want more research available and others just care about low costs and the speed at which trades are done. Sit down and think about your priorities before choosing and remember that high-risk investing is not the only investment strategy.