Incorporating futures into your trading strategy allows you to lock in predetermined prices to buy or sell at a future date. It’s a great way for you to protect yourself from market volatility and unfavorable price movements. But it contains risk.
You can use futures trading for various assets, but you’ll need an advanced platform. With many futures trading apps available, you might have a hard time determining the best one. Benzinga explores the best apps for trading futures and provides deep insight.
1. Interactive Brokers
Casual traders can take advantage of low margin rates and zero commissions for U.S. stocks via Interactive Brokers (IBKR) Lite. Advanced traders will benefit from IBKR Pro, providing $0.47 per 100 shares price movement vs. the industry. The pro version offers a lower percentage for interest on idle cash balances and margin loan interest than lite.
Besides futures, IBKR allows you to trade foreign stocks, cryptocurrencies, options, bonds and forex. U.S. investors can also trade spot gold. Institutions will find an array of tools for managing funds.
You can earn interest for your fully paid shares of stock. IBKR lends your shares to traders wanting to short them and pay borrowing interest. You can still trade your loaned stocks without restrictions while on loan.
IBKR doesn’t charge maintenance or inactive fees and provides no-transaction-fee mutual funds. It offers tier-based commission fees for futures. If you have less than 1,000 contracts, you’ll pay $0.85 per contract. Traders with more than 20,000 contracts will pay $0.25 per contract.
The app provides numerous advanced indicators and trading tools. However, it doesn’t deliver stock alerts via push notification; it’s through email. Beginner traders may find the platform slightly intimidating as IBKR designed it for advanced traders and sophisticated investors.
Best For
Trading Futures 24/7
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Best For
Trading Futures 24/7
1 Minute Review
Interactive Brokers is a comprehensive trading platform that gives you access to a massive range of securities at affordable prices. You can buy assets from all around the world from the comfort of your home or office with access to over 135 global markets. Options, futures, forex and fund trading are also available, and most traders won’t pay a commission on any purchase or sale.
IBKR is geared primarily toward experienced traders and investors but now with the availability of free trades with IBKR Lite, casual traders can also acclimate to IBKR’s offerings.
Best For
- Futures traders
- Trading futures 24/7
- Sophisticated investors
- Access to international markets
Pros
- Buy & sell futures at lowest commission rates
- Hedge positions or act on price movements in 35+ financial markets worldwide
- Trade futures side by side on a single screen w/ substitute asset classes in stocks, bonds, options
Cons
- Beginner investors might prefer a broker that offers a bit more hand-holding and educational resources
2. E*TRADE
E*TRADE is a Morgan Stanley company that offers trading and retirement packages. You can trade futures on desktop and mobile devices using Power E*TRADE. It offers futures trading in brokerages and eligible IRAs.
E*TRADE has made micro and e-mini contracts available and charges $1.50 per contract on futures and options, excluding cryptocurrency futures. Beginner traders will benefit from the knowledge base, teaching you everything from how to open an account to formulating a trading strategy.
The platform provides traders with more than a hundred tools for trading and advanced features for expert traders. Besides futures, E*TRADE offers $0 commission trades on U.S. stocks, ETFs and options. You can also trade mutual funds and bonds and invest in new issues.
Navigating the website can be a bit confusing, as information such as the minimum balance to fund an account and how to close it may take you some time.
1 Minute Review
E*TRADE is an online discount trading house that offers brokerage and banking services to individuals and businesses. One of the first brokers to embrace online trading, E*TRADE not only survived both the dot-com bubble and Recession — it thrived. You can choose from two different platforms (one basic, one advanced). E*TRADE is a suitable broker for traders of most skill levels, whether you want to buy mutual funds and hold them for decades or dabble in options swing trading. E*TRADE offers a library of research and education materials to help you out.
Best For
- Active traders
- Derivatives traders
- Retirement savers
Pros
- Sophisticated trading platforms
- Wide range of tradable assets
- Exceptional customer service
Cons
- Limited currency trading
- Higher margin rates than competitors
- No paper trading on its standard platform
3. Charles Schwab
Charles Schwab offers traders a large selection of assets. The platform’s design appeals to beginner and advanced traders because of its $0 trade commissions and a big selection of mutual funds.
It provides extensive research tools to help you gain a great perspective on the futures market. Video tutorials are available by expert traders. You can trade futures, options and stocks in a single window with the advanced order feature.
The support for trading futures is great. Experts offer an evaluation of your trade or a strategy review. Besides the vast knowledge base, Charles Schwab offers 24/5 support. Another feature available is automated cash sweeps — it sweeps excess futures account funds to your brokerage account. Future contracts cost $2.25.
get started
securely through Charles Schwab’s
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1 Minute Review
Charles Schwab is a solid choice for traders of all skill levels. It offers full access to the U.S. equity and options markets as well as 30 international markets. Traders can create a diverse portfolio with $0 commissions and no account minimums. Schwab’s margin trading is expensive but Schwab makes up for it with affordable futures and options trades, along with a comprehensive mobile offering.
Best For
- 3 trading platforms perfectly in sync makes matching your platform to your skill level a snap
- Excellent futures trading education for new traders
- $0 account minimum means anyone can start trading
Pros
- Wide range of available assets to trade, including futures and 30 global markets
- SmartStreet Edge platform is powerful enough for advanced traders, yet easy enough for new traders to utilize
- Unique educational resources (like infographics and podcasts) make learning fun
Cons
- Margin rates are more expensive than competitors
- More limitations on available margin than competitors
- Expensive mutual funds
4. TD Ameritrade
Whether you’re a beginner or advanced, you’ll find TD Ameritrade caters to you. It provides a platform that’s easy for beginners to grasp and advanced for expert traders to benefit. Besides its great functionality, TD Ameritrade’s platform has a $0 account minimum and offers $0 commissions on online stock, ETFs and options.
You can also trade forex, mutual funds, bonds and CDs. TD Ameritrade provides a wealth of education for trading, retirement planning options and cash management products that help you avoid unnecessary fees.
The only thing that would make TD Ameritrade even better is if it offered fractional shares — owning less than a whole share of a company.
1 Minute Review
This publicly listed discount broker, which is in existence for over four decades, is service-intensive, offering intuitive and powerful investment tools. Especially, with equity investing, a flat fee is charged, with the firm claiming that it charges no trade minimum, no data fees, and no platform fees. Though it is pricier than many other discount brokers, what tilts the scales in its favor is its well-rounded service offerings and the quality and value it offers its clients.
Best For
- Novice investors
- Retirement savers
- Day traders
Pros
- World-class trading platforms
- Detailed research reports and Education Center
- Assets ranging from stocks and ETFs to derivatives like futures and options
Cons
- Thinkorswim can be overwhelming to inexperienced traders
- Derivatives trading more costly than some competitors
- Expensive margin rates
5. TradeStation
Expert traders will benefit the most from TradeStation’s FuturesPlus platform, specifically designed for futures options traders. Some of the features are custom strategy builders, price visualization and advanced contract analysis. TradeStation enables you to trade futures on gold, indices, crude oil, Euro and several other futures contracts.
Although geared toward advanced traders, TradeStation’s platform aims to lure in beginner traders with commission-free trading on stocks, ETFs and options. TradeStation charges for mutual fund transactions and $1.50 per futures contract.
You can also trade cryptocurrencies, invest in retirement and get a share of up-and-coming companies via IPOs. If you want to trade for free, you have to upgrade to the TS Select platform, requiring a minimum $2,000 balance.
1 Minute Review
TradeStation is for advanced traders who need a comprehensive platform. The brokerage offers an impressive range of investable assets as frequent and professional traders appreciate its wide range of analysis tools. TradeStation’s app is also equally effective, offering full platform capabilities.
Best For
- Advanced traders
- Options and futures traders
- Active stock traders
Pros
- Comprehensive trading platform and professional-grade tools
- Wide range of tradable securities
- Fully-operational mobile app
Cons
- Confusing pricing structure to leave new traders with a weak understanding of what they pay
- Cluttered layout to make navigating TradeStation’s platform more difficult than it should be
Advantages of Trading Futures
Adding futures to your trading strategy enables you to benefit in several ways.
Enables diversifying and hedging: Trading futures allows you to minimize risk by diversifying. Predicting trends is difficult, so futures contracts enable you to avoid drastic price movements by securing a predetermined fixed price. It’s particularly beneficial for companies transacting in foreign currencies.
You can use an interest rate futures contract to lock in the price of an interest-bearing asset for a future date.
Future markets are liquid: Markets trade futures in large volumes six days a week. Trading extends beyond the traditional hours and into the night, and some markets trade 24/7. Available buyers and sellers mean that you can execute orders quickly and at any time.
The efficiency and volume of trading make futures a liquid market. High liquidity helps prevent prices from drastic volatility, especially for contracts nearing maturity.
A highly leveraged investment: Traders open positions in the futures market with margins — an amount needed in an account, as a percentage of the value of a futures contract. The margin is usually a small percentage of the contract’s value, 3% to 12%.
An exchange stipulates a margin so that traders use it as collateral if they incur losses when prices affect their positions adversely. Using margin means you expose yourself to a bigger position, allowing you to increase profit significantly.
Allows speculation: The futures market enables traders to speculate about prices and counter perceived movement by securing a fixed price. Before the contract matures, you can buy or sell an offsetting futures contract that eliminates losses of your current contract.
Execution costs are low: Most brokers charge low commission fees for futures trading. Some brokers even offer 0% commission on U.S. stocks. The lower your fees, the more your investment can grow. But low fees don’t guarantee profits.
Things to Watch for When Trading Futures
Having the ability to speculate future prices and counter them to profit may seem like a bulletproof plan. But futures trading contains risks and drawbacks, like all markets.
Leverage is risky: Most stockbrokers allow you to borrow up to 50% of your position’s value. The leverage available for futures trading can be up to 95%. That means you’re exposed to more risk.
Leverage boosts your losses when the price trades against your position. Even small price movements can lead to significant losses. That situation could result in the broker forcing you to liquidate your position.
It’s possible to incur losses bigger than your investment with leverage, triggering a margin call — a broker instructs you to deposit money to reach the minimum value.
Large Margin Deposit: Investors with limited funds might not qualify for futures trading. Financial Industry Regulatory Authority (FINRA) requires you to deposit at least $2,000 into a brokerage account. Although margins are a percentage of the contract’s value, an e-mini S&P 500 contract requires you to deposit several thousand dollars.
Compare Futures Brokers
Choosing the right broker to trade futures requires you to analyze several key factors. Benzinga has made that easier by reviewing and providing insights into the best online broker.
Frequently Asked Questions
How Do You Successfully Trade Futures?
1
How Do You Successfully Trade Futures?
asked 2022-03-22
Goran Radanovic
1
Managing risk is the first step to successful trading. Because futures markets allow leverage, traders can incur significant losses — minimize your leverage. Mastering trading psychology is crucial to avoid making hasty decisions you’ll regret. Learn several trading strategies and incorporate indicators. Avoid the trap of excessive trading to maximize profits or offset losses. Choose a reputable broker that offers a reliable online trading app.
Answer Link
answered 2022-03-22
Benzinga
Are Futures Riskier Than Stocks?
1
Are Futures Riskier Than Stocks?
asked 2022-03-22
Goran Radanovic
1
No. The risk involved in any financial market depends on your risk management. Good traders know that placing stop losses, minimizing leverage and avoiding emotional trading yields the highest probability of success. A trader determines the preferred level of risk in all markets.
Answer Link
answered 2022-03-22
Benzinga
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