How to Choose the Best Futures Trading Broker - Essential Tips

Futures contracts, as they are traditionally defined, are legal agreements made on the trading floor of a futures exchange. This has mostly gone the way of virtual trading, however. Regardless, the contract requires that a buyer agrees to purchase, and a seller agrees to sell, a specified commodity or financial asset at a predetermined price with a future execution/expiration date.

This date is often referred to as the "delivery date". In futures contracts, both parties are expected to fulfill their end of the deal, no matter the price of the underlying asset at the expiration date.

Nowadays, the majority of these transactions are made virtually, through brokerage firms who provide access to the major trading exchanges. This allows for a larger population of traders to access the futures market from the comfort of their homes or on their smartphones. 

With the proliferation of ubiquitous access to futures markets, traders must do their homework in seeking out a quality broker, one that is reliable and meets the needs of the trader.

To that end, we recommend you narrow your search using the following criteria:

• Trading Platforms
• Access to Specific Asset Classes
• Commissions and Fees
• Regulations and Security
• Customer Service
• Account Features and Guidance
• Margin and Order Execution

Let's dive into each one of these and discuss them to help you narrow your focus on choosing a futures broker.

Essential Factors When Choosing a Futures Trading Broker

1. Trading Platforms

Many proprietary trading platforms abound in the world of futures trading. Platforms like Ninja Trader, TradeStation, Schwab, Interactive Brokers, and many more carry their own software platforms that allow individuals and corporations to access futures markets.

Additionally, newer brokers have arrived on the scene with their own trading platforms, or making use of popular charting platforms like TradingView. In 2024, WeBull added futures to its brokerage and allows trading on its popular trading platform as well. 

And these are just scratching the surface of all the potential brokerages and platforms you can use.

Instead of reviewing them all, let's discuss a few criteria you should employ when giving your broker's platform a trial run (which you should definitely do).

Futures Trading Platform Criteria

When searching for a trading platform that fits your needs as a futures trader, consider the following:

• Ease of Use: Is the platform easy to use, easy to navigate? This is especially important for beginners. If you're new to futures trading, you want to look for easily accessible order menus and montages, clear menus without a million confusing options, and customizable layouts that are intuitive.
  
  
• Trading and Charting Tools: Futures traders often rely heavily on technical analysis in addition to their research on the underlying assets and any news related to them. For this reason, you access not only to pertinent news, but also a charting platform that allows for technical indicators and charting tools. Market depth data would also be a good tool as it can indicate liquidity pools.
  
  
• Mobile Access: Larger brokers have taken the time to add mobile apps to their flagship desktop programs. These days, many traders like to trade on the go or while they are working their main job. Having a user-friendly mobile app is a great way to check your positions on the go or make adjustments when you're not at your desk.
  
  
• Order Types: Does the platform offer a solid variety of order types like limit orders, take profit or stop loss orders, or advanced multi-leg orders? These are crucial for traders who like to "set it and leave it" so they can go about life while their orders are being filled by the broker.
  
  
• Reliability and Security: This should be non-issue these days as most brokers are beholden to the standards set by the SEC and FINRA. However, you want to choose a brokerage platform that is reliable. The last thing you want is a glitch in the platform during crucial market times.
  
  
• Education and Customer Support: For beginners, a little hand-holding is often necessary. You'll want to make sure that your broker offers educational resources for not only their platform, but also for trading in general. This is a great way to shorten your learning curve in the markets.
  
  
• Your Experience and Strategies: Last but not least, ensure that the broker you choose aligns with your experience and strategies. If you are a more advanced trader or algorithmic trader, you'll want a platform that is capable of fulfilling your strategies.

2. Access to Specific Asset Classes

Access to the common futures assets may vary from broker to broker. Some of the more popular futures brokers offer access to a wider range of assets. Let’s look at a brief comparison of some of the popular brokers and what they offer. This is not a definitive list and may change from time to time:

As you can see, some brokers offer more access to specific assets. You’ll want to consider this depending on your strategies and the type of assets you’d like to trade.

Most Common Asset Classes for Futures Trading:

Futures contracts are based on a wide array of underlying assets. Here is a list of the most common assets traded in futures markets.

• Equity Indices: As it suggests, these contracts track the underlying stock indexes like the S&P 500 or the Nasdaq 100.
• Energy: These include crude oil, natural gas, gasoline, and heating oil.
• Interest Rates: Interest rate futures allow you to hedge or speculate against Treasury’s and other bonds.
• Metals: Gold, silver, copper, aluminum, and other metals
• Cryptocurrencies: Bet on assets like Bitcoin and Ethereum without actually purchasing the cryptocurrency.
• Livestock: Cows, hogs, and other animals
• Agriculture: Corn, wheat, soy and other products like dairy
• Soft Commodities: Coffee, cocoa, sugar, and cotton are considered soft commodities. 
• Other Commodities: Lumber, wool, rubber and other commodities fall into this category.

Some of these categories overlap and are loosely defined. There is no hard and fast rule for each of the commodities listed, and not all of them will be traded by all brokers or trading platforms.

Do your research and determine which commodities and assets you want to trade, then find out if your broker will allow you to participate in those markets.

3. Fees and Commissions

One of the most important things to consider when choosing a futures broker are the fees and commissions they charge for trading. Let’s look at some of the fees you might expect, and how they can affect your bottom line.

1. Commissions: Many brokers still charge a commission every time you place a trade through their platform. This is often pennies on the dollar, but it can add up quickly if you are placing a high volume of trades. Make sure you know if they charge a flat fee or variable fee based on your trading volume. Also, if a broker advertises free commissions, check to see how well they fill you. Many brokers will sell your “fills” to a middle man for a small profit to offset the commission loss.
   
   
2. Exchange and Regulatory Fees: These fees are in addition to a broker’s commission. Mostly fixed fees, these are attached to your trades as small per contract fees that a broker must pay the regulatory agencies with.
   
   
3. Data and Platform Fees: In order to access the liquidity data, time and sales, and Level II, you’ll have to pay for real-time market data. Additionally, if you’re paying for an advanced or proprietary trading platform, you can expect a monthly fee there as well. These all add up, especially for smaller accounts, so take consideration whether they are worth the cost.
   
   
4. Inactivity Fees: If all the other fees weren’t enough, guess what? Yep, you get penalized by some brokers if you don’t trade regularly. After all, they make money off of you when you trade. It’s like squatting a waitress’s table for 5 hours all night. She can’t turn that table for extra tips. So, you can expect to get charged for not trading frequently.
   
   
5. Hidden Fees: Sometimes the fine print will include “hidden fees.” Be sure to read the broker’s fee schedule and terms of service carefully before you sign up. 

Margin Rates

Margin rates will vary from broker to broker and will depend on several factors like:

• The type of contract being traded
• The exchange where the contract is traded
• The broker’s own policies

When analyzing this piece of choosing a future trading platform, consider the following types of margin and general guidelines for the industry.

Initial Margin

This is going to be the amount of money a broker requires to open a futures account and take a position in a trade. Most initial margin rates typically range from 3% to 12% of the contracts total value. For example, a contract worth $2000 might require $200 initial margin, or 10% of the contract price.

As an example, Interactive Brokers states at the time of publishing that the CME Micro Bitcoing Futures (MBT) and CME Micro Ether Futures (MET) have an initial margin rate of $1,756 and $95 respectively. This is subject to change. For a comprehensive list of their margin rates, click here.

Maintenance Margin

This is the minimum amount of money that you must “maintain” in your account in order to continue holding a futures position. If you take a series of losses and you account falls below this minimum, you might fall prey to a “margin call.” Margin calls require you to deposit additional funds in order to bring your account back into good standing.

Day Trade Rate

Some brokers may offer a lower margin rate for day traders. As long as the trade is opened and closed in the same trading session, traders might enjoy lower margin rates since the risk of carrying a position overnight is lessened. These details would be set by each broker individually.

Customer Support

There are several things to consider when choosing a trading brokerage, and customer support is important for some people. After all, if you don’t understand the platform or get stuck in a trade and things aren’t working properly for you, you might need to reach out in a moment’s notice.

Many brokers will offer a trial run. If you can, test out the customer support in these crucial areas:

1. Availability and Responsiveness: Futures trade 24/7. Unlike stocks, a lot of trading occurs outside of normal business hours. To that end, make sure you broker offered customer support 24/7 as well. You never know when you’ll need assistance with your account or your trades.

2. Multiple Support Channels: Email, live chat, social media, phones, or messenger. However you can get in touch, the better. And the more avenues your broker has for communication, the easier it will be to get in touch with them.

3. Knowledgeable Support Staff: Customer support is only as good as the staff. If you have a team who can’t answer frequent questions about the product or the type of trading you’ll be doing, then it’s pretty worthless. Make sure the support understand the products, the platform, and trading rules at the very least.

4. Language Support: English may be the de facto language for much of the world’s business, however, many traders speak different languages. If you prefer communicating in a language other than English, be sure to vet your broker to see if they offer that language through support so that your questions are answered effectively.

5. Account Management Support: Aside from general support questions, you may want a dedicated account manager who can personalize the experience and provide higher level guidance for your experience. These are usually reserved for higher wealth clients, so keep that in mind.

Educational Resources

Many futures brokers have taken the time to build vast amounts of educational content on their platforms. Many of these are geared to educating beginner investors on the basics of trading and investing, but will often include materials to help you understand their platform.

At the very least, you’ll want to run through introductory course materials to understand the basics of futures trading: what contracts are, how they work, different types of futures, etc.

As you grow in your experience, you’ll want to check out more advanced trading topics. Well-established brokers will have plenty of video tutorials and webinars for these sort of topics. Advanced topics might include complex trading strategies, risk management techniques, or advanced technical analysis.

Additionally, any good trading platform or broker will come with a glossary of terms and FAQs to help you find your way through the new language of trading and the oft-asked questions of beginners. 

Lastly, some brokers will actually offer mentorship and coaching programs through experienced professionals. This is a great way to fast-track your learning and gain personalized experience in the markets.

Comparing and Evaluating

There are two tried and true ways to compare and evaluate futures brokers. One is by trialing the platform, the other is by reading reviews.

If your broker wont’ allow you to download and try the product, you might deposit a small amount just to do so. However, many brokerages will offer demo accounts that allow you to play with the tools and features before you decide to make real trades.

Here at TradingSim, we offer something similar. We have a dedicated futures demo trading server that you can access 24/7 to help with training. It comes with a 7-day risk free trial.

If your broker of choice doesn’t offer a demo account to play with, you may only have reviews and reputation to fall back on for deciding. Many reviews online are nothing more than paid advertising, so be sure you read honest reviews from real customers, not just bloggers. Use the criteria we’ve discussed so far, weigh the pros and cons, and make your decision that way. 

Keep in mind, you don’t have to marry your broker. Many traders have multiple brokers, or bounce around until they find the one they like best.

Making Your Final Decision

We hope you’ve found valuable tips for choosing a futures trading platform in this essential guide. Remember the following criteria:

• Trading Platforms and Tools
• Futures Products Offered
• Commissions and Fees
• Customer Support
• Minimums and Margin Rates
• Educational Resources
• Reputation and Reviews

If you’re in the market for learning how to trade futures, give us try here at TradingSim. We offer a robust simulator with all of the most popular futures contracts. And the best part is you can trade risk-free until you find consistency in the markets.

Here’s to good fills!