Best Futures Trading Platform 2023

This guide will take you through our research on the best futures brokers. We base our analysis on a variety of factors.

When choosing the best futures trading brokerages, you must balance low commissions, easy-to-use platforms, customer support, and research options. On top, your futures trading platform should have charting and screening tools to help your decision-making.

Best Futures Trading Platforms 2023

Here is a list of our favorite Futures trading platforms. When compiling this list, we considered usability, fees, customer support, and more. 

1. Interactive Brokers – Best Futures Broker Overall
2. Tradovate – Best High-Volume Futures Trading Platform
3. TD Ameritrade – Best For Options Trading
4. eTrade – Best Discount Futures Broker
5. Ninja Trader – Top Futures Brokerage For Advanced Traders
6. Tradestation – Great Futures Broker
7. Optimus Futures – Top Micro Futures Broker
8. Charles Schwab – Top for Fund Investing
9. Generic Trade – Best No Volume Requirement Futures Trading Platform
10. Lightspeed – Advanced Futures Trading Trading Platform
11. Discount Trading – Great For High-Volume Futures Traders

What is Futures Trading? 

Futures are derivative financial contracts that require traders to speculate on the future price of a security or commodity. A futures contract enables investors to buy or sell assets at a pre-determined price and time.

The futures contracts also set out the quantity of the assets. These contracts are standardized to enable trading on the trading platform. Contracts can be used to trade with speculation or hedging.

Investors can trade futures on:

• Market Indices
• Commodities (natural gas, crude oil, corn, and wheat)
• Metals (gold and silver)
• Currencies (including Bitcoin and other cryptocurrencies)
• Treasuries
• and more…

Here are a few terms to familiarize yourself with futures if you’re a beginner or looking to brush up on your knowledge.

History

Futures are one of the oldest derivative financial contracts. It originated from farmers who needed to hedge against changes in crop prices between planting and harvesting. 

It is for this reason that they include livestock like cattle, grain, corn, and wheat. 

What are Financial Derivatives?

Futures are financial derivatives. In simple terms, financial derivatives are instruments that get their value from the price fluctuation of another instrument. 

Leverage

Leverage is a crucial aspect of trading. Leverage is used when you don’t have enough money or assets to pay for a contract when you start a trade. You will then pay the minimum margin amount upfront to enter the position. 

The margin depends on the margin requirements of the asset and index that you are trading. Remember that when you trade on leverage, there is a higher potential for both gains and losses.

Variety

When trading, you should know the variations among different futures. For example, day trading futures vs stocks is different. It is important to understand that you are not buying shares but trading contracts. 

Each of these contracts has a standard size that is set by the exchange that it appears on. 

First Notice Day

The first notice day (FND) occurs the day after a trader is obligated to deliver the contract’s underlying commodity physically. 

The FND will vary depending on the contract and the exchange rules. 

It is common for investors to close their positions before the FND because they don’t want to own physical commodities. 

The Last Trading Day

The last trading day is precisely what it sounds like. It is the last day the futures contract can be closed or traded before the delivery of the underlying asset.

It is important to keep price fluctuations in mind. 

Stock Futures

Stock futures are cash-settled futures contracts. These are settled based on the value of the stock market index. You should know that stock futures are high-risk trading instruments in the market. Stock market index futures can be used as indicators to decide market sentiment. 

Margins

Futures margins refer to the amount of money that traders deposit and keep on hand when future positions are opened. Not to be confused with a down payment. 

You should also remember that although the term margin is used across various financial instruments, there are differences between its uses. 

Forward Price

The forward price refers to the price difference between the fair price and the market price. Generally, the forward price would match the market price. 

Delivery Date

The delivery date is the day that shares or underlying commodities of the contract are transferred to an investor. The delivery date is also known as the maturity date of a contract. 

Taxation and Regulation

What makes futures a great option is that it benefits from favorable tax treatment according to Section 1256 of the Internal Revenue Code (IRC). 

According to Section 1256, futures contracts traded on the US exchange, dealer equities option, foreign currency contract, dealer securities futures contract, or index futures contracts are taxed long-term capital gains rate of 60%. They are also taxed short-term capital gains rate of 40%. This occurs regardless of how long the trade was opened. 

If investors want to carry back any losses under Section 1256, they will have three years to do so. This is under the condition that the losses being carried back do not exceed the gains of the previous year. The losses also cannot increase the operating loss of that year. 

Generally, brokerages and exchanges are regulated by financial institutions or companies. An example of this is the Commodity Futures Trading Commission (CFTC) which was founded in 1974. The CFTC is an independent regulatory organization based in the United States. 

Broker regulations differ from country to country and region to region so keep this in mind when choosing a broker. 

How Much Does it Cost To Trade Futures?

Before jumping into futures, here are a few common futures trading commissions you should be aware of.

Broker Commissions

Brokerage commission fees represent the broker and the futures commission merchant (FCM) allowing the trader to interact with the futures market. 

The scale of brokerage commissions is commonly a point of negotiation between the brokerage firm and the potential client. 

Active traders are generally offered discounts on commissions and other cost-reducing benefits. 

Like all fees, broker commissions vary depending on the broker or trading platform you use. 

Clearing Merchant Fee

Clearing fees are charged by assessed on securities transactions. It involves clearing houses to complete the transaction by using their facilities. Clearing fees include all actions from the time of commitment to the time the transaction is completed.

The clearing fee is commonly included in the transaction fee.

Order Routing Fee

Commonly, orders are routed to a broker before hitting the market. Discount brokers can sell order flow to third parties and trade them against client orders. Some trading brokers might charge an order routing fee for this service.

Order routing fees are commonly charged for day-trading, which requires direct market access brokers. 

Exchange Fee

The exchange charges exchange fees in return for allowing access to the market. These are assessed per transaction and will vary depending on the market and the financial instrument being traded. 

These fees are also subject to change over time depending on market conditions. If you want to trade, you should keep up to date with these fluctuations. 

National Futures Association Fee

National Futures Association (NFA) fees are the smallest fees associated with trading futures. The NFA is a self-regulatory body of the derivatives industry. The association requires a fee per side of every exchange-based futures contract you trade. 

The NFA fee is generally billed directly to the trader via the trading account and should be included in the R/T pricing schedule. 

Other Fees

Here are some other fees associated with futures:

• Cost of Tender: This is the total charges associated with the certification and delivery of the commodities that underly futures contracts
• Forex (FX): Forex is a market where currencies are traded. It also refers to currencies traded.

Picking a Good Futures Broker

There are many factors to consider when picking a broker. Below, we list the most important things to keep in mind.

Regulation

An important thing you should check out when choosing a platform is whether it is regulated. It is also important to check out who they are regulated by. Keep in mind that not all regulatory bodies are created equal so you should ensure that they are reputable. 

Regulation offers some protection for your assets and money. It also gives traders some assurance that the trading platform is legit. 

Safety

This is another important aspect of choosing a Futures Broker. Most trading platforms offer a two-step log-in system to protect your account and private information from hackers. 

Trading platforms may also offer cold storage for your assets which can offer a measure of protection against hackers.  

Customer Service

Brokers should offer excellent customer support. Ideally, you want live support that can answer your question in real-time.

Fees

Before jumping in and choosing a broker, you should be aware of the fee structures. You should aim for brokers with transparent pricing to avoid those pesky hidden fees. 

Pricing varies from platform to platform, and while it might be tempting to go with the cheapest option, this might not always be for the best. We advise that you do your research and make sure that you’re getting value for your money.

Available Securities

Investment securities are tradable financial assets. These include equities or fixed income instruments. 

When choosing a broker, you should check out which products they offer. If you’re a beginner, this might not be as important. Active and professional traders should look at the available securities before choosing a futures broker. This is important if you’re looking to diversify your portfolio. 

Trading Platforms Available

Whether you’re a beginner or an advanced trader, having access to a full-featured trading platform is a must. When checking out a trading platform, you want to ensure that it offers a robust array of tools, research, and educational content. 

You should also ensure that you can access fast price updates and all the technical and statistical data you need. 

If you’re a trader on the go, having a broker that offers multiple platforms like web-based and mobile apps is a must. 

Research Tools

When choosing a broker, it is essential to ensure that their platforms offer robust research tools. 

Research tools are essential when developing trading strategies and deciding which assets to invest in. 

Tools that you should look out for are charting and live data feeds. 

Education

If you’re a beginner, you should check out the educational content a platform offers. Education content includes webinars, paper trading accounts, and tutorials. 

It is essential to ensure that the platform you choose offers robust educational content. This helps you familiarize yourself with trading and the stock market. It can help you develop a trading strategy and decide which assets to trade.

What to know before futures trading

There are many aspects, and before you jump in, you should familiarise yourself with them. 

One of the aspects is that it comes at a cost. As with all financial trades and investments, you will have to spend money to make money. 

Another aspect is that futures contracts contain underlying assets such as commodities, metals, energies, and equities.

Something you should be aware of is the FINRA pattern day trading rule. This is a trading strategy and a classification given to traders who execute daily trades for five business days. 

Benefits of Futures Trading

There are numerous benefits to trading futures. Here are a few.

Offers Flexibility and Diversity

Trading with futures allows you to access and engage with various asset classes. It offers you flexibility in the trading strategy. 

The flexibility of trading options is excellent for active traders. Traders can secure profits from both long and short positions as well as bear markets. 

Futures offer a diverse product offering. Commodities, metals, equities indices, energies, and interest rate markets are all available. 

Fixed Upfront Trading Costs

The margin requirements for commodities and currency futures have remained relatively unchanged for years. These requirements are well known within the industry. While margins may fluctuate temporarily depending on the asset but this is rare. 

Good for Certain Investments

Futures are great for trading certain investments like currencies, indexes, and commodities. Generally, futures contracts have high levels of leverage which is excellent if you’re cautious about risks. 

High leverages let investors participate in exchanges and markets they might not have accessed otherwise.  

Futures and Cryptocurrencies

Crypto futures, much like futures contracts, are financial derivatives. A crypto futures contract works similarly to futures contracts. Traders agree to buy or sell an asset at a predetermined price and date. 

With crypto futures contracts, the underlying asset is digital tokens or currencies. 

Futures Options

Futures options are a low-risk introduction to futures markets. They are a great way to start if you’re a beginner at trading or futures. 

What makes them great is that they lack the risk of futures contracts. With futures options, you have the right to buy or sell a contract at the strike price before the expiry date, but you are not obligated to do so. 

With options, you can also choose between taking a long or short position because of the call and put options you have access to. 

Day Trading Futures

Day trading futures involves buying and selling a futures contract on the same day. This is done so that positions are closed before the market closes. 

The time between a trade opening and closing can last a few minutes to the entire trading session.

Pros

• Less risk
• Offers great experience
• Allows for high volume trading which is great for active traders

Cons

• Not suitable for beginners who have no experience in exchanges or investments
• Requires a substantial amount of capital to get started since commissions can easily add up
• Not suited to casual investors or traders 

Stocks vs Futures

Stocks and futures share a few small similarities, but overall they are different. 

The main difference is that buying stock gives you ownership over something relative to the amount you paid for it. An example is buying stock in a company. If you buy stock to the value of 1% of the company, you essentially own 1% of the company.

Futures contracts are very different. When buying a futures contract, you are entering an agreement to receive a commodity for a specific price on a predetermined day. 

When trading futures, you might not intend to own that commodity and instead want to sell the contract at a profit once its value increases. 

Futures Contracts Explained

A futures contract is an agreement between parties to buy or sell an underlying commodity asset or security at a predetermined price and date. 

Futures contracts are generally standardized for quality and quantity to allow trading on futures exchanges. 

Traders engaging in futures contracts are obligated to buy or sell their contracts once it expires. 

Margin and Leverage in Futures Trading

In futures, margins are money traders set aside to trade a futures contract. In simple terms, you can think of margins like a down payment that holds an open speculative position instead of a sale. 

Margin requirements are the minimum amount you can set aside to trade futures contracts. Margin requirements depend on the asset and index you wish to trade. 

Leverage is used when you wish to buy a contract but does not have enough funding to do so. Traders can borrow money by paying a margin.

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