10 Best Futures Trading Brokers for 2023

A futures broker or futures trading broker refers to a brokerage firm that facilitates the buying and selling of futures contracts on behalf of clients. These brokerages serve as intermediaries between traders and futures exchanges.

Futures are standardized financial contracts that obligate a buyer to purchase, and a seller to sell, a specified quantity of an underlying asset (or its cash equivalent) at a predetermined price on a specified future date. These contracts can be based on a wide variety of underlying assets, including commodities (like wheat, oil, or gold), financial instruments (such as interest rates or stock indices), and currencies.

In addition to executing trades, futures brokerages may offer a range of services including market research, trading advice, advanced trading platforms, educational resources, and margin lending. In fact, a futures trading account can be categorized as either a margin account, which allows for leveraged trading, or a cash account, where traders can only trade with the cash they have deposited.

In this article, we have grouped the best brokers and platforms for investing and trading in futures.

In choosing them, we considered the following factors:

• The overall quality of the broker
• The commissions charged by the broker on futures
• The ways of investing in futures offered by the broker

Summary

What are the best futures trading brokers?

Below our curated list of the best futures trading brokers, with details of features and characteristics.

How much money does it take to trade futures?

To start trading futures, an investment of at least $300 is generally needed.

With this amount each trader, considering the maximum leverage of 1:10, will be able to have the margin needed to invest in a good portion of the futures on the market.

The amount to be invested, however, can be lower or higher depending on the minimum margin allowed by the broker for certain categories of assets (such as index futures).

Types of futures contracts

The main types of futures contracts are:

• Futures on stock indices, such as the S&P 500
• Futures on currencies, such as the EUR/USD exchange rate
• Futures on commodities, which in turn are divided into Hard (such as precious metals) and Soft (such as coffee and wheat)
• Bond futures, such as government bonds

Can leverage be used to trade futures?

Futures can be traded with leverage up to 1:10 depending on the broker’s policy.

Trading with 1:10 leverage means multiplying the market exposure of one’s investments by 10, thus causing greater losses or gains depending on the outcome of the trade.

In other words, investing $100 will allow one to invest in a futures contract that is worth $1000, but the gains and losses from trading the latter will be projected onto the $100 invested.

So if the futures contract closes at $990, i.e. loses 1% of its value, the trader will lose $10 on the $100 invested (i.e.10%), and not just $1 as would have happened if he had not used leverage.

Pros and cons of investing in futures

Pros

The main advantages of investing in futures include the transparency of the market, the fact that it is a market based on tangible assets, and that it is virtually impossible to manipulate market prices.

In fact, futures prices vary based on tangible future events and scenarios that can tangibly alter supply-demand laws. This characteristic makes futures one of the most transparent assets in which to invest.

Cons

However, investing in the futures market is one of the most complex assets to carry out effectively.

Each futures asset, even if part of the same category, is regulated by different market laws. To predict the change in valuation on coffee and soybean futures contracts, two totally different types of valuation must be carried out.This requires not only knowledge of technical analysis, but also requires individual knowledge of how coffee and soybean crops work, which countries produce the most, what are the ideal conditions for getting a better or poorer crop, what are the main varieties and what natural needs they have, and much more.

How long do futures contracts last?

Futures contracts have a monthly maturity.

This means that there is one futures contract for each month. If you don’t want to trade a futures with such a low maturity, you can invest in the following months’ futures.

In other words, if it is early January and you want to invest in a long-term futures, you can buy April, September or December ones depending on how long you are willing to keep the position open.

Can I trade futures without a broker?

Trading futures always requires an intermediary, whether it is a bank or a broker.

In fact, futures are a complex market to access without having a brokerage entity.

As with stocks, futures are listed on particular exchanges that accept order requests only from institutions.

If you do not want to open a trading account with a broker, you can ask your bank if they offer investment services. If so, your bank may give you the ability to buy and sell futures through their systems.

However, always consider the fact that brokers generally offer much more competitive fees than banks.