Traders typically have accounts with brokers that direct orders to the various exchanges to buy and sell currency futures contracts. A good futures broker offers low commissions, current research, an intuitive trading platform, useful screening and charting tools and excellent customer service. It all depends on the qualities or characteristics you find preferable in a given futures contract. As an example, the value of the S&P 500 futures contract is $250 times the S&P 500 index value. As a trader, you know that not every strategy will suit your style or match your goals. dollar currency futures contract), there are also E-Micro Forex Futures contracts that trade at 1/10th the size of regular currency futures contracts, as well as emerging market currency pairs such as the PLN/USD (Polish zloty/U.S. Both the New York Stock Exchange (NYSE) and Financial Industry Regulatory Authority, Inc. (FINRA) require a minimum of 25% of the total trade value as the minimum account balance. However, some brokerages will demand greater than this 25% margin.They are also used to hedge against large stock positions. 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. But the idea of getting in or out “quickly” really depends on how fast a time frame you’re working with. Like any market, this one has risks when trading, but the potential to see both short- and long-term gains can be substantial, thanks in part to the huge amounts of volatility that these markets are known for having. But ultimately, what counts more is how you choose your preferred futures market–meaning how you align a given market to your own personal trading strategy, time frame, capital resources, trading goals, and risk tolerance. Many investors confuse futures contracts with options contracts. Past performance is not necessarily indicative of future results. TradeStation is for advanced traders who need a comprehensive platform. We may earn a commission when you click on links in this article. The use of descriptions such as "best" are only for search purposes. As a disclaimer, you need to be aware if you’re going to day trade futures because it’s a risky business. The offers that appear in this table are from partnerships from which Investopedia receives compensation. Some contracts are more volatile on an intraday basis than others. Doing this over and over again means that your profits will continue to add up over time, giving you significant total profits when you add all the small profits together. Be prudent when you leverage positions, and never trade with money you can’t afford to lose. What makes a market “tradable”? If you’re one of them, then perhaps an illiquid market might match what you’re trying to do (if not, then you might want to stay away). Those large open outcry exchanges have now closed, but traders can deal futures electronically via the CME Group’s electronic trading platform known as CME Globex. Another category of futures popular with investors are index futures, such as the S&P 500 index futures contract. You want to be able to get in and out of a given futures contract once your contract reaches an opportune price level. CME Group. We also reference original research from other reputable publishers where appropriate. These include white papers, government data, original reporting, and interviews with industry experts. Once you have a futures trading account open and have deposited funds into it to use as margin, you are ready to make your first live futures trade. Best Brokers for Futures Trading. The Swiss shock put several large online forex brokers out of business at the time, and it stands as an extreme example of how holding a futures position can expose a trader to potentially unlimited liability. Index futures are also available for the Dow Jones Industrial Average (DJIA) and the Nasdaq 100 along with E-mini Dow (YM) and E-mini NASDAQ 100 (NQ) contracts. Remember that your market of choice can count big time when it comes to your success as a trader. Finding the right financial advisor that fits your needs doesn't have to be hard. Of course, the flip side to low margins is that you are taking larger risks with smaller amounts of capital. If you are a position trader who prefers a highly-liquid instrument with a tendency to trend smoothly, then grains might be preferable to, say, cocoa or lumber. You’ll then need to find a reputable and well-regulated online broker to execute your futures transactions through. Scalpers attempt to take short-term profits off incremental changes in the value of a currency. According to the 2019 CME study, the average daily volume (ADM) is a whopping 2,897,861. Benzinga Money is a reader-supported publication. Liquidity is a crucial factor when it comes to trading. Advertiser Disclosure: Learn more about the difference and similarities between trading forex and futures, including how and where you can start trading. If the market is limit up, you can only sell contracts, while if the market is limit down, you can only buy. Optimus Futures, LLC does not imply that you cannot find better tools or opposing valid views to our opinion. But what if that trader happens to be living in Australia, where 8:30 am in the East Coast USA can be anywhere from 11:00 pm to 3:00 am? Here are the top five online brokerages for futures trading in 2020. Dow Jones Industrial Average – E-Micro (MYM) and E-Mini (YM), Nasdaq 100 – E-Micro (MNQ) and E-Mini (NQ), Russell 2000 – E-Micro (M2K) and E-Mini (TF and RTF). The futures markets are where hedgers and speculators meet to predict whether the price of a commodity, currency or particular market index will rise or fall in the future. Financial Industry Regulatory Authority (FINRA). For a day trader, that time frame can be seconds-long. Studying the price trends associated with cycles can lead to large gains for savvy investors. One way that you can learn as you go without putting any of your money at risk is to start out paper trading. dollar futures contract). The E-mini S&P 500 futures contract has a value of $50 times the value of the index.. The 3rd option would be to buy a gold futures contract on 100 ounces of gold that has a maintenance margin amount of $11,500, so you could buy 1 futures contract and control 100 ounces of gold at $1,900 per troy ounce. The best approach to trading futures is day trading. We do our best to share things based on our experience and scope of expertise. You could buy 121 gold ETF shares costing $190 with a 2:1 leverage ratio for $11,495 so that you can control 12.1 ounces of gold. The brokerage offers an impressive range of investable assets as frequent and professional traders appreciate its wide range of analysis tools. Futures contracts on interest rates are also very popular contracts. 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. Two commonly used cycles for stock index futures are the 23-week cycle and the 14-day cycle. For instance, if your strategy needs high intraday volatility, then 30-Year Treasury bonds might not work as well as, say, the S&P 500. For a swing trader, it can mean minutes to hours. We urge you to conduct your own due diligence. Now we’re in more familiar territory. It allows smaller traders to do two things: Until April 2019, these possibilities were virtually non-existent across the four US indexes that day traders frequently traded: the S&P 500, Dow Jones Industrial Average, Nasdaq Composite, and the Russell 2000.