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 futures involve 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.
5 Best Apps for Trading Futures
1. Best for Trading Futures 24/7: 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.
- Tiered commissions for futures are much easier to manage, especially when you aren’t trading a lot
- You can easily set up signals and alerts for your portfolio
- International traders can access the futures market here
- While IBKR offers a massive range of investment tools, you need to make sure you’re comfortable with investing so that you are not overwhelmed by how expansive the site is
2. Best for Desktop Trading: 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.
- The platform offers a high APY on your uninvested cash, making all your money work for you all the time
- The option to invest in e-minis makes it even easier for you to diversify your portfolio
- Low contract fees and commissions help you save cash, especially if you’re a volume trader
- You may find it difficult to uncover the information you need, which can be critical for new or novice investors
3. Best for Fund Investing: 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.
- Futures contract pricing is relatively low, considering many other brokers charge more
- Your dashboard allows you to invest in futures, options and stocks all in the same place
- There are quite a few educational videos that can introduce you to investment concepts
- Support is not available on the weekends, which could be troublesome for those who are reviewing their accounts and cannot reach out during the week
4. Best for Options Trading: 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.
- Fractional investing is a good way to start buying into the stock market
- $0 minimums and commissions on stocks, ETFs and options make it much easier for you to invest and build a portfolio before fees become more prevalent
- TD Ameritrade may say that it works for all traders, but you may feel as though you “fall between the cracks” when using this platform as it might offer too much or too little, depending on your specific needs
5. Best for Futures Trading: 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.
- You can use TS Select to trade for free
- Mutual fund and futures transaction fees are relatively low
- Beginning investors can learn quite a bit while saving money using this platform
- There are some traders who may not feel like they have the expertise to use TradeStation and build a portfolio because the platform is geared towards advanced traders
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.
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 with the best apps for trading futures 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?
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.
Are Futures Riskier Than Stocks?
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.
What are the best apps for futures trading?
Check out Benzinga’s list of the best apps for futures trading in the article above.