If you want to start trading futures or switch brokers, visit NinjaTrader.
Futures are financial contracts that legally bind the parties involved to buy or sell an asset at a predetermined date and price on a publicly traded exchange. Futures markets were created to assist farmers and other commodity sellers offset or reduce risk in the future.
These contracts involve speculated or predicted future values of assets like currencies and stock market indexes and bring considerable high level of risks.
You can also take a look at our list of the best futures trading software to start off on the right foot.
Table of contents [Show]
- 1. Best for Active Traders: NinjaTrader
- 2. Best for Professional Traders: Discount Trading
- 3. Best for Trading Micro Futures: Optimus Futures
- 4. Best for Options: Generic Trade
- 5. Best for High Volume Traders: Tradovate
- 6. Best for All Trading Levels: TradeStation
- Benefits of Investing in Futures
- Risks of Investing in Futures
- Definitions of some Frequently Used Terms in Futures Trading
- What to Look for in Futures Trading Software
- Is Futures Trading a Good Investment?
- Frequently Asked Questions
1. Best for Active Traders: NinjaTrader
With only $400 required for you to start trading, NinjaTrader charges the lowest commission when compared to other futures trading software. The software’s high capability enables traders to visualize the market, analyze market order flow and uncover potential trading opportunities.
It’s suitable for beginners, intermediate and advanced futures traders looking for 24/7 action. Active futures traders hoping to leverage the NinjaTrader platform will enjoy:
- Advanced charting capability with the ability to trade directly from their charts
- The ability to confirm futures market movement in a specific direction using market order flow, volumetric bars and market depth
- Monitoring of hundreds of markets using robust real-time analysis based on your predefined condition to ranking, scanning and sorting
- Advanced alerting capability through custom notification and social media sharing
- Free daily webinar training
- Free real-time futures and forex market data
Although you only need $400 minimum to start trading, having an account minimum of $1000 when funding your brokerage account through NinjaTrader automatically grants you access to the software for free.
As a beginner with little or no trading experience, you can start with the demo account and progress accordingly. Advanced traders might consider licensing the software. Licensing grants you access to advanced trading management (ATM) strategies and great commissions.
2. Best for Professional Traders: Discount Trading
Discount Trading offers multiple trading platforms at low rates. They support the industry’s leading platforms from Sierra Chart, Multicharts, Firetip, MarketDelta Cloud, Rithmic, X Trader, CTS T4, MotiveWave, QST, CQG and many more.
You can gain access to over 20 platforms to meet your budget and needs. There are many options whether you trade on a Mac, PC, smart phone, tablet or phone in your orders.
Additionally, Dicount Trading offers a 24-hour trade desk available during all trading hours.
3. Best for Trading Micro Futures: Optimus Futures
Optimus Futures is retail-focused futures broker specializing in micro futures. Their platforms, clearing relationships and exchange access connections have all been established and integrated into an infrastructure that enables their customers to get access to the latest technology and widest selection of futures trading products available in the marketplace today.
Their signature platform, Optimus Flow, is completely free to all their customers. With specialized indicators designed to observe buying and selling pressure, the platform offers unique view toward price action that many other traders may not be able to see.
Live Account Highlights:
- $100 Account Minimum
- $40 MES Day Trading Margins
- $0.50 Commissions
- Free Trading Platforms
- Expedited Account Approvals
- Fast Funding/Withdrawal
You can also try a free demo of Optimus Flow and trade risk-free in a simulated environment powered by live market data.
- DOM & Chart Trading (Time and Tick Charts)
- Order Flow Tools
- Strategy Back-testing with Live Data
- Market Replay
- Third-Party Platform Demos Also Available
Trading futures and options involves substantial risk of loss and is not suitable for all investors,
4. Best for Options: Generic Trade
The 2 Generic Trade softwares, Generic Trader Online and Generic Trader Professional, are fast, reliable and highly-efficient. These softwares are an ideal platform not just for futures and options traders but also for low derivatives traders.
Investors trading futures and options on the Generic Trade platform will enjoy:
- A simple rate structure made up of $0.59 commission per side on all trades regardless of account volume and size
- 0 account opening minimum
- Lowest exchange-allowed futures margins and aggressive day trading margins
- Round the clock tech support and customer service
Tip: The $0.59 commission per side on all trades excludes transaction fees charged by exchanges and NFA.
Generic Trade is the 1st choice software for options traders because a combination of high-tech plus low cost guarantees great trading values for such investors. You can begin trading with Generic Trader Online, and if you are an active day trader, Generic Trader Professional is perfect for you.
Like eSignal, Generic Trade is also customizable. You have access to analytics and can easily carry out trade with one click. You can access the software through their mobile app or download the software on your Macbook and PCs.
5. Best for High Volume Traders: Tradovate
Tradovate is an innovative futures broker offering a tiered pricing structure and a comprehensive proprietary trading platform you can access with additional fees. Tradovate offers a community tab that allows you to connect with other traders and exchange trading ideas. New users can test out Tradovate’s platform with a demo account and free trial, which allows new investors to master the learning curve before opening an account. Though the platform might be too complicated for traders who prefer a simplified experience, it can be a strong choice for more experienced users.
And Tradovate’s platform doesn’t only allow you to create custom charts — it also allows you to save those charts and access them across platforms, including both PC and Mac. For example, if you create a custom chart on your desktop, you can access it from your mobile account. This can be an especially useful feature if you usually switch between multiple platforms when investing and trading.
6. Best for All Trading Levels: TradeStation
With a 0 account minimum and no commission, TradeStation is by far the best overall software for futures traders irrespective of trading experience. You can choose between either the TradeStation Go account or the TradeStation Select account. Both are unique software with hassle-free signup processes.
If you are a beginner, consider starting up with the TS Go account as it requires a 0 minimum. Desktop users are charged a $10 commission.
The TS Select account is more in-depth and therefore suitable for experienced traders. However, it requires at least $2,000 to get started, and commission-free holds up to 10,000 shares. After that, you start paying a $0.005 commission per share.
Benefits of Investing in Futures
Despite the risks involved in trading futures, there are immense benefits. Some of the benefits that make trading futures attractive are.
High liquidity means futures are traded in large volumes daily. A high number of traders means market orders can be executed quickly. The massive volume of trade helps prevent price fluctuations. For example, a large position can be closed without affecting the price adversely.
Investors with good judgment can make a lot more in futures trading than other investments. This is because they are essentially trading with 10 times as much exposure than with spot trading.
Stable Margin Requirements
For most currencies and commodities in the future market, the margin requirements are well-established. So a trader is not confused about how much margin he should put up in a contract.
Diversification and Hedging
Futures are vital financial instruments for hedging or diversification of portfolios. By trading at different predetermined periods, future contracts automatically allow manufacturers and consumers to hedge in a way that closely reflects their risk appetite.
Commissions charged on futures trading are significantly low compared to the other types of trade. And the best part is the fact that these commissions are usually charged at the close of a position.
Most brokerage charges little to no commission, depending on the services they provide. On average total commission or brokerage charges can be as low as 0.6% of the contract value.
Risks of Investing in Futures
Some of the apparent risks associated with trading futures are:
Futures traders are exposed to unlimited liability. This means that you lose beyond what you commit to a position in futures, unlike other types of trading where you only lose your committed capital. Sometimes you can end up losing more than the amount of money available in your futures trading account.
No Control Over Future Events
One common drawback of investing in futures trading is that you don’t control future events. Natural disasters like earthquakes and political unrest among other factors may disrupt your estimated demand-supply equilibrium.
Futures trading can give you up to 5 to 100 times leverage, depending on the initial margin (a fraction of the total margin). This is great if the prices are moving as you speculated, and you can make enough to cover the interest and still make a profit. However, when the price moves against you, you will make huge losses.
For example, let’s assume you need to pay only $10 in initial margin for a $100 asset. If the asset price goes down by $10, you instantly make a 100% loss on your initial margin. Meanwhile, the cost of the asset only dropped by 10%.
Definitions of some Frequently Used Terms in Futures Trading
Account equity: The net worth of your account, or the value you hold over your initial investment.
Futures commission merchant: A certified and licensed broker who can write and execute futures contracts.
Futures equivalent: A term used by brokers to compare options and futures, demonstrating how many options would satisfy just one future.
Grantee: The person or entity on the receiving end of an investment contract.
Grantor: The person or entity providing goods or services as part of an investment contract.
Liquidity: Relates to how active a market is. High liquidity means a large number of traders are actively trading.
Margins: It represents the money you keep with your broker as a form of collateral in case the market moves against you and results in losses.
Volatility: Measures price fluctuation in a market. The futures market doesn’t fluctuate drastically.
What to Look for in Futures Trading Software
Some features to look out for before choosing a future trading software include:
You should go for software that is easily accessible on various platforms — web, mobile apps and even desktops. This gives you a lot of options, so you are not just limited to a single platform.
Graphs and charting tools
For you to trade effectively, you need to monitor trading graphs and use charting tools. Look out for trading software with graphs and charting tools and, if possible, come with educational resources to help you learn.
Choose a platform that comes with the necessary features you need at the most reasonable price. Although some platforms offer varied pricing tiers, and in most cases, lower fees mean fewer features.
Traders can choose the low-fee trading platforms and integrate them with third-party applications or use them independently
Is Futures Trading a Good Investment?
Futures trading, although inherently risky, is profitable if you learn to manage the risks involved. It’s essential to choose the right trading software and broker that can give you access to digital tools to help you monitor and trade profitably.
Get started now with our list of the best futures trading software.
Frequently Asked Questions
Can futures trading make you rich?
The high liquidity of most futures markets and leverage makes it very easy to make money from futures trading.
How much money do you need to start trading futures?
The amount needed depends on the broker. Some brokers require a minimum of $500 and below.
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