Anyone use Etrade futures? I have a brokerage account there and thinking about opening a futures account somewhere. I don't plan on doing a lot of futures trades but it would be nice to occasionally trade some Eurodollars, Vix, etc.
Etrade futures
- Thread starter newwurldmn
- Start date
.Newwurldmn, here is the conundrum. I have ZERO, count that ZERO faith in every single FCM on the planet. I think every one of them is a ticking time bomb. The retail guys that offer futures are charging you a premium for insurance. Think of it as protecting your capital. Yes they charge more, but at the end of the day your money will be there. I guess at the end of the day you have to choose either the red pill or the blue pill. The choice is yours.
Outside of the quality of their balance sheets, are all the FCM's the same in terms of execution and services?
Does the quality of the balance sheet of the larger company matter or are the futures businesses separated?
I'll try to answer this the best I can as I know there are far more knowledgeable posters here to respond to this. Execution by definition should all be the same. I say that because unlike the equity world where there is payment for order flow and routing to 30 different exchanges, futures all go to the same place. The execution is highly dependent on your technology and not on the broker.
As for services, yes, there is a difference. Usually the role of the "IB" is to enhance the services of the FCM so they can offer software deals, customer service, research reports and troubleshoot software issues. So for example you might clear RJO as an FCM but use Maverick74 Futures as your IB.
Regarding the balance sheet, I think the big draw that retail brokers offer is the cash sweep. So say you have 100k in your retail account and you put on some futures that require 5k in margin, your retail broker will only move the 5k over into the futures account leaving the rest of your 95k protected in cash on the retail side. Compare this to say depositing 100k with Maverick74 Futures and using 5k for margin and leaving 95k on MY balance sheet. VERY VERY different story.
One thing you can do to protect your capital at an FCM is buy treasuries, not futures, cash. You can borrow 95% against them. So I open an account with Maverick74 Futures with 100k. I buy 100k in Treasuries in my name. I put on that same trade with 5k in margin using the treasuries as collateral. The benefit here is if the firm goes under, they CANNOT take my treasuries as that is NOT in the cash account of the IB or FCM. All I could lose is the 5k I posted in margin on the futures. And of course one side benefit is your earn interest on your treasury holding vs ZERO on your cash in the FCM. FCM do NOT pay interest on cash holdings.
I think E-Trade offers a watered down version of TT to execute futures on at no extra cost so that is one plus other then that, don't know anything specifically about them.