Thoughts on a few futures brokers I've used -- From a 25+ Year Trader

[C.D.A.]

Hi,

I started trading futures and futures options back in the mid 1990s and am surprised at the lack of knowledge by the people you'll deal with if you try to get good answers to questions, even if you're asking an employee of a futures brokerage firm!

When I have time, I'd like to try to help new (or not new) traders by doing my best to answer any questions you might have about brokers, the markets, whatever (but not teaching you how to trade successfully!).

If you're new, the first thing you're going to have to decide is where you would like to open an account. I AM NOT A DAY TRADER and never was, so I won't have a whole lot to offer on that aspect other than to say I'd advise AGAINST taking that approach to the futures markets if you want to have a better chance at being profitable.

Since I have the most experience with INTERACTIVE BROKERS [IB], I'll start this by giving a brief overview of that particular firm. I'll add to this over the next several days, as I usually don't have long stretches of free time to post.

The nutshell synopsis is this: IB is a really good firm to use if you're a new trader that wants to trade futures and/or futures options. If you plan on doing a lot of equity or equity option trading, I think you have better alternatives than IB.

If you do decide to open an account at IB and I have helped you in making that decision, I wouldn't mind if you contacted me via a PM so that I can offer you a referral (unless you have a friend with an account there -- if so, make sure you get a referral from them!).

While IB's platform (FREE) is lacking in some more "advanced" charting methods and while their Trader Workstation platform can seem overwhelming to a new user, it really doesn't need to be that complicated. Really, you can set it up to be as simple as you want it to be for your style of trading, and most of the features you will not need and will never use.

Most new traders seem to care most about costs/commissions/fees, since it's hard enough to profit from trading, the higher the transaction costs, the more you start off "in the hole."

Even though you might be a new trader, it is almost always best to shoose the "Pro" account choice instead of the "Lite" choice. "Lite" offers free equity trading, but as I mentioned above, if you plan on doing a lot of equity trading, there are better places to open an account for that.

Round-Turn costs for most futures (from here on out, when I say "futures," I'm also including futures options) at IB are likely going to end up being lower than most other futures brokers, and there are additional benefits you'll get at IB that you will probably not find at ANY other futures bro

 

[Overnight]

Round-Turn costs for most futures (from here on out, when I say "futures," I'm also including futures options) at IB are likely going to end up being lower than most other futures brokers, and there are additional benefits you'll get at IB that you will probably not find at ANY other futures bro

Yet at the same time, IB has absolutely the highest margin requirements of any futures broker out there, far and above what the exchanges require.

Just thought I'd mention it for all the new (or not new) traders reading this, since it seems you were going to just gloss over that fact.

 

[C.D.A.]

Way to jump the gun... I barely got started, and that is exactly the reason I've moved most of my funds (and ALL retirement funds) OUT of IB.

Keep your pants on, man... impatience like that is probably contributing to your failure in the markets.

 

[Quanto]

Which other brokers are you going to present under this thread?
Are they still operating?

 

[David's faith]

Yet at the same time, IB has absolutely the highest margin requirements of any futures broker out there, far and above what the exchanges require.

Just thought I'd mention it for all the new (or not new) traders reading this, since it seems you were going to just gloss over that fact.

Yes, over 20k for 1 oil contract. It's either ridiculous or absurd.

 

[destriero]

Hi,

I started trading futures and futures options back in the mid 1990s and am surprised at the lack of knowledge by the people you'll deal with if you try to get good answers to questions, even if you're asking an employee of a futures brokerage firm!

When I have time, I'd like to try to help new (or not new) traders by doing my best to answer any questions you might have about brokers, the markets, whatever (but not teaching you how to trade successfully!).

If you're new, the first thing you're going to have to decide is where you would like to open an account. I AM NOT A DAY TRADER and never was, so I won't have a whole lot to offer on that aspect other than to say I'd advise AGAINST taking that approach to the futures markets if you want to have a better chance at being profitable.

Since I have the most experience with INTERACTIVE BROKERS [IB], I'll start this by giving a brief overview of that particular firm. I'll add to this over the next several days, as I usually don't have long stretches of free time to post.

The nutshell synopsis is this: IB is a really good firm to use if you're a new trader that wants to trade futures and/or futures options. If you plan on doing a lot of equity or equity option trading, I think you have better alternatives than IB.

If you do decide to open an account at IB and I have helped you in making that decision, I wouldn't mind if you contacted me via a PM so that I can offer you a referral (unless you have a friend with an account there -- if so, make sure you get a referral from them!).

While IB's platform (FREE) is lacking in some more "advanced" charting methods and while their Trader Workstation platform can seem overwhelming to a new user, it really doesn't need to be that complicated. Really, you can set it up to be as simple as you want it to be for your style of trading, and most of the features you will not need and will never use.

Most new traders seem to care most about costs/commissions/fees, since it's hard enough to profit from trading, the higher the transaction costs, the more you start off "in the hole."

Even though you might be a new trader, it is almost always best to shoose the "Pro" account choice instead of the "Lite" choice. "Lite" offers free equity trading, but as I mentioned above, if you plan on doing a lot of equity trading, there are better places to open an account for that.

Round-Turn costs for most futures (from here on out, when I say "futures," I'm also including futures options) at IB are likely going to end up being lower than most other futures brokers, and there are additional benefits you'll get at IB that you will probably not find at ANY other futures bro

absolutely zero value add in this post.

 

[C.D.A.]

Which other brokers are you going to present under this thread?
Are they still operating?

Hi -- I apologize, but I changed my mind about submitting posts without someone actually asking a question that I think I can help answer. I am new to E.T. and didn't realize how many snarky trolls hang around here!

If you have a question about a specific futures broker, let me know and if I have experience with them I'll share that with you. It sucks to take the time to apply and fund an account only to find out that it's not suitable for you, so if I can help anyone avoid that...great.

While it'd be more helpful to more people if I answered any questions in a thread, it seems as if there are always people just looking to hijack the threads and bury the information, so a PM is fine. In fact, I am not going to subscribe to threads because I don't want to get all of the notifications when the trolls post their snarky, unhelpful contributions.

 

[C.D.A.]

Yes, over 20k for 1 oil contract. It's either ridiculous or absurd.

For a new trader, I don't have a problem with that. New futures traders don't truly appreciate the leverage they're using, so having to put up $20,000 to control $80,000 of oil is not a bad thing.

In fact, all of the brokers that allow people to open accounts with no minimum and then offer exchange minimum or SPAN are not doing the new traders any favors.

The problem with IB is that they use a one size fits all approach. As a result, any trader that becomes successful enough to trade even in a relatively small size can end up not having enough margin available to make adjustments to their positions. That's a shame, because I really liked IB and their Trader Workstation. Even with its flaws, I think it's better than most of the other platforms I've tried, but that may be because I do a lot of options trading and most little firms cater to enticing small account futures day-traders.

 

[Quanto]

Hi -- I apologize, but I changed my mind about submitting posts without someone actually asking a question that I think I can help answer. I am new to E.T. and didn't realize how many snarky trolls hang around here!

If you have a question about a specific futures broker, let me know and if I have experience with them I'll share that with you. It sucks to take the time to apply and fund an account only to find out that it's not suitable for you, so if I can help anyone avoid that...great.

While it'd be more helpful to more people if I answered any questions in a thread, it seems as if there are always people just looking to hijack the threads and bury the information, so a PM is fine. In fact, I am not going to subscribe to threads because I don't want to get all of the notifications when the trolls post their snarky, unhelpful contributions.

There are hundreds if not thousands of brokers out there.
It would be helpful if you tell us which brokers you know and have experience with, just a list with their names.
Otherwise it very much looks like you did a lengthy advertisement for just one specific broker... This is IMO unfair to the readership here, and could possibly also violate the Terms-And-Rules of this site...

 

[Robert Morse]

I too have experience with several futures brokers including StoneX, Wedbush Futures and TDA. I have my own opinions on how to choose a broker and or FCM. And yes, this is my personal opinion and, in this post, I’m not going to push Lightspeed. There are smaller FCMs. One is a sponsor here. The tend to have a smaller capital base. Since “overnight” positions from any customer also requires the FCM to post 8% of their capital, they tend to target day traders of different deposit amount. They often automate their risk and offer very low margin for day trading and sometimes lower rates than other FCMs. They often offer an array of futures software. IMO, very low margin and automated liquidation is not in the best interest of some customers. Then you have what I’ll call mid-size FCMs. I would put Wedbush Futures, StoneX, ADMIS and RJO in that category. They prefer larger accounts size (They do not take $2000 accounts) and a customer base with less risk and higher margin. It is very hard to get more than 25% of SPAN at these FCMs. Unless you do very high volume, their rates are a little higher than the smaller FCMs but also have a large balance sheet. They can handle larger overnight positions from customers but during the account application process, they want to know how much their capital will be required. Small CTAs and CPO tend to prefer these FCMs. They offer block trading with post trade allocation to other FCMs. Many of these FCMs work with Introducing Brokers like Lightspeed. Then you have the online brokers like IB and TDA, where futures are just one part of their business. IB has more competitive rates than TDA but TDA is more service orientated. So, you are paying for that. Rates are mostly set at these firms even though they might have a process for large customers to negotiate. They tend to cater to those that trade multiple asset classes. The margin rates are often higher than the small to medium size FCMs. They also tend to not want “Give up” trades from CTAs do business away, as they can’t monitor risk in real time. Next are the larger FCMs. They do not take smaller retail accounts. You can see a list of all FCMs here with their financial data. https://www.cftc.gov/MarketReports/financialfcmdata/index.htm