See the best futures and commodity broker for 2020 based on cost, trading platforms, available products, and customer service.
“The best futures brokers are those that have the lowest per contract pricing and offer free futures trading software to place trades and manage positions.”
To trade a futures contract, whether it’s for a commodity, stock index, or currency, you need a futures broker (also called an FCM). Futures trade almost 24/6, and allow traders to speculate or hedge on items like corn, soybeans, crude oil, and even entire stock indices. As of 2020, here are the best futures brokers.
Best Futures Brokers for 2020
Futures Price Per Contract
Trading Platform rating
Best Overall: tastyworks
As one of the newest online brokerages, tastyworks is pioneering the way towards affordable futures trading. Although closing trades aren’t free for futures, their per-contract pricing is a competitive $1.25 per contract.
tastyworks has some of the best futures trading software in the game. This shouldn’t come as a total surprise, since the same team that founded thinkorswim also founded tastyworks.
The downloadable tastyworks software has tons of slick features, like creating complex futures orders preset with stop losses. But, most of all, we just like they layout of tastywork’s futures trading platform. It’s easy to use. It’s simple. It’s effective. Although you will only be able to trade around 20 US futures products, all of the main products are included, i.e. E-mini S&P, WTI crude oil, VIX, 30-year treasury bonds, etc.
TradeStation is the cheapest futures broker that doesn’t charge market data or software fees. All market data and software is free, and there are no inactivity or maintenance fees; this is VERY rare for a discount futures broker. *Although the $0.25 per contract futures pricing is for active traders who trade over 20,000 contracts a month, there are more discounts available if you trade just 300 contracts a month. Regular pricing starts at $1.50 per contract, which is still highly competitive, especially to access the international futures market.
The TradeStation futures trading platform, Futures+, is amazing. Although it’s windows only, it has advanced order types, and offers full access to level II futures depth of market books. Futures can still be traded online and on mobile.
Trading futures from the mobile app is excellent. Not to mention, for new accounts, there are no software or inactivity fees. This never used to be the case. TradeStation used to charge high monthly fees to use their platform, so the fact that it is now available for free is highly enticing.
Make no mistake, Interactive Brokers is a futures broker for the professional, serious trader. We have had mixed experiences trading futures with IB. We were charged a “Daily Exposure Fee” that was more than $30/day for a few weeks when we maintained a large futures position in crude oil. Although IB looks cheap on the surface, we have found that there are hidden inactivity, market data, and exposure fees that offset their low commissions.
The biggest problem we have with Interactive Brokers’ futures trading is their auto-liquidation. If, for whatever reason, the equity of a futures account falls below the maintenance margin requirements, Interactive Brokers starts to automatically liquidate positions in your account.
This is precisely what happened to us, and long story short, we blew up a futures account with $100,000. Nevertheless, IB made the list of best futures brokers because of the international futures trading aspect. It’s possible to trade futures on different exchanges around the world, but you have to pay for market data feeds, which is really expensive, and you have to pay a small fee for order cancellations. We don’t recommend trading with Interactive Brokers, but they are a well-known FCM.
Discount Futures Brokers
Many online brokers, like TD Ameritrade, for example, are not discount futures brokers. Td Ameritrade charges $2.25 per futures contract, which is very expensive.
TradeStation and tastyworks are perfect examples of online discount futures brokers. At $1.25 to $1.50 per side, you’ll save bundles on commissions and still get to use professional-grade futures trading platforms for free.
TradeStation’s tiered commissions are great for very active futures traders. If you plan on trading thousands of contracts per month, you won’t find a lower per-contract price than TradeStation. As of 2018, TradeStation is the only online discount futures broker to offer tiered pricing with no account inactivity or market date fees. Interactive Brokers charges both of these fees, which is something to be aware of.
Futures Trading Platforms
Futures+ by TradeStation is one of the top futures trading platforms that we’ve used to date. Although we like tastyworks’ downloadable futures platform, TradeStation does offer more advanced order types, automated trading, and the ability to trade international futures products from one central platform.
As a futures trader, having a reliable futures trading platform is crucial, particularly because some futures trades can last just minutes at a time. One of my favorite ways to trade futures is using a price ladder, where I can click on bid or ask prices and place live orders with one or two clicks.
Both TradeStation and tastyworks offer price ladder trading, but TradeStation seems to offer more advanced features which puts it just slightly above tastyworks for 2018.
Is Online Commodity Trading Risky?
Regardless of the futures broker you select, before you can even trade futures, you will have to apply specifically for futures trading privileges or along with a futures trading account.
When doing this, you will have to sign multiple documents where you acknowledge the significant risks associated with trading futures and commodities. These risks are very different than the risks associated with trading stocks, but this shouldn’t deter you from trading futures.
At the core level, futures are just like any other financial instrument, except they cary a very high degree of leverage. As all traders know, leverage is a double-edged sword that can result in magnified gains or losses. If you know what you’re doing, like Navinder Sing Saro, you can turn a small amount of money into a fortune with futures trading.
Granted, Navinder made so much money, ($50 million+), he was arrested and accused of market manipulation and is currently in prison. The point is that futures present a lot of opportunity.
How to Avoid Blowing up Your Futures Trading Account
Blowing up a futures trading account means you lose all your marbles very quickly, often in dramatic fashion. For example, one bad futures trade wipes out your entire account balance to near zero, or in the worst-case scenario, makes you go negative.
Don’t let this happen – ever. I’ve had it happen a few times, and it sucks. Here are a few tips and general best practices to make sure this never happens.
- Never use all of your available buying power
- As a general rule of thumb, try to maintain at least 50% cash
- Use a stop-loss, either a mental or a physical one
- Know the contract specifications of the product you’re trading
Too Much Leverage can Destroy the Best Futures Traders
You cannot forget the leverage of the futures products you’re trading. When you feel like you’re certain that “the E-mini S&Ps are totally oversold and will never go down again” it’s often tempting to pile on as many contracts as your margin buying power will allow, and this strategy sometimes works.
But the one time that it doesn’t work, and the E-min S&Ps sell-off dramatically, you’ll be in hot water. It’s always best to keep your futures positions under control and never use more than half of your available buying power. You’ll thank me later when a futures trade unexpectedly moves against you so fast that you don’t even have time to cover.
What’s the Best Broker for Day Trading Futures?
Many traders who are interested in futures are also interested in day trading futures. This is where all positions, regardless if they are bought to open or sold to open, are initiated and closed out on the same day.
There is something called “intraday futures margin requirement,” where only a fraction of the total margin requirement is necessary to establish a long or short position for a particular futures product.
For example, if the overnight futures margin requirement for an E-mini S&P futures contract is $5,500, the intraday margin requirement might only be $1,800. This means you can trade significantly more futures contracts on an intraday basis than you would otherwise be able to.
Day trading futures is risky, but it is also lucrative because of the increased leverage. TradeStation has very low intraday futures margin requirements for popular futures trading products.
Here are the best futures brokers
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Updated: Jan 30, 2021