What Brokers do Professional Traders Use?
Simple. Professional traders use online brokers that have the lowest fees, best technology, and widest-range of tradable products. If your current broker only offers US stocks, and offers awful options trading capabilities, like Vanguard, you might want to consider switching.
Brokers like Charles Schwab and Vanguard are fine for the recreational investor who switches positions around in an IRA every few months, but for the active and professional trader, you need a broker that can keep up.
TradeStation, one of the most popular deep-discount online brokerages, recently underwent a huge rebranding mission. They are trying to appeal more to a younger generation of traders, as evidenced by the flashy new graphic on their homepage. But TradeStation originally started as one of the premier sources for institutional and professional, full-time traders, and they still are. The amazing thing about TradeStation, and this is where Ally Invest and TD Ameritrade both fall short, is that they offer access to international futures and futures options.
TradeStation offers full access to LIFFE and EUREX futures and futures options.
- FGBS Euro-Schatz Futures
- FGBM Euro-Bobl Futures
- FGBL Euro-Bund Futures
- FGBX Euro-Buxl® Futures
- FBTS Short-term Euro-BTP Futures
- FBTP Euro BTP Futures
- FOAT Euro-OAT Futures
- FDAX DAX® Futures
- FDXM Mini – DAX® Futures
- FVS VSTOXX Mini Futures
- FSTX DJ STOXX® 50 Index Futures
- F2LA DJ STOXX® Large 200 Index Futures
- F2MI DJ STOXX® Mid 200 Index Futures
- F2SM DJ STOXX® Small 200 Index Futures
- F2MX MDAX® Futures
- FSTB DJ STOXX® 600 Banks Futures
- FSTG DJ STOXX® 600 Industrial Goods & Services Futures
- FSTI DJ STOXX® 600 Insurance Futures
- FSTM DJ STOXX® 600 Media Futures
- FSTZ DJ STOXX® 600 Personal & Household Goods Futures
- FSTV DJ STOXX® 600 Travel & Leisure Futures
- FSTU DJ STOXX® 600 Utilities Futures
- FTDX TecDAX Futures
- FESX DJ EURO STOXX® 50 Index Futures
- LZ FTSE 100 Index Futures
- CC3 London Cocoa Futures
- RC London Robusta Coffee Futures
- LT2 Three Month Euro (EURIBOR) Interest Rate Futures
- LL Three Month Sterling (Short Sterling) Interest Rate Futures
- LF2 Three Month Euro Swiss Franc Interest Rate Futures
- LI Long Gilt Futures
- H Medium Gilt Futures
- G Short Gilt Futures
- JGB Japanese Government Bond (JGB) Futures
A Global Futures Options Portfolio
The following international futures are eligible for intraday futures margin with TradeStation: FDAX, FESX, FGBL, FGBX, and FSTU.
The ability to trade all of these products is highly beneficial for options and futures traders looking to reduce risk by creating an international portfolio of derivatives. We can’t stress how critical this is. Trading Europe 600 Utilities futures is entirely different than the typical Emini S&P 500 futures.
If your primary strategy is selling put options, having a bunch of positions with high correlation could spell disaster if the market suddenly turned south. Diversifying internationally is what every global hedge fund does, and there is a reason. It works. Index futures in America might sell off, but Index futures in Europe could be entirely unaffected and rally substantially.
Simply put, if you want to be an active trader in 2017, having the ability of trading internationally is essential.
There will be times when it makes sense to sell FTSE call options and sell ES put options. The bottom line is, you need to have the ability to trade a wide range of products. It’s too difficult to create uncorrelated options and futures positions in just the US.
It’s completely free to sign up for an account with TradeStation, and the minimum amount needed for a futures account is only $5,000.
For stock options, the minimum requirement is only $2,000. This is considerably lower than many other brokers, i.e. Interactive Brokers.
Dirt Cheap Commissions
Futures at TradeStation go as low as $0.25 per contract! Granted you have to trade over 20,000 contracts per month to receive this rate, but if you buy/sell futures options is lots of 100, it adds up quick. Regular futures commissions start at $1.20 per contract, which is a total bargain. Because futures options are treated the same as futures, the pricing for futures options contracts is the same for futures; exchange fees are the same as well.
- $0.25 per side/contract (> 20,000 monthly)
- $0.45 per side/contract (10,001-20,000 monthly)
- $0.65 per side/contract (1001-10,000 monthly)
- $1.00 per side/contract (301-1,000 monthly)
- $1.20 per side/contract (≤ 300 monthly)
For options trading, TradeStation charges $5.00 + $0.50/contract OR $1.00 per contract with no ticket charge. This flexible pricing structure is accommodating for large and smaller traders alike. It makes legging into iron condors, credit and debit spreads and any other multi-leg options strategies possible.
For some perspective, TD Ameritrade charges $2.25 per futures contract, and they don’t officially offer a tiered program for active traders. For options, they charge $6.95 + $0.75/contract.
TradeStation is simply made for the active trader. Period.
Free Useful Trading Tools
The days of paying lofty fees for sophisticated trading software are over. Back in 2005, online brokers didn’t offer level II market data for free! Fast-forward to 2017 and trading technology and availability has improved to the point where most online brokers offer free data to their clients.
TradeStation offers has absolutely no software fees, plus they offer real-time market data and the RadarScreen® scanner for free. Before their rebranding effort, they used to charge $59 per month for the RadarScreen® scanner.
Additionally, if you have trading algorithms that run in excel, or if you use any type of third-party trading software, you can connect to TradeStation’s servers via their API.