How to Choose the Right Futures Trading Broker

What Is a Futures Broker?

A futures broker negotiates contracts for the selling of goods or securities at a defined price on a fixed date in the future. Futures brokers typically earn a basic salary as well as a commission based on transactions.

Now, the next question is, how does a futures broker make it simple to buy and sell contracts without being a producer or manufacturer?

This article can help you get started. When looking for a futures broker, you need to ask them a lot of questions.

Questions To Ask A Potential Broker

Are You Regulated? If Yes, By Who?

Any investor who takes the opportunity to trade with an unregulated broker is taking a significant risk. When you choose a properly supervised broker, you are safe from abuse and theft, which is crucial in case something goes wrong.

Do You Reside in the Same Country?

For this question, you have to take note if you have a broker outside where you live. A broker that isn’t in your country of residence could deny you your rights as a trader, compared to a broker from your home nation that is obligated to follow the laws and regulations of your country.

Do You Have the Right Technology?

You’ve got to know if you can trade through them online or on your samrtphone for convience. Do they have an app you can download that can work for Windows, Mac, iOS, or Android?

Do You Have a Demo Account?

You need to know if you can practice trading before making a real account for yourself. You need to have an understanding of how their platform works.

Do You Charge for the Data Feed?

You need to ask beforehand if they will be charging you a trade feed or data fee, and you need to ask how much the rates are if they say yes. Data feed fees and commissions are two different things, and that brings us to the next question.

What Are Your Commissions?

Brokers will handle the compliance side, so they will charge you a specific commission for every trade you close. These are also called round-turn fees. These can sometimes get expensive and eat into your profits, so choose wisely!

Can I Rely on Your Customer Service?

There could be a scenario when you are in the middle of the trade and the power unexpectedly goes out. You have to know that you can give your broker a call during this kind of emergency. Will they allow you to manage your position over the phone, like placing a stop or limit for you?

You can also ask about specific scenarios. For example, say you want to place 20 trades, 20 micro contract trades, or 20 Emini contracts in a month. What would be their projections towards that?

What Is a Broker Going to Allow You to Do?

Basically, the broker will allow you to press a buy or sell button. As a trader, what you do is bet on a price. When you press the button down, and the market goes up, you earn a lot of money. However, if you press the button and the market goes down, you could lose a lot.

In the futures market, you will be able to buy or sell the market first. In short, they are going to allow you to buy or sell contracts. On average, a contract can cost between $50 to $7,000, which would depend on when you enter And there’s what’s called intraday margin and initial margin. What are the broker’s margin requirements?

The broker measures the price movement, or what is known as ticks. To make money, you have to buy low and sell high. It could mean that you can earn a lot from your initial investment, or it can mean that you could lose a lot. Before taking any risks, you have to know what you are doing.

Conclusion

By asking these important questions, you can zero-in on the best broker for you trading strategy. And since everyone’s trading strategy is unique, a broker that works well for one trader may not be a good fit for another. Start looking for your broker and ask the above questions to take the next step towards becoming a futures trader!

Josh Martinez

Josh Martinez

Josh Martinez is an elite Analyst who’s been actively trading the financial markets since 2011. He’s known as one the leading innovative traders in this industry due to his his cutting-edge strategies.

Josh first burst into the scene when he took an initial deposit investment of $500 and turned into over $39,000 in just under 2 years.
Josh’s trading articles have been featured in Your Trading Edge, The FX Street, Trader Planet, Forex Crunch, Trading Pub, and Equities.com.

In addition to trading, Joshua has also trained thousands of traders worldwide. His strategies and systems have helped others find success in the market

Reader interactions

7 Replies to “How to Choose the Right Futures Trading Broker”

  1. Nicole Gilfert June 28, 2021 at 7:47 pm

    I'm having issues with every Brooker. Seems I do not effecent means to verify my residency. Embarrassingly I must stay in a motel efficiency that does not get mail here. My mailing address is a post office box and this is not enough for a broker to take me on, yet enough for every bank account that I own. I don't understand it. They have asked for a lease and the beat I can give them our Walmart receipts acting I paid 350 for the week. There is no name on receipt of motel like I stated to them it's not the Hilton or Ralph Victorian it's a low d own motel on the side of hwy 1. They don't even get mail here! In anycase, can you help? Advise, some Inside pull o r. Leverage. I can't get any of my applications approved because of this. Please a we help!

    Reply

  2. Hey josh you teach good i thank you . Nope!. where can I go to get that demo account!? I prepare am ready! 🙏🏽

    Reply

    1. Traders Agency Analyst July 20, 2021 at 2:13 pm

      Hey Eduardo. Thank you for your kind words! We'd recommend viewing a few tutorial videos of different platforms, whichever ones you seem to gravitate towards, those are the ones to open demo accounts on to test drive them. We look forward to working with you!

      Reply

  3. Josh,
    I'm trying to set up an account for my futures trading. I'm settling on Ninja Trader. I see that you don't use them. Will I be alright using them or should I use the one I see you using. Do they have all the methods and presentations that yours does?

    Reply

    1. Traders Agency Analyst Anthony Speciale September 21, 2021 at 11:34 am

      Hi Barbara. We are not affiliated with any platform. We strongly advise students to use what they are most comfortable with. Happy Trading!

      Reply

  4. Hey Josh - Great Videos...
    Can I ask what trading platform you use? Tks - steven1818...

    Reply

    1. Traders Agency Analyst Anthony Speciale November 17, 2021 at 2:55 pm

      Hi Steven. Thank you for the feedback! Josh uses TradingView as a charting analysis platform. It's very user friendly and reasonably priced. Happy Trading!

      Reply

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