To find the best futures broker, we compared each platform’s trading tools and pricing. Before you can trade futures, you must apply for margin trading and futures trading approval. For most online brokerages, the minimum deposit is less than $1,000. Commission aside, some brokers also charge monthly platform fees and market data fees, so it is important to consider all costs before selecting a futures trading platform.Įach online broker requires a different minimum deposit to trade futures contracts. How much does it cost to trade futures?įutures trading commissions can range from less than one dollar for most commodity futures to as high as $10 per contract when trading bitcoin futures. The regulatory body in the US that oversees futures trading is the National Futures Association (NFA). With futures trading, investors can trade everything from market indices (e.g., S&P 500 futures) to commodities (crude oil, natural gas, corn, and wheat), metals (e.g., gold and silver), currencies (including bitcoin), treasuries, and more.
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As one can imagine, futures are traded mostly by institutional investors, but retail investors can also speculate by using a futures trading platform. By using futures contracts, Bob can lock in the price of corn before the season starts to offset (hedge) the risk of a difficult growing season causing corn prices to spike.įarmers aside, investors trade futures contracts as a way to speculate on the future price of a security or commodity. Contrarily, when corn prices are high, Bob’s profit margins on the milk he sells shrinks. When corn prices are low, Bob makes more money because it costs him less money to feed his cows, which produce the milk that he sells. Farmer Bob makes his own hay, but he buys the corn. His dairy cows eat a mixture of corn and hay.
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Wikipedia defines a futures contract as "a standardized forward contract, a legal agreement to buy or sell something at a predetermined price at a specified time in the future, between parties not known to each other."įor an oversimplified example, farmer Bob operates a dairy farm.
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The best online brokers 2021 review (11th annual) took three months to complete and produced over 40,000 words of research.