All stock trading involves speculating on the value of something rising in the future. Futures trading, however, differs in that it's about the value of concrete commodities like foodstuffs or metals, or of currencies. When trading in futures, you purchase a set share of a specific commodity at a price in anticipation of selling it at a higher price.
This is done through a futures contract. You purchase a contract, which really is an agreement to pay for a specific amount of a commodity when it's delivered on a specified date. You secure the contract by putting up a percentage up front – say paying $600 on a contract worth $60,000. Then, you can sell the contract or the commodities at any time. A savvy trader can make a larger profit faster with futures than with stocks because he or she can invest in larger amounts of commodities with less money. Of course, with the high potential profits comes high risk.
You can trade futures using a broker, many of which allow you to trade futures yourself using their software at very reasonable commissions. When you look for the best futures trading platform, there are several things you should consider: price, ease of use, ability to grow with your skill, depth of reporting and broker support.
Here's how some of the best services stack up:
Best Overall Brokers
It's hard to go wrong with TD Ameritrade and its thinkorswim platform. The company consistently ranks high on our Top Ten Reviews lists for online stock trading and forex trading. Its futures accounts are equally high quality. The thinkorswim platform is among the easiest to use, and the company offers educational resources from blog posts to seminars.
With over 300 technical indicators as well as a variety of forecasting and risk-analysis tools, thinkorswim has an array of tools to help you make informed trades. Its one drawback is price: at $2.25 per contract, it's among the most expensive futures brokers we looked at. However, there's no minimum needed to start an account, the trading software is free, and it works with many other types of trades.
E*TRADE comes in as a close second. Our testers give the platform high praise for ease of use as well as for its variety of educational resources. You can trade in a whopping 200+ commodities. With 69 analytical tools, it's easy to do your research or you can take advantage of the broker support. Its big drawback is the $10,000 minimum for maintaining an account. It's a strong choice for the average to advanced trader.
Price isn't everything, but if you are budget-minded and don't need a lot of frills, then Generic Trade is worth considering. The online platform is simpler than others, with fewer analytical tools. Customers who reviewed this service online seem to love or hate it. Those who love it appreciated the price and straightforwardness of the service. Those who hated it had issues with customer service provided by the broker, and found the online platform to be feature-poor and difficult to use. Generic Trade offers broker support 24/7, does not have a required minimum balance, and the $0.59 commission on trades is hard to beat.
Another relatively inexpensive and high-quality service is TradeKing. This online stock broker consistently ranks high in our lineup for strong platforms and quality support. With the acquisition of MB Trading, it now offers futures trading in over 50 commodities at a low price of $0.85 per trade, with a required account minimum of $500. The platform has over 100 reporting and analytical tools, and TradeKing offers excellent educational materials for all types of stock trading, some arranged by experience level. It also has 24/7 customer support.
Best for Choice of Platform
Lightspeed has been supporting active traders since 1994. It offers a multitude of trading platforms geared for different types of trading, with a choice of nine for futures trading. Some of these platforms can handle other types of trading; some come with a monthly fee; some specialize in risk control while others allow for automated trading.
If you have a specific need in mind, Lightspeed may have just the platform you need. Regardless of which you choose, you can trade in over 60 commodities and take advantage of 24/7 expert support. Its commissions are inexpensive, and it offers discount for bulk trades.
An All-Around Good Choice
While optionsXpress didn't stand out for one particular feature, it's an excellent choice for a futures broker nonetheless. It handles trades other than futures, is reasonably inexpensive, and easy to use. This online stockbroker lets you trade in over 100 commodities. It has 39 reporting and analytical tools, enough to let you dig deep in your research without overwhelming you.
When testing its platform, we found it reasonably easy to use, although not as customizable as other platforms. It offers many educational resources both for investing and for learning the platform. The commission and account minimum are higher than most, but not prohibitive for the serious trader. It offers 24/7 broker support.
Choosing Your Futures Trading Platform
Futures trading can generate large profits – or large losses. It's not a trade to make lightly. Finding an excellent broker with the best futures trading software can help you to make educated decisions and buy or sell contracts inexpensively.
Many include futures trading tools as part of their overall platform and offer educational materials to help you hone your skills. Examine some of the platforms we've recommended and then take a step toward bright futures – and a brighter financial future.