The world of investing can be exciting and daunting all at once. While there are a variety of strategies and approaches that investors take, one thing is certain: having the right tools and resources is essential in order to succeed. For those looking to engage in futures trading, choosing the best platform can make all the difference. In this article, we’ll provide a smart investor’s guide to finding the best futures trading platform.
What is Futures Trading?
Before diving into the specifics of futures trading platforms, let’s first define what Futures Trading is. Simply put, futures trading involves buying and selling futures contracts, which are agreements between a buyer and seller to purchase or sell an asset at a specific price on a specific date in the future. Investors trade futures on a variety of assets, including commodities such as crude oil and gold, stock indexes like the S&P 500, and even bitcoin.
Why Futures Trading is Beneficial?
There are several reasons why investors engage in futures trading. First and foremost, futures can help hedge against risk. For example, if a farmer expects to have a large harvest of corn in the fall, they may choose to sell their corn futures in the spring to lock in a price for their product. If the price of corn were to drastically drop, the farmer would not lose as much money as they would have without the futures contract. Futures trading can also be utilized for speculation or passive income generation.
Finding the Right Futures Trading Platform
There are countless futures trading platforms available to investors, each with their own unique features and benefits. Here are some key factors to consider when choosing the best futures trading platform for your needs:
1. Commission and Fees
One of the most important factors to consider is the commission and fees associated with the platform. As with any investment, fees can significantly impact your returns over time. It’s important to research and compare the commission and fees of various futures trading platforms. Be sure to look for any hidden fees or additional costs, such as platform fees or data fees.
2. Platform Usability and Features
The trading platform must be user-friendly and easy to understand. Good features like an intuitive interface, a smooth order entry system, and customizable charting options go a long way in aiding the user experience. Traders should also look for platforms that offer real-time market data and news, as well as tools for technical analysis and risk management.
3. Security and Reliability
Security is an essential consideration when it comes to any investment platform, including futures trading platforms. Ensure the platform uses security measures such as SSL encryption and two-factor authentication. It’s also important to research the reliability of the platform. The last thing the investor needs is for the platform to crash right before they make win a large position.
4. Customer Support
Excellent customer support should be a priority when deciding on the right futures trading platform. Top platforms offer multiple communication channels, such as phone, chat, and email. Look out for platform with excellent customer service, which will not only save the investors some headache but can also reduce execution time. especially if a question or issue arises in times of high trading volume.
5. Demo Account Availability
Before opening a live trading account, consider using a demo account to get a feel of the platform. Demo accounts are free to use and give futures traders a chance to practice and explore trading strategies in a simulated environment using virtual money. This will give an adequate amount of experience and information to decide whether the platform is good enough for trading with real money.
5 Best Futures Trading Platforms
Now that you know what to look for in a futures trading platform, let’s take a look at the top five platforms available based on the criteria above:
1. NinjaTrader
NinjaTrader is a leading futures trading platform that offers both free and premium versions. The platform had tick-by-tick historical market data and multiple charting options suited for a wide range of technical analysis. NinjaTrader has excellent customer service via email, phone, and chat. Traders using NinjaTrader also benefit from a community of users that offer free, useful third-party tools and add-ons.
2. TD Ameritrade
TD Ameritrade offers a robust futures trading platform that combines simplicity and cutting-edge technology, with top-notch customer support. Its futures trading integration is linked to its award-winning thinkorswim securities platform, making it the most accessible futures trading platform for new traders. It also provides commission-free trading on certain products.
3. Tradovate
Tradovate is an all-in-one, cloud-based futures trading platform that offers both a desktop and mobile app to ensure traders are never too far from the market. It provides real-time market data, charting tools, and order execution with low commissions. Its simplicity and ease-of-use make it ideal for beginners, and the platform’s education center provides a wealth of resources to help traders build their skills.
4. E*TRADE
E*TRADE, a well-known online broker, also offers a futures trading platform for the active trader. The platform has excellent research and news analysis features and broad futures trading access across a range of commodities and indices. It also provides 24/7 customer service via phone, email, and chat. E*TRADE also offers several great tools that can be valuable to traders, including futures trading simulator and strategy analyzer.
5. Interactive Brokers
Interactive Brokers is a globally recognized leader in online brokerage and boasts low commission fees on futures trading. As one of the earliest adopters of electronic trading, Interactive Brokers is a pioneer in the industry with their Trader Workstation platform. Trader Workstation provides all the technical analysis tool traders need, a variety of order types and even more. It is designed for advanced and active futures traders seeking sophisticated trading tools and low fees.
Conclusion
When it comes to futures trading, choosing the right platform is essential for success. Considerations such as commission and fees, platform usability and features, security and reliability, customer support, and availability of demo accounts should all be taken into account when selecting a platform. We have presented the top five futures trading platforms to help you narrow down your options, but it is still your responsibility to educate yourself and choose the platform that is best for your needs. With the right platform in place, you can confidently trade futures and take advantage of the many opportunities that this investment vehicle offers.
