While futures trading first began in the 1800s, regulated trading in the United States didn't take place until 1974 when Congress passed the Commodity Futures Trading Act, which added federal oversight and established the Commodity Futures Trading Commission (CFTC). The original Commodity Futures Trading Act was later amended by the Futures Trading Act of 1982 and thereafter by the Commodity Futures Modernization Act in 2000.
Primarily used a way to trade commodities on paper, futures trading has expanded over the years to include a variety of different assets, including most recently Bitcoin.
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."
While futures trading is overwhelmingly conducted by institutional investors such as hedge funds, it is also traded by retail investors. Here, we breakdown the best online brokers for futures trading.
Best Brokers for Futures Trading
Here are the top five online brokerages for futures trading in 2020.
- Interactive Brokers - Professionals, high minimum
- TradeStation - Great platforms, low commissions
- TD Ameritrade - Best desktop platform
- E*TRADE - Balanced offering
- Charles Schwab - Balanced offering
Professionals, high minimum - Open Account
Exclusive Offer: New clients that open an account today receive a special margin rate.
As our top pick for professionals in 2020, the Interactive Brokers Trader Workstation (TWS) platform offers programmable hotkeys and a slew of order types for placing every possible trade imaginable, including algorithmic orders. Popular among the institutional community, including hedge funds, Interactive Brokers isn't beginner-friendly but does offer the lowest margin rates in the industry. Just beware, Interactive Brokers requires a $100,000 minimum deposit for margin accounts. Read full review
Great platforms, low commissions - Open Account
Promo Offer: Commission-Free Trades on Stocks, ETFs & Options Trades
As a trading technology leader, TradeStation shines, supporting traders through its web-based platform as well as its desktop platform, which we rated No. 1 for Platform Technology. Both are excellent. Tools in the TradeStation arsenal include Radar Screen (real-time streaming watch lists with 329 customizable columns), Scanner (custom screening), Matrix (ladder trading), and Walk-Forward Optimizer (advanced strategy testing), among others. Using TradeStation's proprietary coding language, EasyLanguage, traders can even code their own apps for the platform and make them available in TradeStation's own TradingApp Store. Read full review
Best desktop platform - Open Account
Exclusive Offer: Get up to $600 and trade commission-free with TD Ameritrade.
TD Ameritrade thinkorswim is our #1 desktop platform for 2020 and is home to an impressive array of tools. Highlights include virtual trading with fake money, performing advanced earnings analysis, plotting economic (FRED) data, charting social sentiment, backtesting, and even replaying historical markets tick-by-tick. TD Ameritrade also enables traders to create and conduct real-time stock scans, share charts and workspace layouts, and perform advanced options analysis. Read full review
Built as a web-based platform, Power E*TRADE innovates and delivers speed, ease of use, and the tools needed for traders to succeed. Once again, in our 2020 Review, Power E*TRADE won our award, "Best Web-Based Platform." Read full review
Balanced offering - Open Account
Current Offer: $0 online stock, ETF, and options commissions at Schwab.
Alongside the Charles Schwab website, Schwab offers customers access to two primary platforms: StreetSmart Edge (desktop-based; active traders), and StreetSmart Central (web-based; futures trading). While each platform has its highlights and lowlights, all in all, Schwab will satisfy most traders. Read full review
What is futures trading?
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." With futures trading, investors can trade everything from indices to commodities, bonds, currencies, and more. The regulatory body in the US that oversees futures trading is the National Futures Association (NFA).
How much does it cost to trade futures?
Each online broker requires a different minimum deposit to trade futures contracts. For most online brokerages, the minimum deposit required is less than $1,000. Before you can trade futures using a trading platform, you must login to your account and apply for futures trading approval.
Do I need a margin account to trade futures?
Yes, a margin account is required to trade futures with an online broker. The margin requirements will vary depending on the instrument being traded. The S&P 500 e-minis are the most popular futures contracts traded (alongside the most liquid) in the United States.
How do I choose a futures broker?
For traders looking for the best futures broker, focus on comparing platform trading tools and pricing. Interactive Brokers offers the lowest pricing, but its platform is built for professionals and not easy to learn. On the other hand, TD Ameritrade provides an excellent downloadable trading platform, however, its pricing is more expensive. For perhaps the best balance of both pricing and tools, TradeStation is a winner.
Futures Trading Platforms Comparison
|Desktop Platform (Windows)||Yes||Yes||Yes||No|
|Desktop Platform (Mac)||Yes||No||Yes||No|
|Watch Lists - Total Fields||494||335||514||125|
|AI Assistant Bot||Yes||No||Yes||No|
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Explore our other online trading guides:
- Best Online Brokers for 2020
- Best Online Brokers for Beginners 2020
- Best Brokers for Day Trading 2020
- Best Brokers for Penny Stocks 2020
- Compare Online Brokers
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