Finding the best futures to trade is the first step toward maximizing the potential of your assets. Choosing a futures broker is just the tip of the iceberg for futures trading. You also need to choose a suitable product or market, determine the appropriate size of your trading account and create a trading plan. Back-test your trading strategy on the different futures contracts and see how you fare. Interactive Brokers’ futures offering scores among the highest in our analysis, thanks to the broker’s flexible low pricing and professional-level trading platforms and tools.
A large account gives you more flexibility in what to day trade, and the guide below will help you decide. All research, writing and data collection at StockBrokers.com is done by humans, for humans. Unlike day-trading stocks, trading futures isn’t covered by Pattern Day Trader rules, which require stock day traders to maintain a minimum account value of $25,000. Brokers have their own minimum requirements to be approved for trading futures, so you may need to find a broker that is willing to allow you to trade. We ranked the 10 futures contracts according to the day trading margins my broker offers.
TO BE A SUCCESSFUL TRADER?
Here’s how many people chose these brokers at BrokerChooser in the last 6 months. Due to current legal and regulatory requirements, United States citizens or residents are currently unable to open a trading business with us. This is where you place a combination of a buy and sell stop and then protect them using a stop loss and a take-profit. Similarly, if the price is falling, you short it and benefit as it declines.
Futures contracts are traded on organized exchanges and serve as a way for traders and investors to speculate on price movements or hedge against potential price fluctuations in the underlying asset. This list by no means comprises the only tools a futures day trader should employ. Other technical indicators and tools used in combination can be invaluable when customizing a day trading strategy. Additional options for futures day traders best futures for day trading include incorporating multi-time-frame analysis and, monitoring various bar intervals to visualize a comprehensive picture of the markets they are trading. Pivots are a widely used indicator and were frequently used as a day trading indicator on the trading floors of exchanges. Often referred to as ‘Floor Trader Pivots’, this tool is easy to calculate and remains one of the most widely used day-trading tools for futures traders today.
Best Books for Futures Trading
Comparing the Mini S&P 500 with the Micro S&P 500, we can see that when you trade Micro S&P 500 you need the price to move 2.25x more in order to cover the fees + commissions. Comparing the Mini NASDAQ with the Micro NASDAQ, we can see that when you trade Micro NASDAQ you need the price to move 2.18x more in order to cover the fees + commissions. Comparing the Mini Dow with the Micro Dow, we can see that when you trade Micro Dow, you need the price to move 2.24x more in order to cover the fees + commissions. Some brokers have fixed commissions, others where may charge different commissions depending on the number of contracts that you trade on average. Another thing to consider regarding liquidity is price manipulation.
- Note that traders are able to report business purpose by commodity and, therefore, can have different classifications in the COT reports for different commodities.
- Every contract trade has a winner on one side and a loser on the other.
- The 10-year is also less volatile in terms of dollars at risk per contract.
- The Commodity Futures Trading Commission (Commission or CFTC) publishes the Commitments of Traders (COT) reports to help the public understand market dynamics.
- The choice of strategy should align with your trading objectives, risk appetite, and market understanding.
- Used properly, futures are a powerful way to increase capital efficiency and exposure.
But when you’re looking to diversify how you invest money with futures, it’s important to understand the risks and to focus on futures brokers that can help cut costs. Crucially, Swagger, the author of some of the bestsellers’ trading books, gives his readers plenty of technical analysis tools and information to use in the futures market. It is an excellent book for those who make their first steps in the trading world but also for seasoned traders with experience and knowledge in trading. Micro futures are basically smaller contracts of the popular and larger stock index futures contracts traded on the Chicago Mercantile Exchange (CME). If you are confused about it, just read the book above, and you will understand how to start trading micro-futures contracts.
What is a futures contract?
Depending on the chosen future contract, there can be other costs attached as well. One miscellaneous fee you should consider when choosing your broker is the one for the data feed. In 2019 Charles Schwab announced to acquire TD Ameritrade for $26 billion. TD Ameritrade and it’s trading platform Thinkorswim https://www.bigshotrading.info/blog/what-are-pivot-points-in-trading/ is still a separate brand. The acquisition pushed the value of Charles Schwab to a market capitalization of about 100 billion with an EPS of about $2. Comparing the DAX with the Mini DAX, we can see that when you trade Mini DAX the price needs to move 2.67x more in order to cover the fees + commissions.