Futures and commodity trading is complicated business. Finding the right Forex broker who offers futures and commodity trading is equally as complex. After all, there are more things to consider about a potential broker than just commission fees and minimum deposits, although those should factors should be considered.
A Forex broker suitable for futures and commodities traders should contain a variety of special investing tools, research, and data. You want a company delivering the most accurate real-time data and quotes, a powerful and intuitive trading platform, plus a diverse array of charting, screening, and technical analysis tools. You also want to consider the amount of margin a broker offers.
Here are a few things to consider when shopping around for a Forex broker who offers futures and commodity trading products.
The cost of trading futures can quickly add up. Some brokers charge platform fees, data fees, inactivity fees and some even charge for specialized reports. Besides this, the main costs associated with futures and commodity trading are commission fees, which are charged twice, for opening and subsequently closing a position. Brokers with competitive commissions charge anywhere from $0.25 to $0.85 per contract.
There aren’t many Forex brokers who offer extremely advanced research, analytics and screening tools, but these tools can easily be found in an outside service. Ensure your broker’s available trading platforms offers plenty of technical indicators, studies, and a news or research feature. Futures and commodity traders need to be tapped into the market’s pulse at all times.
Day traders who plan to open and close hundreds of futures or commodity contracts per day will definitely want a Forex broker offering the most leverage. Generally, commodity and futures contracts are highly leveraged. A small investment can control a large contract, with the required capital typically ranging anywhere from 5% to 10%. Controlling large volume can result in massive wins and equally large losses. Losing too much capital can cause an account to slide below the brokers margin requirement. If this happens, the broker may issue a margin call, in which case you would have to immediately deposit more funds into your account before you’re able to resume trading.
Initially, the margin requirements are set by the exchange being traded over, not by the broker. Though this is only true of trading positions that are held overnight. But because most futures contracts are opened and closed within the same day, brokers give day traders a reduced margin requirement, which is usually a percentage of the exchange’s required margin amount. If your account is small and you plan to trade commodities and futures, then you’ll need access to high leverage. Look for Forex brokers who offer around 25% day trading margin requirements and have low minimum deposits.