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Futures Brokers, If you’re looking to gain access to the multi-trillion pound futures trading scene – think again. This particular segment of the financial space is reserved for institutional money. With that said, the good news is that you can still invest in the very same assets that futures track – but in the form of CFDs.
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Think along the lines of oil and gas, gold, wheat, and even cryptocurrencies like Bitcoin. The underlying make-up of the CFD operates in exactly the same way as a futures contract, but with one key difference – there is no expiry date. As such, you can still go long and short on your chosen instrument, as well as apply leverage.
Nevertheless, in this article, we explore the Best Futures Brokers of 2023. All of our regulated platforms deal with the retail client space via CFDs, so you’ll be able to trade from the comfort of your own home with ease.
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What are Futures?
In its most basic form, futures allow you to speculate on the future price of an asset without you needing to take ownership. The vast bulk of the futures space is dominated by commodities such as oil, natural gas, gold, wheat, and corn. The overarching reason for this is that trading commodities in the traditional sense would be a logistical nightmare.
Crucially, attempting to trade £5,000 worth of physical oil barrels and then selling them a few hours later just wouldn’t work. Instead, a shrewd investor would initiate the above trade by buying or selling a futures contract. As we have alluded to, futures contracts give you the option of going ‘long’ or ‘short’.
With that being said, futures contracts are sophisticated tools reserved for the institutional investment space. This is because futures providers set minimum lot sizes, which is often surplus of 6-figures. Fortunately, there are a number of futures brokers active in the online space that give you access to the very same markets, albeit, in the form of CFDs.
Pros and Cons of CFD Futures Contracts
The Pros
- Invest in an asset without needing to take ownership.
- Perfectly suited for hard assets like oil, gold, and wheat.
- You have the option of going long or short.
- Most futures brokers allow you to apply leverage.
- You can hedge assets with ease.
- Futures brokers service the retail space via CFDs.
- Heavily regulated marketplace.
The Cons
- Traditional futures contracts are reserved for the institutional space.
- Much more complex than traditional assets like stocks and shares.
How do Futures Work?
There’s much to learn about futures, so it’s best that we break down the fundamentals bit-by-bit.
✔️ Expiry Date
First and foremost, traditional futures will always have an expiry date. While this is not always set in stone, in the vast majority of cases a futures contract will have an expiry of 3 months.
However, in the case of CFD futures, there is never an expiry date. This gives you much more flexibility, as you are not forced to offload your investment when the contract matures.
✔️ Long vs Short
Irrespective of the underlying asset, futures brokers always allow you to go long or short. This makes futures an ideal option if you are looking to speculate on an asset going down in value.
✔️ Contractual Agreement
When you enter into a futures contract, you are agreeing to buy the asset, and then sell it at a later date. Similarly, if you’re going short, then you are agreeing to sell it, and then buy it back at some point in the future.
Here’s where things get interesting. You, as the owner of the futures contract, can exit your trade at any given time – as long as this is not later than the expiry date of the contract.
For example, if you went long on an oil futures contract with an expiry date of three months, regardless of whether or not you are in profit, you will be forced to sell the contract once the three month period concludes.
✔️ Stakes
When it comes to stakes, futures operate in a completely different manner to traditional assets. This is because futures brokers not only require you to purchase whole contracts, but you will also need to meet a minimum lot size.
For example, let’s say that you are investing in a Bitcoin futures contract. The provider might price a single contract at £10,000, and require you to purchase a minimum of 25 contracts. This means that you would need to invest £250,000 just to get a look in.
Once again, you won’t need to worry about this as a retail trader, as the futures brokers that we recommend on this page allow you to invest with small stakes via CFDs.
How Futures Brokers Calculate Profits and Losses
In order to clear the mist, let’s look at an example of what a futures trade might look like. We’ve opted to use arbitrary figures to keep the example basic.
- Let’s say that you want to go long on the price of oil, so you decide to invest in a futures contract.
- The futures contract has an opening price of $29 per barrel, and a three-month expiry date. As you think the price of oil will increase, you place a ‘buy’ order.
- In order to meet the broker’s minimum investment amount, you buy 100 contracts. This amounts to $2,900 (100 contracts x $29).
- Two months into the contract, the price of oil has rocketed to $40.60, so you decide to cash in your profits by placing a ‘sell’ order.
- As you sold each contract for $40.60, but paid just $29, this amounts to a profit of $11.60 per contract. As you had to buy 100 futures contracts, your total profit is $1, 160 ($11.60 x 100 contracts).
In the above example, you decided to cash out your futures contracts just two-months into the agreement. This is perfectly fine, as you can exit your trade at any point before the expiry date. There is no knowing what the futures contract would have closed at once the three-month term concluded, so in this example, it was wise to sell.
CFD Futures Brokers for Retail Traders
Assuming you are a retail trader, you will need to invest in CFDs if you wish to gain exposure to the futures space. Although CFDs operate in exactly the same way, there is one key difference – CFDs never expire. As such, the markets operate 24 hours per day, 7 days per week, and 12 months per year.
Below we have listed some of the many benefits that CFD futures brokers offer.
✔️ Account Minimums
Firstly, the best futures brokers in the CFD space allow you to get started with really small amounts. This starts at the very offset with the deposit process, as brokers often install minimums in the £50-£150 range.
Furthermore – and perhaps most importantly, there is no requirement to purchase a minimum amount of contracts. Instead, you can usually invest as little as you like.
✔️ Leverage
All of the brokers that we recommend on this page allow you to apply leverage on CFD futures. The specific amount that you will be able to trade with is dependent on your location, and the asset you wish to trade.
For example, if you’re based in the UK or a European Union member state, you’ll be bound by the regulations imposed by ESMA. For those unaware, this stands at a maximum amount of 30:1 on forex, and 20:1 when trading gold or major indices like the S&P 500.
This then goes down to 10:1 on all other commodities and non-major indices. At the lower end of the scale, cryptocurrencies like Bitcoin and Ethereum come with leverage limits of 2:1. You will, of course, be able to apply higher amounts if you’re a professional trader.
✔️ Thousands of Assets to Invest in
One of the stand-out selling points of opting for the CFD route is that you will have access to thousands of financial instruments across heaps of asset classes.
This typically includes:
- Hard Metals like gold, silver, and platinum.
- Energies like oil and natural gas.
- Indices such as the S&P 500.
- Cryptocurrencies like Bitcoin and Ripple.
- Agricultural products like wheat, corn, and sugar.
- Currencies pairs such as GBP/USD and EUR/GBP.
- Interest rates and government bonds.
✔️ Short-Selling
Opting for futures brokers that specialize in CFDs is the best way to short-sell an asset. You simply need to select the asset that you’re bearish on, enter your stake, and place a sell order.
Futures brokers also allow you to install stop-losses, so you’ll be able to mitigate your risks in the event the markets go against you.
✔️ Low Fees
The traditional futures industry is fraught with operating costs, which often makes it an expensive process to invest. On the contrary, futures brokers operating in the CFD arena allow you to trade at super-competitive prices.
For example, some of the futures brokers listed on this page allow you to buy and sell assets without paying any commission. Moreover, if you’re trading a highly liquid asset like the S&P 500 or gold, you’ll be accustomed to really tight spreads.
Payments at Futures Brokers
When it comes to funding your account, futures brokers typically support a number of everyday payment options.
Deposits Methods
The easiest funding method is a debit or credit card, as your deposit will be credited instantly. This is also the case with popular e-wallets like PayPal and Skrill, although support is less common in the futures space.
Alternatively, you can also deposit funds with a bank account. Although it might take 1-3 working days for the funds to be credited, you are usually afforded higher limits.
Deposit Fees
While the futures brokers that we recommend allow you to deposit funds without paying any fees, some platforms will impose a transaction charge. If they do, this is normally a percentage of the amount that you wish to deposit.
For example, if the futures broker charges 1.5% on Visa deposits – and you fund your account with £1,000 – you will need to pay a fee of £15. This is usually subtracted from the amount you deposit, so in this example, you’d be left with a balance of £985.
Withdrawals
In terms of getting your money out of a futures broker, you will need to withdraw the funds back to the same method that you used to deposit. This is to ensure that the broker complies with anti-money laundering laws.
Before you can request a withdrawal, you’ll need to bypass a KYC (Know Your Customer) process. This requires the futures broker to verify your identity. You can do this by uploading a copy of your passport or driver’s license.
Once you do, futures brokers typically process withdrawal requests within 24-48 hours. You’ll then need to wait for the respective card issuer, e-wallet provider, or bank to credit the withdrawn funds.
Where can I Find the Best Futures Brokers?
So now that you know the ins and outs of how traditional futures work – and that as a retail trader you will need to invest via CFDs, you now need to start thinking about your chosen broker.
If you’re looking to research a broker on a DIY basis, we would suggest making the following considerations prior to signing up.
⚠️ Regulation and Licensing
Never, and we mean never sign up with a futures broker that isn’t regulated. In fact, even if it is regulated, you still need to assess the credibility of the licence issuer. For example, we only recommend brokers that are regulated by tier-one bodies.
This includes the likes of the UK’s FCA, as well as regulatory bodies in Australia (ASIC), Singapore (MAS), and Cyprus (CySEC). This means that your funds will remain safe at all times, not least because the broker will need to adhere to a range of licensing conditions.
⚠️ Supported Payment Methods
It is important for you to assess what deposit methods the futures broker supports. After all, there is nothing worse than going through the sign-up and verification process only to find out that your one-and-only payment method isn’t available.
Instead, you should check this prior to opening an account. Don’t forget, you also need to explore what the minimum deposit amount is, as well as if any fees apply.
⚠️ Listed CFD Futures
When it comes to the trading department itself, you need to assess what assets the futures broker lists. In the vast majority of cases, futures brokers that offer CFDs will host thousands of financial instruments. As such, you should be able to trade most asset classes.
⚠️ Trading Commissions and Spreads
We prefer futures brokers that allow you to trade on a commission-free basis. This is possible because of the make-up of CFDs. In other words, as CFDs merely track the real-world market price of an asset, the broker in question is not required to take ownership.
Similarly, you should only use futures brokers that offer tight spreads. This is the difference between the buy and sell price of an asset, and will vary depending on what you are trading. Ultimately, by using a commission-free futures broker that offers competitive spreads, you’ll get to keep your trading costs to a minimum.
⚠️ Customer Support
You should also ensure that the futures broker offers a sufficient customer service department. This should include live chat, email, and telephone support – preferably around the clock.
⚠️ Research Tools and Fundamental Analysis
By utilizing research tools at your chosen futures broker, you’ll stand the best chance possible of making long-term gains. This typically comes in two segments – technical analysis and fundamental analysis.
The former strives to analyze historical chart patterns, and how this might influence the future direction of the asset. As such, you’ll want to use a futures broker that offers heaps of technical indicators. At the other end of the spectrum, fundamental analysis is based on real-world news events.
For example, if it is announced in the US that there is a major oversupply of wheat, expect the price of the asset to decline. Therefore, opt for a broker that offers fundamental news in real-time.
Futures Brokers: How to get Started
So now that we have explained how futures brokers work, we are now going to give you a step-by-step guide on how to get started with an account today.
Step 1: Choose a Futures Broker
There are hundreds of futures brokers active in the retail trading space. Do all of them offer a top-notch service? Absolutely not. As such, we would suggest reviewing the tips outlined in the section above to find a broker that best meets your needs.
If you don’t have time for this, you’ll find our five top-rated futures brokers listed towards the bottom of this page. Each broker is heavily regulated and offers thousands of financial instruments for you to go long or short on.
Step 2: Open an Account
All online futures brokers will ask you to open an account before you can start trading. As such, you’ll need to provide some basic personal information.
This includes:
- Full Name.
- Nationality.
- Home Address.
- Date of Birth.
- National Insurance Number (or Tax Identification Number).
- Contact Details.
You will also be asked to verify your account. Once again, this is to counter the threats of money laundering and to ensure the broker complies with its licensing bodies. As such, you’ll need to upload a copy of your passport or driver’s license. Most futures brokers can verify the documents instantly.
Step 3: Deposit Funds
You will now need to deposit some funds into your broker account. The payment methods available to you will depend on the broker you use, which is why we advise checking this before opening an account.
Nevertheless, brokers typically offer support for the following payment options:
- Debit Card.
- Credit Card.
- Paypal.
- Skrill.
- Neteller.
- Bank Transfer.
Step 4: Find a CFD Futures Market
As a retail trader, you’ll be investing in futures contracts via a CFD. Don’t forget, CFDs never expire, so you can enter and exit the market whenever you see fit.
To get the ball rolling, head over to the CFD department of the broker’s site, and choose the asset class that you are interested in trading. For example, if you want to trade gold futures, look out for the ‘precious metals’ section.
Step 5: Make an Investment
You should now be on the trading page for your chosen futures market. As future CFDs are sophisticated trading products, you’ll be given a range of investment options. This means that you will need to fill out an order form.
This can be intimidating at first glance, so be sure to refer back to the points outlined below.
- Buy/Sell Order: First, you need to select which way you think the markets are going to go. If you want to go long – meaning you think the asset will increase in value, select a ‘buy order’. If you think the opposite, select a ‘sell order’.
- Stake: You need to state the size of your investment. Take note, you do not need to enter your stake by the number of contracts you wish to buy or sell. Instead, simply add the amount in pounds and pence (or your local currency).
- Market/Limit Order: If you’re planning to enter the futures market when the asset hits a certain price, opt for a ‘limit order’. For example, if oil is priced at $25, but you want to go long when it hits $24, a limit order can facilitate this. Alternatively, a ‘market order’ will simply execute your trade at the next available price.
- Leverage: If you have a slightly higher tolerance for risk, futures brokers allow you to apply leverage. Simply select the amount that you wish to apply – such as 2x, 3x, 4x, etc.
- Stop-Loss Order: One of the most important segments of your order form is to ensure that you mitigate your losses. This can be done by setting up a stop-loss order. Enter the price that you wish the trade to close at if the markets go against you. For added security, pay an additional fee to install a ‘guaranteed’ stop-loss order.
Finally – depending on the type of order you are placing – click on ‘buy’ or ‘sell’ to execute your futures trade.
Step 6: Cashing Out Your Futures Trade
As we have noted throughout our guide, CFD futures do not have an expiry date and thus – allow you to enter and exit the market whenever you want. This means that once your order is live, you can exit it at the click of a button.
So, if you placed a buy order, you’ll need to place a sell order to close your trade – and visa-versa if you went short. Once you have cashed out your investment, the funds will be instantly credited to your broker cash account.
Best Futures Brokers – Our Top 5 Brokers of 2023
If you don’t have time to research a futures broker yourself, below you will find our top-five rated platforms of 2023.
To clarify, each broker:
- Is regulated by at least one licensing body.
- Offers thousand of futures markets via CFDs.
- Supports heaps of payment methods.
- Facilitates futures trades on a low-cost basis.
1. AVATrade – 2 x $200 Forex Welcome Bonuses
The team at AVATrade are now offering a huge 20% forex bonus of up to $10,000. This means that you will need to deposit $50,000 to get the maximum bonus allocation. Take note, you'll need to deposit a minimum of $100 to get the bonus, and your account needs to be verified before the funds are credited. In terms of withdrawing the bonus out, you'll get $1 for every 0.1 lot that you trade.
- 20% welcome bonus of upto $10,000
- Minimum deposit $100
- Verify your account before the bonus is credited
2. Capital.com – Zero Commissions and Ultra-Low Spreads
Capital.com is an FCA, CySEC, ASIC, and NBRB-regulated online broker that offers heaps of financial instruments. All in the form of CFDs - this covers stocks, indices and commodities. You will not pay a single penny in commission, and spreads are super-tight. Leverage facilities are also on offer - fully in-line with ESMA limits.
Once again, this stands at 1:30 on majors and 1:20 on minors and exotics. If you are based outside of Europe or you are deemed to be a professional client, you will get even higher limits. Getting money into Capital.com is also a breeze - as the platform supports debit/credit cards, e-wallets, and bank account transfers. Best of all, you can get started with just 20 £/$.
- Zero commissions on all assets
- Super-tight spreads
- FCA, CySEC, ASIC, and NBRB regulated
- Does not offer traditional share dealing
Conclusion
In summary, although the futures space is a multi-billion pound battleground, access for everyday retail traders is extremely limited. However – and as we have covered throughout our guide, a simple workaround is to use an online futures broker that specializes in CFDs.
You’ll still be able to speculate on thousands of financial instruments, and you’ll have the option of short-selling and applying leverage. The only major difference is that CFD futures do not have an expiry date.
With that said, we would argue that this is a benefit – as you are under no obligation to offload your investment. On the contrary, you can keep your position open for as long as you wish.
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