Do you already trade in Futures? Are you training for it? Are you not satisfied with your current broker or have you had a bad experience in the past? Haven’t you decided on one yet?
We help you evaluate the aspects that you should look at when choosing a specialized futures broker to work with.
1. Location and Regulation
As the first point and, perhaps, the most important, we must ensure that it is a serious, supervised and regulated entity, staying away from financial chiringuitos at all costs. Therefore, we opted for a Spanish entity, supervised by the CNMV and covered by the Investment Guarantee Fund (Fogain), which guarantees up to € 100,000 per holder in the event of bankruptcy.
On the other hand, being an entity in Spain solves the issue of taxation, since operations are reported automatically, there are no additional obligations to declare assets abroad, and a local broker will know how to understand and adapt to our Spanish tax requirements. on time (deadlines) and form (information to be reported to the Treasury).
2. Futures broker commissions
The second point is obvious. We need low trading commissions on the specific Futures we trade , but also transparency on all costs and conditions. For example, does the broker charge for the real-time data of the futures markets that interest me? Normally yes, but some also discount this cost if you do a minimum of operations.
In this regard, Enrique Martí, the CEO of iBroker.es, tells us: “We are the only broker in Spain that offers, to all its clients, without exception and just by opening an account with us, free real time with depth of 10 positions in all CME Group futures: Nasdaq 100, Dow Jones, S&P 500, Gold, Oil, Currency, and a long etc. ”
3. Guarantees in Futures
Guarantees in Futures is another of the most relevant issues, since it determines the size of the capital that our account will require to carry out the operation that we have decided to carry out.
The futures day trader needs the closest possible guarantees. Some brokers, to achieve this, handle two concepts, the “intraday guarantees” and the “closing guarantees”, which are higher. Therefore, if we are going to open and close the position on the day, which has less risk in terms of very abrupt price movements, we can make use of that advantage in the reduction of guarantees, as long as the broker offers us a guarantee plan reduced for intraday trading.
It is also important to be clear about the broker’s position closing procedure in the event of an overdraft, what criteria they will follow, when and in what order the positions will be closed in the event of a lack of balance. The latter must be crystal clear, since although the guarantees are reduced, we must have enough balance in mind to face possible losses.
4. Platforms for Trading Futures
If we do day trading in Futures, at least we would need a good web platform, which has advanced graphics to be able to do the necessary analysis and sophisticated orders, such as OCO, OSO and BRACKET orders, that allow me to manage a position without the bondage of being all the time glued to a screen.
Having a good mobile app is also essential, since we may need to close a position quickly wherever we are. And also, some traders already operate almost exclusively with their mobile or tablet, so it needs to work well and be easy to understand, so as not to make mistakes that could cost us very expensive.
Additionally, it is interesting that the futures broker offers integrations with other large platforms that may interest us, to be able to operate, for example, via TradingView, VisualChart, or Metatrader.
5. Customer Service
We must rigorously evaluate the Futures Broker’s customer service. What contact channels they have and what hours, for general doubts about platforms or products, and also when faced with a doubt or complicated situation in an operation.
The channels must be accessible quickly, for example by telephone. It is important to be able to quickly access an operator who will assist us, and in our language. Other channels that should have an adequate quality of service can be chat, email and, in some cases, they could even have customer service via WhatsApp.