To prosper in the futures marketplace, a trader must possess a few things to make success a real possibility. Having a viable strategy, adequate risk capital, and mental toughness are the trader’s responsibility. However, providing market access and expert guidance are duties that fall to futures trading brokers. If a trader lacks either of these two broker inputs, sustaining profitability in the futures markets can be an epic challenge.
Although available resources and personal levels of dedication vary from trader to trader, the role of a strong brokerage firm remains constant. If a broker is competent in the following areas, a trader’s performance is likely to improve:
- Core services
In a perfect world, all futures trading brokers would provide the same quality services. Unfortunately, this is not the case. An inadequate broker can be a drag on profitability in a variety of ways — some obvious, some obscure. Ultimately, it’s the responsibility of the trader to secure the services of the most suitable broker for the job.
Whether you’re a large-cap institutional investor or a market newbie, the core functions of all futures trading brokers are essentially the same. However, the manner in which the following services are provided can have a dramatic impact on your bottom line:
- Access: Accessing the market via an unfettered data flow is essential to efficient trading. Undue latencies cost money!
- Technology: In the modern marketplace, the broker must operate within a sound technological infrastructure. This includes the support or provision of robust trading software.
- Trade execution: Order routing and hosting are two elements that directly impact trade execution. A good broker furnishes clients with streamlined order routing and server-side order hosting.
In many ways, your broker is your avenue to the marketplace. If market access, technology, or trade execution services aren’t first-rate, odds are that your performance will suffer. To give yourself the best possible chance at success, your broker must be on the competitive lead lap.
Although most futures trading brokers appear legitimate, it takes more than an online presence or a fancy brick-and-mortar headquarters to make a broker worthy of your business. Aside from the trade-related essentials, brokers must excel in two areas:
- Competency: Being able to consistently execute the core trade-related essentials is a key aspect of competency. Brokers who have a solid track record of reliability are more likely to provide quality service.
- Reputability: A broker needs to have a positive reputation and be in good standing with all regulatory authorities. If outstanding judgments or pending litigation surround a firm, the risk of loss due to default or fraud increases exponentially.
Securing the services of a competent, reputable firm is a must. Fortunately, through a little due diligence, ensuring that a broker is ethical and in legal good-standing is a task easily accomplished.
Whether you trade futures or options, having access to a veteran of the markets can be an valuable asset. There’s no substitute for understanding the “hows” and “whys” behind a seemingly random event. When you find yourself face-to-face with the unexpected, it never hurts to consult with an experienced professional.
Many futures trading brokers offer guidance, analysis, and advice free of charge. In the event that your performance lags expectations, a broker can help address any problems in the following ways:
- Strategic advice: There is truly nothing new under the sun. If you’re having trouble in the markets, chances are that your issues are not unique. An experienced market professional can give insight into how to modify your strategy for success.
- Analysis: Having a comprehensive understanding of the futures marketplace is a full-time job. The technicals and fundamentals of each specific product are unique. A savvy broker understands the underpinnings of the futures markets and how they may be affecting your performance.
Sometimes a minor change can make all of the difference in the world. Troubleshooting subpar performance is one area where a strong broker can help eliminate unforced errors and boost profitability.
Futures Trading Brokers Are Not “One Size Fits All”
The futures markets offer opportunity at the cost of certainty. A broker should be a concrete pillar in trader’s approach to the markets. For more information on how a strong futures broker can help you achieve your financial goals, schedule a free consultation with a member of the team at Daniels Trading today.