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Staring at a Futures Broker List and Don’t Know How to Select the Right One?

April 11, 2019 by Daniels Trading| Futures 101

Without a doubt, one of the most important choices that a trader must make is which broker to work with in the market. No matter if you’re trading stocks, forex, or futures, your broker is an important source of information. It’s crucial to select one that’s capable of satisfying your personal trade-related needs and objectives.

You’re probably well aware that there are dozens of brokerage options available to service your futures account. Full service, discount, and deep discount firms line up to secure business, offering traders a wide variety of perks and unique features. If you’re struggling to shorten your futures brokers list, keep reading for helpful ideas on how to find a suitable broker for your venture into the markets.

Licensed and in Good Standing

The first aspect of narrowing a futures brokers list is to find out whether the firm(s) you’re considering are licensed and in good standing. This may sound like a mountain of work, but it’s actually straightforward. You don’t even need to hire a team of paralegals to get the job done!

In the U.S., a futures broker must be licensed with two regulatory bodies:

  • Commodities Futures Trading Commission (CFTC)
  • National Financial Authority (NFA)

Aside from very few exceptions, futures brokers are required to carry active memberships with both organizations. To quickly find out whether a potential firm is licensed, use NFA’s Background Affiliation Status Information Center (BASIC). It offers a free search to check current and historical CFTC registration and NFA membership information. If a broker is not in good standing with the CFTC and NFA, cross it off the list!

Read our guide, Basic Training for Futures Traders, and discover 50 of the best tips from experts.

Reputation

Firms at the top of any futures brokers list typically have one thing in common: a solid reputation. It’s an unfortunate part of the business, but not all brokers enjoy a positive reputation in the industry. This is one area where you can’t afford to skimp on performing your due diligence ― the security of your money is at stake!

There are three ways to gauge the reputation of a futures broker:

  • Longevity: Fly-by-night firms come and go. Having a long-standing position in the markets indicates both competency and financial stability. If a broker has stood the test of time, then chances are your capital will be in secure hands.
  • Track record: Recognition from peers and clients is a good sign that a broker does things right. Periodic awards and industry acknowledgement are often common to prominent brokerage outfits.
  • Word of mouth: In the event a brokerage’s clientele has little good to say about the service, then there is a problem. This is a key area pertaining to trade execution and may be a sign of a broader issue. If word on the street is bad, it may be time to look elsewhere for service.

A firm that has been in business for a long time, received accolades, and is recognized by its peers is more than likely a solid brokerage. It respects customer segregated funds and is competent in facilitating trade. Simply put, a strong reputation is a great measuring stick of a broker’s caliber.

Narrowing Your Futures Brokers List

Choosing a futures broker can be a daunting task. Finding a firm that features adequate technology and an ideal custom service suite depends greatly upon your individual trading style. However, confirming that a broker is licensed and has a solid reputation is relatively straightforward.

In order to trade you will have to part with your money ― be sure your funds are in good hands. For more information on how to reduce your futures brokers list to one, schedule a no-obligation consultation with the team at Daniels Trading today.

Ready to think like a technical trader? Download our free guide to learn how to identify chart formations and take action when the time is right.

Filed Under: Futures 101

About Daniels Trading

Daniels Trading is an independent futures brokerage firm located in the heart of Chicago’s financial district. Established by renowned commodity trader Andy Daniels in 1995, Daniels Trading is built on a culture of trust committed to the firm’s mission of Independence, Objectivity and Reliability.

Risk Disclosure

This material is conveyed as a solicitation for entering into a derivatives transaction.

This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.

Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.

Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.

You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.

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Risk Disclosure

This material is conveyed as a solicitation for entering into a derivatives transaction.

This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.

Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.

Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.

You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.

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