The vastly reduced barriers to entry may be the biggest upside to trading in the contemporary futures marketplace. In comparison to decades past, it’s simple to begin buying and selling contracts on everything from soybean oil to the Dow Jones Industrial Average. In fact, you can open an online futures trading account in three routine steps:
- select a broker
- apply online
- fund your account
From top to bottom, the process of opening a futures account really couldn’t be much easier. Assuming that your internet connection is strong and your checks don’t bounce, you can be ready to start trading in only a few business days.
Step #1 Select a Broker
Like any other financial institution, brokers are not one-size-fits-all. Each specializes in a unique collection of services designed to cater to a specific clientele. Therefore, it’s critical that you select a brokerage firm suited to your individual needs. Here are a few questions you should ask any broker before giving them your business:
- Service suite: What services does the broker offer? Are there both self-directed and broker-assisted options for trade?
- Competence: How long has the brokerage firm been active in the markets? Is the word-of-mouth among the current and past clientele positive?
- Reputable: Is the firm a member of the National Futures Association (NFA) and licensed by the Commodity Futures Trading Commission (CFTC)? Are there any pending lawsuits or standing judgments against the firm?
It may appear to be an elementary point, but selecting the ideal brokerage service for your situation is the most important part of opening an online futures trading account. The best broker for the job will be both competent and reputable, as well as provide a service suite capable of satisfying your individual needs.
Step #2 Apply Online
The beauty of modern technology is that tasks once requiring in-person office visits and the U.S. Postal Service may now be completed online. To open a futures account, you are going to have to complete the online application process. This is unavoidable, and here’s the process:
- Submit application: The typical online account application asks for basic trading experience and financial background information. Enter the data, click “Submit,” and it’s on its way to the broker.
- Compliance review: The broker’s compliance department reviews the application.
- Addendums: If any additional documentation is required by compliance, it must be produced before the application process may proceed.
- Approval/denial: The application for a new account will be either approved or denied.
Barring any extraordinary circumstances, the entire process for opening an online futures trading account is typically completed within three to five business days. Upon approval, all that is left to do is fund the account and begin trading.
Step #3 Fund Your Account
Before you can start live trading, you must make a monetary deposit to your new account. The transfer is essential to securing the margin necessary for physically buying and selling futures contracts. Once the funds post to the online futures trading account, they will be available for use.
Most brokers offer clients several deposit options. Cashier’s check, automated clearing house (ACH) transfer, and bank wires are a few of the most common. Be sure to check your broker-specific fees and processing times for each type of transaction because they do vary.
Opening an Online Futures Trading Account Is Fast and Convenient
Anytime an individual divulges personal information before sending money, many red flags go up ― and rightfully so. That is why it’s imperative that your broker is licensed, reputable, and of the highest ethical standing. If there are questions in this area, then it’s time to find another broker.
For more information on how to open an online futures trading account, reach out to the professionals at Daniels Trading. With more than two decades in the industry, Daniels Trading has a proven track record of reliable and efficient service within the futures arena.