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

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!

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 StoneX today.