Back in the eighties farmers from North America traveled to Michigan to sell crops. But no one was interested in buying their crops. The absence of buyers in the market makes crops worthless. Many farmers have to dump crops in Michigan and return home empty-handed. If there were a futures market in that time, farmers could have buyers before selling crops. The future market helps traders to make agreements to buy or sell specific quantities at specific dates at specific prices.
For trading futures online in the stock market, every retail or individual trader is not eligible. It’s pretty hard to get approved. It requires money, time, documentation, and obviously approval.
How to get approved for future trading?
The first step is to find a funded online broker’s account with margin and futures trading approval. After this, you need to deposit money to activate your account and get started. It’s not that simple, not everyone gets approved for this account except SEPs, Roth traditional, and Rollovers IRAs.
For individual traders, the future may be risky. Institutional traders are trained to trade the future and they know the stock market better than individual traders. Never start this trading if you know little about it.
What Is Future Trading
Future trading means the agreement of buying or selling contracts of security, commodity, or crypto at a certain time and place. It is based on speculation of price. It is a risky game, especially in crypto where leverage is involved.
It may cost you as minimum as $5 per contract (in crypto) to a maximum 1500$ per contract. Most institutional investors get future trading approval. In the USA, it is controlled by the National Future Association. NFA. Investors can trade futures contracts on market commodities and Crypto.
5 Steps To Get Approved For Future Trading
Future trading approval is somehow more difficult than forex trading. You need to keep more money in your margin account and more documentation. However, it depends on the platform where you want to trade futures. The most popular futures trading platform is Ameritrade.
Let’s check out the step to get approved for future trading fast:
Step 1-Search For Authentic Future Trading Platform
Not every broker and investment firm offers future contract trading. Only a few platforms for future trading are there. You need to do proper research for this. Ask your friends about their experience of trading futures successfully on any platform and go with it.
For US residents Ameritrade is best. What to consider when looking for the best future trading platform? Consider pricing, commission, web-based advanced features, and other offers.
Below is a list of the 5 best futures trading platforms to go with
- Interactive Brokers – Best for Pro traders
- TD Ameritrade – Best for PC and desktop
- TradeStation – Best with low commission
- E*TRADE – Best web-based futures trading platform
- Charles Schwab – Best Offers
Step-2 Create Profile Or Register
After searching for a funded online broker account with margin approval you can start your future trading journey. All you need to do is to create your profile. This may require simple to complicated information depending on which broker you may choose.
To complete profile creation in Ameritrade go to Client Services > My Profile > General. Under Elections & Routing, look for Futures, and click Apply.
Step-3 Check Account Eligibility For Future Trading
Not all accounts are approved or eligible for future trading. Only the accounts that fulfill the following criteria are eligible to buy and sell futures contracts:
- Accounts of the registered broker with margin approval
- Accounts that have enabled advanced features from setting in profile: For this go to enable: Log in > Client Services > My Profile > General > Advanced Features (click Enable)
- Account must have a minimum deposit of $1500 for margin approval(on Ameritrade Only)
- Or account minimum deposit varies depending on the broker you may choose
- SEPs, Roth traditional, and Rollovers IRAs are eligible for approval of future trading accounts only
Step 4-Deposit Money
If you think you are eligible for trading futures contracts, the next step is to deposit money. There are many ways offered by brokers to deposit money Via banks or Credit Cards. You may choose bank transfer, wire, or debit card, whatever suits you. Beware of doing your proper research before depositing money to a broker.
Step-5 Get Started
After depositing money your account will show Active status. Now you are ready to buy and sell futures contracts. Don’t forget to read the contract fee of your broker.
Check the status Active after depositing money and get started. If you see your account is not activated after depositing money, chat with your broker from chatbox and ask for a reason.
How Much Money Is Required For Future Trading
The cost of future trading varies with the type of contract. It may cost as minimum as 1$ per contract for commodities and 10$ for crypto futures. Brokers fees and commissions are also applied. Each online broker has a different deposit fee. The minimum deposit limit of most future trading accounts is $1000.
The broker fee varies from 1$ per contract to 10$per contract. It depends on the leverage and price of the contract you want to order.
The cost of future trading increases when you apply for a margin trading approval account. You cant trade future online if you don’t have a margin trading approved account of any funded broker.
What Is The Minimum Deposit To Trade Futures
Before getting involved in future trading you need to know how much money is required to open an account to trade futures under online brokers. Two types of deposits are required for future trading. One is a broker’s deposit.
Each broker sets a minimum deposit limit differently according to the prices of contracts he is offering. The lowest deposit for broker account opening for future trading is as minimum as $2500.
Traders can compare this lowest requirement with different brokers. Another cost is the margin deposit requirement. Each future trading contract has a certain margin cost depending on risk. It varies from $600 to $800 for a low-risk contract. On commodities, it may go up to $10,000.
Is it hard to trade futures?
Comparatively, trading futures is harder than forex and options trading. It requires a lot of investment, time, and patience. Even most expert traders have to stay in touch with the market, news, and charts.
How much does a futures trader make?
It depends on whether future traders are trading individually or working for some brokerage. The salary of future traders in the USA ranges from $32,680 to $1,119,284. About 57% of future traders make
Does anyone make money trading futures?
Lastly, getting approval for future trading is easy if you have an approved margin trading account. Moreover, if your account is eligible for future trading, only then you can apply for it. Not all applications and every individual trader is accepted to trade futures.
The criteria of this approval vary from brokers to institutions. Some brokers don’t allow individual traders to trade futures. Do proper research before starting this trading, otherwise, you can lose your deposit amount.