The Russian-Ukrainian conflict sent oil prices around the world sky-rocketing to all-time record highs.
But businesses and traders who already had future investments agreed in oil were not immediately affected.
So whether you’re trading in lean hogs, wheat, soybeans, ownership of company stocks & bonds - or even bitcoin - futures contracts let you hedge or speculate.
So you can secure an instrument at an early price now, for delivery later (minutes, days, or months ahead).
In this guide, let’s review the top futures trading platforms.
Table of Contents:
- 1. 💬 eToro review: Trustpilot rating 4.2
- 2. 💬 CMC Markets review: Trustpilot rating 4.2
- 3. 💬 Capital.com review: Trustpilot rating 4.4
- 4. 💬 Libertex review: Trustpilot rating 4.3
- What are futures?
- Who uses futures?
- How futures work
- Securities vs. commodities
- Advantages of futures contracts
- Disadvantages of futures contracts
- Do futures trade all day?
- Futures vs. options
- Popular futures contracts
Best Futures Trading Services (UK) 🚀
Considering futures trading? As always, when crunching your Trading Data, take time to learn your strategy. Adapt to your chosen provider. And use good financial common sense. But things to keep in mind, regarding astute futures trading:
- Futures contracts can be used to hedge or speculate 🌵.
- The futures contract itself is a financial instrument that allows exchangers to trade for a set price and date.
- Big futures markets include energy, stock indexes, crypto, fiat currencies, interest rates, crops, grains, livestock, and forestry 🌐.
- The biggest advantages are diversification, hedging and leverage; the biggest challenges are too much leverage and timing expiry dates.
1. 💬 eToro Review – Trusted by Thousands
- Large Range of Stocks
- No Hidden Fees
- Chat to Expert Traders
- CopyTrade Mirroring
- Fractional Shares Enabled
- Start With Under £8
68% of retail investor accounts lose money when trading CFDs with this provider. You should consider
whether you can afford to take the high risk of losing your money.
Used by Beginners and Experts
There’s a wisdom, concerning any skill, that is more trusted than any trading platform or broker on the planet. And it goes as follows (paraphrased):
“It takes around 10,000 hours, i.e. ten years of regular practice, to become a master in any field.”
The 10,000 Hour Rule is one of the central factors that separate a Warren Buffet from a Joe Blow. Indeed, the vast majority of financial traders lose. And this means that future contract speculations depend much more on the skill-set being applied than on any singular platform or approach.
At times, however, there are unique opportunities that present themselves. One such instance of this was the exponential rise in the value of crypto. Which saw many regular savers become “superstar investors” overnight.
I’ve placed eToro (review) in the number-one position as it gives beginners an entry into potentially opportune markets. There’s no fronting or pretence to offer unique insight into this or that. It just gives you lots of pretty powerful automations on portfolios and copying traders who have a decent track-history of accomplishments.
Indeed, eToro’s biggest selling-point is its automatable 1000s strong network of expert traders: each of who can be tapped into, in real-time. Have a look at Trustpilot’s reviews are 14,000+ strong with a strong average of 4.2 out of 5. So if you lost out on early crypto speculations, here’s a possible way to squeeze more interest growth from your extra non-emergency savings.
Overall, they seem to be pretty transparent. This wouldn’t be any good if the fees were high or if there was lots of technical fuss. Its platform lets you automatically copy top trades using its CopyPortfolios feature, which include bettering on the timing of future prices of crude oil:
- No dealer charges
- No management fees
- But there is a small withdrawal fee, also for inactivity
- Opening an account is only an £8 as a minimum
-That said, let’s cover a few more trusted (and user-recommended) platforms that offer futures contracts with what seems to be decent fees-
2. 💬 CMC Markets – Trustpilot Rating 4.2
- Trustpilot Rating 4.2
- Investopedia Rating: 4.7
- Commission: Single Shares, ETFs
- Crypto Offerings: 14
- Account Minimum: £0
Forward vs. Future Contracts
CMC Markets’ online trading platform, Next Generation, actually offers forward contracts across a large range of financial instruments - instead of futures contracts.
Forward contracts are the underlying state of futures, which are both themselves derivatives of the underlying asset. Both work to enable two parties to agree to exchange a specific asset at a specific price point and date.
(Note that European futures may differ to American futures; European futures may only let you sell the contract at the specific expiry date, whereas American may let you sell at any point up to that date, in return for higher associated fees.)
In either case, buyers and sellers can work around risks involved in price fluctuations due to seasonal changes or events. They lock-in an agreed price in advance.
The biggest difference to using forward contracts with CMC Markets - compared to futures contracts with something like eToro - is that there is increased counterparty risks to do with potential deaulting. While it is unlikely in any event, it is much less with futures contracts (which are regulated by the Commodity Futures Trading Commission).
When you do forward contracts with CMC Markets, you’ll be technically speaking entering a privately negotiated agreement between a buyer or seller to trade an asset at a specific price on a specific future date. You won’t be trading on the exchange directly; which gives you more flexibility in terms and conditions:
- Precisely when delivery will happen
- How many units of the underlying asset
- Even day trade futures (most used for commodities markets according to energy price fluctuations)
- But settlement always happens on one date – the end of the contract 📑
3. 💬 Capital.com review – Trustpilot Rating 4.4
- Trustpilot Rating 4.2
- AI-Powered App for Trading Insights
- Commission: No
- Market Offerings: 3000+
- Account Minimum: £20
Convenience, Fast Trades, TradeView-Integratable
Capital.com is the best-rated trading platform in this guide’s list, if you go by Capital.com’s Trustpilot score, which is 4.4 on average from nearly 6k user reviews. (eToro has 3x the number of reviews and still manages to hold at 4.2.
And so it really depends how you slice it. The most recurring opinions on the platform seem to be extreme convenience, ability to quickly trade or day trade, and letting you start trading with an initial deposit as small as £20 (there is also a demo account option).
One thing we’ll make a point of highlighting is the responsiveness of Capital.com with regards customer feedback. They seem to go great lengths to resolve personal queries, taking time to investigate the specific situation and to explain any procedural misunderstandings.
To expand on the main down-sides, it seems that the web-based version - in particular - may not be too up-to-scratch with getting the freshest prices on futures instruments.
This may be especially the case when the market is moving quickly; buy/sell orders may be sluggish across these high volatility windows - which makes this perhaps less advantageous for day trading futures, as you might eat pretty large losses or miss out on great opportunities.
But Capital.com has a plethora of active users who have had an excellent experience. And on the hard data side of things, you’ll get cool futures trading capabilities that range from the ability to do both pre and after market hours bidding, lots of convenience, and minimal barriers-to-entry.
Just be wary of minute-to-minute bets. (To explain the above part, praise part complaint: Capital.com supposedly amalgamates market price data from several sources, in order to present the more reflective one. This can vary from across platforms, and there may be software or hardware (OS, device model) reasons that influence this.)
4. Libertex review – Trustpilot Rating 4.3
- Large Range of Assets
- Undercuts Most CFD Commissions
- Libertex Mobile App or Desktop
- Integrates Commodity Sentiment
- Clean Charts
- Commissions: Under 0.1%
Libertex could have risen to second-place in this guide, so it’s fitting to say this is the last but not least futures trading app that I’ll cover. It’s especially geared to futures trading of commodities but there are many mentionables: agricultural products, metals, oil and gas, all the way to crypto.
Futures are handled through CFDs, which means very little upfront investment capital is needed to begin trading. But unlike the typical approach to CFD fees using spreads, Libertex instead charges a single fixed commission per trade.
Commissions are typically small (under 0.1%) depending on the asset. This normally works out to paying less per CFD trade than you would with providers who charge according to spreads. As the commission is fixed, there’s the extra peace of mind of knowing exactly what you’re going to pay.
Going into more detail on the LIbertex app, it provides sophisticated pricing charts with a handy inbuilt Economic Calendar. Furthermore, when on-the-go with charting and technical analytics, view the commodity sentiment; to see how traders are exchanging that contract on average.
And platform-wise, the broker is integrated with MT4 and MT5 - if you choose not to use the Libertex app. Just keep in mind that the learning-curve is steeper. The service is under Cyprus Securities and Exchange Commission (CySEC) regulations. Open an account by debit or credit card for as little as £20.
Buying Guide 📚
Let’s cover the basics. This section will offer key awareness. It’s good for beginners who are still learning how futures trading works. This section will also be helpful for making a buying decision on the top futures trading platform to use:
What are futures?
Futures contracts are agreements to buy or sell an asset at a future time for an agreed price. This asset could be oil, gold, coffee, corn, wheat, company stocks, bonds, ETFs, fiat currencies, cryptocurrencies and a host of others.
Usually, future contracts run on exchanges; a buyer agrees to purchase a set volume of a set asset (a commodity or security), with a set delivery date. While the seller agrees to provide that asset according to those contractual terms.
Who uses futures?
A wide range of financial parties, this direct investors and speculators alike. This may also be a company who wants physical ownership of a commodity once it is ready for delivery, water supply in the future.
Who uses futures will depend on the kind of asset, which varies as well. Wheat, for instance, is an agricultural commodity that can be exchanged in futures contracts. But an investor might also trade Dow Jones futures contracts - for stock futures investment.
How futures work
The futures agreement lets buyers and sellers secure a specific buying or selling price and hedge against the chance of large volatility (I have a direction) ahead. To illustrate this, let’s use the jet fuel commodity:
- ☑️ An airline firm wants to guarantee jet fuel prices for years ahead to avoid unforeseen rises and so purchases a futures contract, agreeing to purchase a specific amount of jet fuel for delivery in the future at a set rate.
- ☑️ Meanwhile a fuel supplier wants to sell a futures contract to lock-in a predictable market demand for fuel and ward against unforeseen drops in prices.
- ☑️ Both parties agree to set terms: to exchange 2 million gallons of jet fuel, for delivery in 180 days, at a rate of £2 per gallon.
This is an instance where both players are hedging; these are productive companies who rely on the quality to sustain their business. The futures market is a practical way of offering their vulnerability to risk in the event of price moves.
But not all financial players seek to physically exchange a product in the future. These participants are more purely speculative investors, with the aim to profit from price moves from the contract itself. For instance, if market conditions make it so that jet fuel prices appreciate, the futures contract itself can make a profit.
The futures contract owner can sell the contract for more than they paid, in the futures market. These traders may purchase or sell a futures contract without intending to take part in any physical exchange of the underlying commodity; there is no operational need, they’re only participating in the market in order to bet on price moves.
Because of the existence of these different types of traders - hedgers (e.g. airline firms and fuel distributors), and speculative investors (those profiting from the futures contract itself), increase the liquidity and market cap of these markets.
Securities vs. commodities
Even if you call it by a different name, you probably already know what commodities and securities are.
Investments in stocks, bonds - and other institutional and business-related interests like purchasing debt - are all securities. While the purchase of natural resources such as coal, gas and oil, or even gold and silver, as well as agricultural goods like corn, sugar, coffee, and wheat are examples of commodities. These articles are purchased in demand, before delivery.
In other words, instead of a film studio buying “options” to a screenplay adaptation - like in the Star Wars example that I used in the intro - you’re an individual putting a claim in to have “first dibs” to a financial marketplace security (such as a stock or commodity)
Securities (e.g. stocks and bonds)
Most people trading securities are purely investing in a speculative way. For instance, a publicly traded firm can appreciate or depreciate in the value of its stocks. Purchasing bonds can secure consistent gains without significant risk of loss.
The three most common reasons people hold securities are for retirement, or to fund education or big purchases. A few investors use securities to develop their overall wealth. Securities are also a big part of the financial system.
The most common securities are stocks, bonds, and credit default swap (CBS) debt agreements. But most often, an investor will purchase stocks of a company, in anticipation that it can profit from the company’s accomplishments.
The biggest difference between securities and commodities is the thing that is being sold. When you buy a stock, you’re sharing in a company’s operation and ownership.
Whereas buying commodities gives you the commodity itself, before it is available. The purchaser agrees to buy an agreed-upon number of units of product at a specific rate for delivery at a much later date.
When you invest in commodities, You’re hoping to get a fixed good price ahead of time, to sidestep any visors in value in the future. Whereas the seller does the opposite: they want to sell at a peak price in order to avoid any drops in the price later on.
These are both forms of hedging. If oil skyrockets to £150, but you buy £75, this will be a bargain. Gains can be made, even if the product is coffee. For a commodity to be exchangeable this way, it needs to be interchangeable. Each barrel of oil should meet the same minimum quality standards as any other, so that the only real buying consideration is the price and number of units.
Advantages of futures contracts
Disadvantages of futures contracts
Because futures contracts give risk-tolerant investors access to markets that they could not otherwise trade in. Having so many different types of financial players means high liquidity, particularly for currencies, popular commodities, and indexes. Traders can come in and out of the market as they like.
Eliminates time decay
Time decay happens with options: Assets depreciate in value with time, which massively lowers the asset’s profitability for the trader. But traders who use futures contracts do not have this issue. Margins are also well formed in these markets, so each trader knows precisely how much margin is required for a contract. The pricing model is overall pretty easy to grasp, compared to the options market.
Insulation from market volatility
Futures contracts are frequently used as a hedging strategy in industries known to have high price volatility. For instance, farmers use forward contracts to insulate themselves from being exposed to sudden falls in crop prices.
The given example, the Seo farmer is farming wheat, and anticipates a harvest of 10,000 bushels of wheat once the crop matures. Unable to be sure of crop prices once harvest is ready, he can sell off the full crop ahead of time at a set rate. This time of agreement could be months ahead of the actual harvest, agreeing to make delivery at the future time.
While the farmer does not get the actual payment at the start of the contract, the contract still protects him from chance changes in currency strengths versus another as well as dips in the wheat market.
Other hedging examples
A diverse range of financial players use forward contracts for risk management purposes. Firms normally implement these contracts in order to put a bottle-stop on risk that may happen due to fluctuations in the foreign currency exchange.
For instance, a UK firm has manufacturing and hiring costs in pounds sterling but exports its end product to the North American market and receives payment in dollars. The company will supply these products half year from now, which makes it vulnerable to negative exchange rate changes. To insulate from this risk, the company can agree to a forward contract; to sell its goods at the current exchange rate, even though the delivery will not get underway for another six months.
The future is unforeseeable
Future events may be disastrous to the futures contract: A sudden turn in weather conditions, natural disasters, political events, e.g. can radically influence the supply and demand balance.
Leverage comes from using borrowed capital to fund investments in an asset. The higher the leverage, the more this can lead to big fluctuations in futures prices. The price can swing up and down daily or even in a matter of minutes.
As with options, futures contracts have a set expiration date. However, the outlook on an asset can increasingly dwindle as the expiration date comes closer. For this reason, a futures contract can, in some situations, expire at the point when the asset is no longer valuable at all.
Do futures trade all day?
Futures span across wide industries, sectors, assets, and instruments. So whether your futures contracts are all-day or otherwise will generally depend on the market that you happen to be dealing in. For instance, stock index futures are nearly 24/7. Whereas the U.S. stock market has the highest activity levels between 9:30 a.m. and 4 p.m.
Index futures traders often look for rises and falls that happen outside of typical market hours, in order to decide whether or the stock market will open up higher or lower the following day.
Futures versus options
The main advantage of features versus options is that they are normally easier to understand and properly priced. There is more margin use and frequently greater liquidity. Nevertheless, futures are more complicated than the underlying assets they contract. So it’s important to know all of the risks before trading futures.
Popular futures contracts
- ☑️ Agricultural products like soybeans, wheat, and corn are all popular choices of futures contracts - also, oranges and orange juice.
- ☑️ Gas, oil and coal are the biggest trading commodities in natural resource sectors.
- ☑️ The foreign exchange market (FX or forex) has become increasingly popular for futures contracts. It is also possible to do bitcoin futures trading, or futures for interest rates.