TD Ameritrade futures trading spreads pricing, CME, ICE US, CFE, Emini, oil futures fees. TD Ameritrade futures margin requirements.
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TD Ameritrade Futures Trading
Whether you already trade futures or are looking to start, you may be looking to TD Ameritrade as a possible trading platform to facilitate your investments. Futures trading at TD Ameritrade comes with many benefits, but there are also some things that traders should know about the broker before getting started. Continue reading to see if TD Ameritrade is the best broker for your needs and expectations.
Trading futures at TD Ameritrade comes with many advantages. The list of available futures contracts that you can trade is quite long, and the broker has one of the most advanced charting platforms in the industry.
TD Ameritrade offers its users several ways to access the futures markets, so investors can switch between a browser-based interface, professional trading platform (TOS), and mobile. TD Ameritrade has also recently introduced a browser-based version of thinkorswim (TOS) which is certainly welcome to anyone trading on a browser or away from home/office.
Educational content, opt-in market analysis, up-to-date news feeds, and a highly customizable trading experience all add to the futures trading package as well.
On the other side of that coin, commissions and margin requirements are on the high side.
Available Futures Products
Futures traders at TD Ameritrade have access to virtually every type of futures contract there is. This partly due to the free market data. At many other brokers, you only have access to the group of contracts that your market data subscription covers.
To select the best futures contract for your needs, trading style, and expectations, you can compare the contract sizes in terms of risk and margin requirements, as well as the volatility that each product is known for. Some contracts come with considerable risk/reward parameters, while others are more subdued. The available futures product categories include stock indices, commodities, metals, interest rates, digital assets, and currencies.
Depending on your timeframe, objectives, and account size, some futures contracts will be more suitable for you than others.
Some investors gravitate towards the products with greater volatility and liquidity, such as the S&P 500 (/ES), the Nasdaq-100 (/NQ), the Russell 2000 (/RTY), the DOW (/YM), Crude Oil WTI (/CL), Gold (/GC), and the 10-Year Treasury Note (/ZN). Others look for longer-term, swing-type opportunities in products such as Wheat (/ZW), Soybeans (/ZS), and currency futures.
CME also supplies a long list of micro-sized futures contracts that represent 1/10th of a standard contract. Micros are perfect for investors looking to learn or practice without putting too much money on the line. Not only are the gains and losses 1/10th the size of the regular futures products, but the margin requirements are also significantly lower.
Find more information about available futures products here.
Margin and Fees
One of the most important things to understand about trading futures is how your broker deals with margin requirements. At TD Ameritrade, margin requirements are a bit high when compared with some of the available ‘futures only’ brokers.
TD Ameritrade Futures Margin Requirements
There are a couple types of margin that affect futures traders. There is Initial Margin, and Maintenance Margin.
Initial margin is a percentage of the notional value of whichever contract you are trading. As the notional value is quite different between products, so too are the margin requirements. Initial margin is also regularly adjusted by the broker to factor in volatility metrics, global events, etc. As such, margin requirements are always changing. However, we can provide an example.
If one futures contract for the S&P 500 had a notional value of a quarter million dollars, the initial margin would be close to $15,000. You would need to have at least $15K in your trading account to establish a futures position. If you were to trade Nasdaq futures, you would need more capital in your trading account to meet the higher margin requirements that come with the bigger contract.
It is always a good idea to keep a close eye on margin requirements and how they relate to your trading account.
Maintenance margin is lower than the initial margin.
Once a position is established, the amount of capital that your account must maintain is the maintenance margin. Again, this amount is different across products and contract types, but the initial margin is usually 110% higher than the maintenance margin. The good news is that you do not have to keep track of the margin requirements. Margin for each contract is displayed on the dropdown symbol menu on the charts tab (in TOS).
It is also possible to see how each position has affected your bottom line by reviewing your open positions in the monitor tab.
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TD Ameritrade Futures Fees
When it comes to fees, TD Ameritrade could certainly do better. The broker is a bit late to adjust its fee schedule to meet the competition. Traders pay $2.25 per contract, or $4.50 per round trip. For active traders, that can certainly add up, cutting into profits or expanding losses (especially when trading micros).
Market Data
One standout feature of TD Ameritrade is the free futures market data. While it is still an ‘opt-in’ subscription, there is no charge for it if you are a non-professional trader.
One exception relates to the ICE futures products. To trade futures on the ICE exchange (coffee, cocoa, cotton, orange juice, and sugar), you do need a separate market data subscription. Another exception is professional clients who still pay for professional-level market data.
For most active futures traders, the Real-Time NASDAQ Level II Quotes are enough for trading. Years of historical data, tick charts, market internals, volume profiles, TPO charts, and market depth are all included in the TD Ameritrade market data package.
Futures Trading Permission
To trade futures at TD Ameritrade, you will need to upgrade your account. Going through the upgrade process activates futures trading and ensures that you have signed all the necessary agreements that go along with using margin and trading levered products.
To apply for futures trading, navigate to the ‘My Profile’ page on the TD Ameritrade website. Once there, locate ‘Futures’ under the ‘Election & Routing’ column. If futures are listed as ‘Disabled’, you will need to ‘Upgrade’ your account.
Selecting ‘Upgrade’ brings to a confirmation page that explains how your account will change based on the upgrade that you are considering. Submit the request and wait for a day or two for the account upgrade process to complete.
Platforms Available for Trading Futures
TD Ameritrade tries to reach every type of investor with its various trading platforms. You can place trades from the web interface, the web-based version of the popular thinkorswim, the flagship trading software thinkorswim (TOS), and the mobile app. Each of the available platforms provide advanced order entry, and solid charting experiences.
For futures trading, it is recommended to use TOS. The trading platform excels at delivering large amounts of data and handling all of your futures trading needs. The mobile trading environment is also quite good, but it certainly lacks the versatility of the desktop platform.
Available Trading Tools on TOS
TOS provides many ways to interact with the futures markets. You can place trades directly from a chart, a chart grid, the ‘Futures Trader’ tab, or the ‘Active Trader’ tab. You can also place trades directly from the snap ticket, located at the bottom of the trading platform. Each one comes with its own pros and cons, and you should try them all to see which trade entry methods work best for you.
Futures Trader Tab
The Futures Trader tab is a dedicated, multi-product screen from which you can view multiple futures contracts at the same time and place trades at will. You can select the number of cells that you would like to display, and then each cell can be modified to show tools that suit your preferences. Some available tools are L2, charts, trading buttons, news, and more.
While it is a powerful tool, some find the Futures Trader tab to be a bit cumbersome.
Active Trader Tab
The Active Trader tab is similar in many ways to the Futures trader tab, although the layout is a bit different. By default, active trader loads two charts with DOM alongside. It is possible to modify the tab by adding more products, modules, etc. You can also set advanced order entry rules and trade size preferences.
Flexible Grid and Charts
The Flexible Grid and Charts can be designed to suit any trading style. They can serve as a market overview with numerous charts, an active trading platform, or a mixture of the two. The Flexible Grid is best for traders looking to have all the features of the charting interface and grid functionality on one screen. The Charts tab is best for traders looking at a single chart.
Orders can be placed via buttons, right click menu, or by using one of the available ‘gadgets’.
Education and Customer Service
TD Ameritrade provides many great tools for traders to learn about futures and futures trading. From the broker’s website, traders have access to a library of educational content. From TOS (thinkorswim), you can access educational content, webinars, and more directly from the trading platform. Simply navigate to the ‘Education’ tab to get started.
Customer service is another strong aspect of TD Ameritrade’s futures trading service. You can contact the trade desk via telephone at any time. There is also a live chat option, a ticket submission option, and an AI assistant to help you find the information that you need as quickly as possible.
To get help with account inquiries or futures trades 24/7, current customers in the US can call 800-669-3900, and international customers can use 800-368-3668 or 402-970-5805.
Pros
- A long list of futures products
- A very good trading platform
- Excellent charting experience
- A very good mobile trading experience
- Free market data for all futures products
- A lot of educational material and guides
- Customer Service is good
Cons
- Expensive compared to competitors
- Commissions and margin are on the high side
- Order entry and position management requires a bit of a learning curve
About the Author
Ben Wright is an investor, a trader, an educator, and something of an explorer. He spends his days in the markets when he is not teaching or spending time with his family. Ben writes about stockbrokers, markets, investment vehicles, promotional offers, and tools that help investors make the most of their time in the markets.
