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How to compare FCMs for small futures account?


#1

Hello,

I’m planning to open a new account trading some CME contracts (ES,NQ,ZN, etc). Can someone suggest which FCM is more friendly to small accounts (<30k)? On optimus webpage, I can tell Wedbush requires highest day margin (50%), TradeStation less (25%), and AMP & Gain only $500. What are the advantages of going with Wedbush if they require higher margin? What other factors should be considered? Clearing, network speed, tax reports, portfolio performance report and analysis, online support, etc? Thank you for any information.


#2

@dsrtegle,
I had the same issues when I started with Optimus.
As a rule you want to choose the most reputable and largest by customer funds FCM but usually those firms require more funds on deposit and hence lower risk of the trader to blow up.
It’s my understanding that all 4 FCM offered by Optimus are reputable and would work with accounts <30K but only half would work with accounts <$10-15k.

Besides the margin rates, one would be wise to consider the trading platforms offered by the FCM/Optimus combo so that placing/managing orders is comfortable and the learning curve is realistic.
Depending whether one is an experienced trader and would like advanced tools or just need a solid and stable platform to send/manage orders.

I like platforms that offer Excel / DDE / DLL connectivity so It narrowed down my search to R-Trader, OEC/Gain and CQG.

I hope that helps.

Regards,

  • P11

#3

@Project11 Thank you!

According to this table, https://optimusfutures.com/Platform-Pricing.php, except TradeStation, most of platforms are supported by AMP, Wedbush and Gain. It should not be a problem. For fast order routing and data feed quality, my understanding is that it’s more about platform and independent of FCMs, is it correct?

Minimum deposit is $2500 or $5000, same for the three: optimusfutures .com/Futures-Commodities-Trading-Account.php

Admin fee: Looks like similar. Wedbush may charge a little higher on wire, margin call, insufficient funds, etc. than AMP and Gain, but not big difference, assuming I usually transfer funds via free ACH and have very occasional margin calls.

Net capital as of Dec 2018: https://www.cftc.gov/sites/default/files/2018-12/12%20-%20FCM%20Webpage%20Update%20-%20December%202018.pdf
AMP: $4,568,597
Gain: $52,400,739
Wedbush: $191,807,942

So, Wedbush requires higher margin and charges higher fees just because it’s the largest? What other conveniences or obstacles would I face as a retail trader if I choose one not another from AMP, Gain, or Wedbush?

I’m now with IB. What are the most significant differences after switching to the 3 FCMs above?


#4

We will respond today after market close. You guys will get our view shortly.
Thank you,
Matt Z
Optimus Futures


#5

@dsrtegle,
It appears that aside from FCMs administrative fees differences and the competitive rates with an Introducing Broker, its really about one’s trading organization and keeping this as professional as possible on the trader’s side.

I focused on these when choosing an additional IB/FCM combo:

  1. Solid Risk Management (The less aggressive margins offered, the more sustainable the process,
    although at times I find it useful to use the low margins to cross-margin some strategies, rather then
    “load-up” on a position)

  2. Stable technology (Data feed+Execution Program (Auto or Discretionary);

  3. Systemic/Bankruptcy Risk - The Funds safety and reputation of the FCM (custodian) - although it happens on a rare occasion that FCM blows up but after MF Global Futures and PFG’s errors, the regulators stepped in and aggressively monitor the custodian funds and trader’s funds are placed in segregated accounts;

  4. IB and Customer Service - although many seem to ignore the crucial importance of having their personal brokers helping with the day-to-day business and servicing to their needs. Choose your IB wisely.

Some believe that overriding the need of an IB and try to deal with the FCM directly is better. I think it’s much less desirable. Try calling any of the FCM (big or small) and ask them of anything other then tracking of a stuck order or get the status on the funding of an account.
For everything else you are on your own without a solid IB support.
Big FCM’s have and rely on a network of IBs who introduce business and the customers (us the traders) to them and who are supposed to explain and guide us in the process of technology, accounting, costs and risks.

The lack of personal touch with any FCM’s that I dealt with over the years only confirms that this business is about relationships and then some. It’s like any other industry. IBs have their own dedicated reps with the FCMs (relationships!) and a trader’ questions may get answered faster then trying to build rapport with the FCM directly. Unless you set up a $1M+ account, the FCM is the last call you ever want to make (if possible).

Build a relationship with solid humans on the IB side and you have a chance not to get burdened to death by administrative tasks and focus on risk control and trading instead.

I realized after all, that one judges the FCM by online posts, size of customer funds, years in the business, technology offered, their portal and sometimes by their website and how aggressively do they advertise around. I almost didn’t go with GAIN because of their logo and a bad post from years ago lol

Optimus is FCM agnostic. Try the one you feel is right and unless you like it, switch or add another account with the next FCM in line. Good IB shouldn’t mind if a trader tries new routes until it works best for all sides.

For example, I like GAIN and their OEC product although, as I said, I had my doubts in the beginning.
I experienced; ultra fast funding process, solid fills, very good order tracking tools, 3 GAIN platforms to execute from (Gain OEC Desktop Trader, iBroker Mobile App and iWeb-based) and no extra data feed fees across all 3 platforms and no limit on logins for multi-location logins. Excel / DDE capacity works great too.

Final thoughts:
I think the choices of the FCMs offered by Optimus are solid and shouldn’t make or break one’s career.
Finally, I don’t know many successful traders who credit their success to the choice of the IB and/or FCM.

A few inputs to consider @dsrtegle.

By the way, I’ve heard Interactive Brokers are decent for futures traders and CTAs support but would love to hear your inputs on your overall experience with them?

Best Regards,

  • P11

#6

Thank you @dsrtegle for your questions about FCM (Futures Trading Commission) selections and at the same time the opportunity to earn your futures trading business. Also, thank you to @project11 for ongoing support and details provided.

It is hard to find a match for a customer unless we know the following:

  1. Account Size or type (IRA, LPOA, CTA, Self-Directed, etc).
  2. Futures Trading Technology Required ( Actual front end and the API associated-Data Feed)
  3. Risk Appetite (margin necessary)

We always prefer to discuss this over the phone because we always unveil details that would allow us to find in our opinion a near perfect match. Please call us at 1-800-771 6748 or local at 561-367-8686. email support@optimusfutures.com

Having said all of the above, I also want to provide a few general points that would allow you to understand what drives certain FCMs and their business model when it comes to customers, risk and execution.

First, large FCMs such as ADM (ADMIS)/Wedbush that we carry are involved in numerous operations such as hedging, Managed Futures, Give Ups, Allocations, and Self-Directed Trading. Due to their size, they carry large corporations on their books, large net-worth individuals, and smaller accounts. When it comes to risk, they are conservative and do not allow margins such as $500 for day trading. They allow 50% day trading margins, and at times if the customers have a really good history of trading they will allow 25% for day trading margins. The customers that are attracted to these FCMs are conservative in their nature, and the size of the organization gives them a feeling of safety. Also, their back office deals with multi-account allocations, Limited Power of Attorney Accounts, Managed Futures, and carry a multitude of technologies that are known to the public such as CQG, Rithmic, CTS, TT and more institutional driven ones such as Stellar, Fidessa, APEX, etc. Lastly, larger organizations have a highly efficient trading portal with immediate reporting.
The second issue is the front end and the corresponding data feed that comes with it. There are those who need one data for futures and commodity charting and one for execution, and as such, they want to keep the two separate. There are those who want to have all in.

We at Optimus Futures try to find the best combination for your trading requirements. Also, consider that we always try to be very cost conscious because the CME does charge for data, so our goal is to avoid paying the CME for data fees. They are not big, but they add up over time. For example, you can have Rithmic for multiple futures trading devices, and see all accounts under one. Many people like their data feed because it is unfiltered, not aggregate, and those who scalp may need such data. However, they charge for their data $20, and for many, it is worth it. OEC Data could be applied across multiple devices, and they do not charge for their data. CME Fees for data are different of course. CQG as far as we know could be extended only to two devices at the same time but they charge for each user they create.CQG wants a different ID for each platform. At AMP Clearing, They provide CQG credentials for many CQG devices, and they do not charge for their CQG devices.

Lastly, your risk appetite has to do with your risk capital and risk tolerance. We have a fiduciary duty not to advocate the overuse of leverage as it does not put the odds in your favor. Nevertheless, we respect the fact that many need $ 500-day trading margins because they carry small amounts for trading. Consider carefully how many contracts you need to hold for your day trading and decide whether you need such margins. As a general statement, smaller FCMs-in order to be competitive offer lower day trading margins.

Gain Capital and AMP would serve you well from that perspective.

As @project11 suggested, as an introducing broker we bridge the gap of knowledge and support for many futures traders. Like yourself @dsrtegle, we receive many customers from other FCMs and IBS because they always missed an element that the futures trader may need and is crucial for their operation.

If you have additional and specific questions about FCMs, I would be more than happy to address that. If you have data feed questions, please open a new thread.

Just as summery, at the moment we have clearing arrangments with ADM, Advantage Futures, AMP, Gain Futures, and TS.

Thank you,
Matt Z
Optimus Futures
www.optimusfutures.com


#7

Thank you @Mod-MattZ for such detailed explanation.

About the three you listed:

  1. Small size (<30k, maybe 100k later), self-directed
  2. Only front-end for now. May need API later.
  3. Conservative to mild risk.

Lastly, larger organizations have a highly efficient trading portal with immediate reporting.

I don’t quite understand this. With the same platform, say Rithmic, would there be any difference in trading efficiency or speed between two different clearing portals (e.g. AMP vs Wedbush)?

Just as summery, at the moment we have clearing arrangments with ADM, Advantage Futures, AMP, Gain Futures, and TS.

No more Wedbush? Do you still offer this Wedbush only combo? https://optimusfutures.com/Platforms/SierraChart-CTS.php


#8

I was referring to the administrative portal https://members1.admis.com for example where your trades are reported, statements generated, etc. I was not referring to the actual clearing servers. Rithmic whether in Wedbush or AMP is the same. There is no difference except that some FCMs may allow more instruments over the same data feed.

I apologize I neglected to mention Wedbush. The Sierrachart/CTS combo is still available, and we have customers on it. But, it is a very cumbersome integration, and honestly today I do not see its advantage over Rithmic or CQG. However, we are still fans of Sierra and CTS technologies separately.

Matt Z
Optimus Futures
www.optimusfutures.com


#9

May I drop you an email? I want to help you with a good option.

Thank you,
Matt Z
Optimus Futures
www.optimusfutures.com


listed #10

#11

Yes sure. Please feel free email. Thanks.


#12

Will drop you a note shortly.

Matt Z
Optimus Futures
www.optimusfutures.com


#13

@Project11

By the way, I’ve heard Interactive Brokers are decent for futures traders and CTAs support but would love to hear your inputs on your overall experience with them?

About IB: it’s a one-stop turnkey solution like TDA, Etrade or other big banks.
pros: 1. They have everything. FCM, clearing, platform, data, API, statements, portfolio analysis, free or low-cost. 2. Not very high commission 3. Many people use it so easy to find a solution to your problems. 4. They pay interest to idle cash. 5. Fast software iteration.
cons: 1. High margin requirements, higher than initial. 2. You are bind to one platform and data feed, and their data are filtered. (Certainly you can use 3rd party software like Sierra Chart to trade but it’s cumbersome since you always have to run two apps.) 3. No historical data. Api has historical download but also enforces pace violation so make it useless in practice. 4. Not very good order matching efficiency. 5. Platform lacks advanced analysis features.


#14

When Futures traders start out they typically start with the big firms because they have the ad $$, and they are also widely discussed. However, as time progress and some become advanced Futures traders, they start looking at details such as latency, type of data and ease of execution. What you summarized above is exactly what traders lack and where we find the solution to overcome that. We are platform, data and FCM neutral, and make sure you have the right match. Past the point of opening an account and execution, we make sure you have what you need.

Matt Z
Optimus Futures
www.optimusfutures.com