Interactive Brokers for Futures Trading: Is It Worth It in 2024?

Interactive Brokers (IBKR) is one of the most popular platforms for futures trading, providing access to various markets and asset classes. Known for its low commissions and robust trading tools, IBKR appeals to seasoned and beginner futures traders. Whether you're looking to trade agricultural futures or cryptocurrency, IBKR's platform has the necessary resources. But before jumping in, it’s important to understand the costs, tools and requirements for futures trading on Interactive Brokers.

Trading Futures on IBKR

Trading futures on IBKR offers a highly flexible and cost-effective experience. Futures traders can access global markets, trading contracts based on everything from equity indexes to energy commodities. Advanced tools like ComboTrader and SpreadTrader make managing futures positions efficient and tailored for precision. The platform's low commissions and competitive margin requirements make it popular among active traders.

Interactive Brokers allows traders to utilize SmartRouting, which automatically seeks the best available price across multiple exchanges for futures contracts, ensuring you’re not overpaying for trades. For high-volume traders, this feature alone can save significant money over time.

Futures Commissions

IBKR uses a tiered or fixed pricing model for futures commissions, depending on the volume of contracts traded. In the U.S., commissions for standard futures contracts are as follows:

• ≤ 1,000 contracts: $0.85 per contract (fixed)
• 1,001 - 10,000 contracts: $0.65 per contract (tiered)
• 10,001 - 20,000 contracts: $0.45 per contract (tiered)
• > 20,000 contracts: $0.25 per contract (tiered)

For example, if you trade 1,000 contracts of standard futures in a month, your total commission would be $850 (1,000 contracts x $0.85). If you trade 2,000 contracts, the commission drops to $1,300 (1,000 x $0.85 + 1,000 x $0.65).

Interactive Brokers also offers reduced commissions for E-micro futures. These smaller contracts come with lower fees, starting at $0.25 per contract for volumes of up to 1,000 contracts. Cryptocurrency futures, such as CME Bitcoin Futures, cost $5 per contract, while micro Bitcoin futures are $2.25 per contract.

Futures Asset Classes Available

IBKR offers a wide range of futures asset classes, giving traders the flexibility to trade across numerous markets:

• Agriculture: Trade futures contracts on wheat, corn and soybeans.
• Cryptocurrency: Access Bitcoin and ethereum futures contracts on the CME.
• Currencies: E-mini and E-micro futures on forex pairs like USD/EUR or USD/JPY.
• Energy: Trade futures contracts for crude oil, natural gas and other energy commodities.
• Equity Indices: Futures on popular indexes like the S&P 500, Nasdaq and Dow Jones.
• Fixed Income: Trade treasury bond and other government debt futures.
• Interest Rates: Access futures contracts based on interest rate benchmarks.
• Metals: Futures contracts on precious metals like gold, silver and copper.
• Softs: Trade soft commodities like cotton, coffee and sugar.
• Volatility Indices: Trade futures on the VIX, the volatility index.

This diverse range of asset classes enables traders to diversify and hedge across multiple sectors.

Futures Trading Tools

IBKR provides powerful futures trading tools that make managing multiple contracts and strategies easy from a single platform.

• ComboTrader: This tool allows you to set up and execute combination orders involving multiple legs on the same underlying asset. Traders can manually define the combinations or choose from preset templates. ComboTrader is ideal for executing futures spreads and options combinations.
• SpreadTrader: A specialized tool for managing futures spreads, SpreadTrader lets you view and execute futures calendar spreads or options spreads from a single screen. It also provides margin impact estimates before placing an order, so you can gauge the potential cost.
• Index Arbitrage Meter: This tool is essential for traders looking to exploit price inefficiencies in index futures. It shows discrepancies between futures prices and the underlying index, allowing traders to profit from small price gaps.

Advantages of Trading Futures on IBKR 

Trading futures on Interactive Brokers has numerous benefits, especially for active and professional traders.

• Low Commissions: With tiered and fixed pricing structures, IBKR offers some of the lowest futures trading commissions in the industry, particularly for high-volume traders.
• Advanced Trading Tools: IBKR’s ComboTrader and SpreadTrader tools make it easier to manage complex futures strategies and offer a more efficient trading experience for spreads and options.
• Global Market Access: Interactive Brokers provides access to futures contracts from multiple global exchanges, allowing traders to diversify their portfolios and hedge risks across markets.
• Competitive Margin Rates: With competitive intraday and overnight margin requirements, IBKR enables traders to control larger positions without tying up excessive capital.

Limitations Trading Futures on IBKR 

While IBKR offers numerous advantages, there are some limitations to consider.

• High Minimums for Portfolio Margin Accounts: The $110,000 minimum for portfolio margin accounts may be prohibitive for smaller retail traders, limiting access to certain futures strategies.
• Complexity for New Traders: While robust, IBKR’s wide range of tools and features can be overwhelming for inexperienced traders, who may find it difficult to navigate the platform.
• Regulatory and Exchange Fees: Though IBKR offers low commissions, exchange and regulatory fees can add up, especially for traders holding overnight positions or trading across multiple markets.

Requirements to Trade Futures

To trade futures on Interactive Brokers, you’ll need to meet certain capital and account requirements:

• Portfolio Margin Account: Minimum of $110,000 to open and maintain a portfolio margin account.
• Intraday and Overnight Margin: Traders must maintain sufficient margin to cover their intraday and overnight positions. These requirements vary by asset class and contract.

How to Trade Futures on IBKR

Here’s how to get started with futures trading on Interactive Brokers:

Step 1: Open an IBKR account.
Step 2: Enable futures trading permissions in the account settings.
Step 3: Deposit sufficient funds to meet the margin requirements.
Step 4: Use Trader Workstation (TWS) to access futures markets.
Step 5: Place your futures orders using tools like SpreadTrader or ComboTrader.

Once your account is set up, you’ll have access to all IBKR's futures markets and tools.

Is IBKR Future Trading Worth It?

Interactive Brokers is a top choice for traders looking for low commissions, advanced tools and access to a wide range of futures asset classes. While the platform’s complexity might be a hurdle for beginners, seasoned traders will appreciate the robust functionality and cost-saving opportunities. With competitive margin rates and global market access, IBKR is an excellent platform for active futures traders.

Frequently Asked Questions