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Best Broker offers the lowest commissions on Micro Futures

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Best Broker offers the lowest commissions on Micro Futures

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FuturesTrader71's Avatar
Posts: 380 since Feb 2012
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Futures Operator View Post
@FuturesTrader71 ,

What are the tangible benefits to a more expensive broker for a self directed intraday trader?

How do they overcome the higher costs to come out ahead overall with an improved trader's bottom line PnL?

It's straight forward to analyze costs. Any data to show this analysis as a worthwhile tradeoff in expectancy?

Hi @Futures Operator,
I will try to answer this with a question: How much more successful as a trader would many be as a result of trading for very low rates at Interactive Brokers or AMP or wherever? They are provided with a cut-rate commission structure. They are provided with crazy leverage. How is that working out?

As a trader, it can't be about the commission unless it is a crazy amount. For context, I will speak about Edge Clear (EC) because that's the brokerage I created and know well:
EC charges $1.08 vs AMP's $0.98 or IB's $1.14. One benefit of having EC is that you won't get the run-around on an automated phone attendant when you need it. Your specific needs are handled by a personal broker who will be assigned to you for the life of your account. EC's brokers are traders and have expertise in cost, risk management, proper setup, etc. They can understand what you are dealing with and their aim is not to cut your margin requirements and watch you churn while creating volume on the way to being auto-liquidated. Other brokers make it so that you get what they have on their website and that's all there is.

On Sierra Chart Teton, EC is at $1.04 per round trip, and those same services are offered. Teton isn't offered at AMP at this point.

Additionally, with someone like AMP, IB, and others, you only have one solution. If you are unhappy with the clearing, then you need to go elsewhere. If you are unhappy with the software (like in the case of IB or others), then you must open an account elsewhere. With an independent broker like EC, the broker you built a relationship with can still intervene on your behalf, move your account, change your data feed, change your software, offer you an exchange membership analysis, etc.

But why does this matter unless you are doing an extraordinary amount of volume and are consistently profitable? The difference in a cut-rate broker and EC is more than made up for when you need
help. I personally would rather support a sustainable business than always go where commissions are less (which means something is being cut somewhere).

How many round trips a month do you do? Let's start there and then let's talk about what is "expensive" for the service provided.

Oh...on Rithmic, you get the lowest rate in the industry (on what I think is the best feed) as well as access to EdgeWatch (performance analysis tool) for free.
I'm not trying to sell you on Edge Clear specifically, but I'm using it as an example of the difference between this kind of service vs the others. To me, a "cheap" broker is like driving an extra 50 miles to save 3 cents per gallon on gas with no insurance and no seatbelt.

I hope that helps.

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