Contrarily, when corn prices are high, Bob’s profit margins on the milk he sells shrinks. When corn prices are low, Bob makes more money because it costs him less money to feed his cows, which produce the milk that he sells. Farmer Bob makes his own hay, but he buys the corn. His dairy cows eat a mixture of corn and hay. Wikipedia defines a futures contract as "a standardized forward contract, a legal agreement to buy or sell something at a predetermined price at a specified time in the future, between parties not known to each other."įor an oversimplified example, farmer Bob operates a dairy farm. E*TRADE - Best web-based futures trading platform.
To find the best futures trading platform, we compared pricing (e.g., contract charges and margin rates) and the platforms themselves, including trading tools, research, usability, and available order types. This is where the “futures” in futures markets comes from.įor our 2021 Review, we tested 11 different online brokers, five of which offer futures trading. Futures markets were originally established to help farmers and other commodity producers hedge (offset or reduce) risk in the future. Here's how we tested.Ī futures contract is an agreement to buy or sell a particular security or commodity at a future date.
The best online brokers 2021 review (11th annual) took three months to complete and produced over 40,000 words of research.
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