Infinity Futures – An Introduction
Infinity Futures, founded in 1995, is an Independent Introducing Brokerage firm. An Introducing Brokerage (IB for short) is a brokerage who has direct relationships with clients, yet sends its actual order requests to another firm for execution on the trading floor. This model of business was developed so that the IB could focus a greater amount of resources on servicing the needs of the client while the partner firm can tailor itself to develop the best execution infrastructure possible. Essentially it enhances the degree of specialization possible.
Infinity Futures partners with TransAct Futures for its execution needs, which is generally held to be a reliable firm who services other IBs as well as Infinity, such as Cannon Trading Company for example. Infinity Futures’ primary emphasis of service appears to be toward intraday derivative traders. The following selling points offer a compelling draw for this particular audience.
Decent pricing for trade commissions, far better than the more mainstream brokers such as eTrade or TD Ameritrade.
Low barrier to entry for funding an account, getting data, and executing orders with competitive latency
Most importantly, extremely low intraday margin requirements to open and hold positions in the various futures markets they service
Infinity Futures Cost Structure
The cost structure for placing trades is definitely on the low end of the spectrum. For new traders moving low size, costs can be negotiated without much hassle down to $5 / RT per contract. This doesn’t quite match up to Interactive Brokers, which is arguably the largest and best-known IB for derivative markets. They come in around $4 / RT to start and have a rigid tiered cost structure which gives discounts for certain levels of transaction volume. But this is a small margin of difference. The most popular brokers such as eTrade can get as high as $10 / RT.
Since Infinity Futures is much smaller and open to cost negotiations, it is very possible that a consistent customer doing a moderate amount of volume will be able to secure lower costs than Interactive Brokers. Infinity’s charting software is basic, but free with a minimum of 10 RT trades per month, and the data fees are shaved down severely to a basic package of $15 / month, which is a real bargain for the quality of the feed. For comparison, Trade Navigator is a popular charting software package and their mandatory data feed costs $60 / month for the same coverage and quality.
Infinity Futures Data & Trade Latency
When getting involved in intra-day trading, latency becomes a very important consideration. The price of a futures contract can move several units (referred to as ticks) within the span of seconds. The most highly traded derivative contract is the ES, whose price correlates to the S&P 500 index. Each tick has a value of $12.50 per contract. One can easily understand how a few seconds of latency before the customer’s order is filled can amount to a significant amount of money lost over time. A market order to buy for 10 contracts that gets filled three ticks away from when the trader first transmitted the order ends up taking $375 off the realized Profit or Loss (PnL) of the trade.
Infinity has streamlined software and a quality data feed which results in excellent latency times. Their data reflects the tick-to-tick price changes with almost no delay, and orders are filled within milliseconds as to when they are transmitted. This is a fantastic selling point for the serious trader. The only way to get a significant edge over Infinity Futures’ execution times is to switch to institutional infrastructure, which comes with a large increase in cost. Trading Technologies has the most easily accessible institutional grade data and software for the retail trader, and their minimum monthly fee is $400.
Infinity Futures Margin Requirements
For CL, the exchange minimum is set to $3,625 currently. Interactive Brokers requires $1,812.50 to open a CL position intra-day. Infinity requires a mere $1,000. This provides a much lower barrier to entry into futures markets for the beginning trader, and also allows successful traders to compound their capital far more aggressively, securing much bigger gains on the same amount of funds because the assets they can control are much larger.
Infinity Futures Customer Service
Infinity Futures has decent customer service support. This customer spoke with a personal representative in order to set up an account. Infinity required some basic documentation of personal ID and information before the account request was processed. Their account minimum is $3,000 which is relatively low. The representative was friendly enough and competent in assisting the account set-up. On the down-side, he appeared a bit patronizing in tone when this customer fell below the minimum capital required to trade within a short period of time after account creation, and decided to discontinue using Infinity as his primary broker. This decision stems from the most alarming aspect of the experience with Infinity.
Infinity Futures Problems
In a period of uncharacteristically high volatility around the time of the 2016 presidential election; this customer placed a chain of several orders in a small period of time. A short order was placed, filled, and after a quick change of price and volume information, two more orders were quickly transmitted; one to close the short and another to buy the same amount of contracts, essentially reversing the position. However, a processing error message appeared on the trading platform and the short position was not closed. About five seconds after this there was a large surge in volatility and price traveled several points up. Another order to close the short was manually submitted and this one finally registered.
This resulted in the short position losing about $500. If the orders were transmitted correctly the account would have been holding a long position that just gained $500. The error cost just over $1,000. Perhaps this was a very rare error. This customer consulted another trader who has used Infinity for several years, and found that he had never experienced an error like this. However, this customer has used Interactive Brokers for almost 1,000 orders now and never experienced a similar error. Let down at such a crucial moment, this customer decided to keep the majority of the trading funds with Interactive Brokers and discontinue the small account being used as a trial of Infinity’s services.
Infinity Futures Review Summary
Overall, it appears that Infinity Futures is an established broker that has largely provided good service to many customers over the year. Their infrastructure, data, software, trading costs, and especially intraday margin rates are very competitive. Their customer service is passable; the service is adequate but does not go above and beyond in service of the client. Their order filling is quick, but the possibility of error exists. The circumstance in which the orders that experienced a processing error were placed was definitely unique and perhaps the benefit of the doubt can be given to Infinity Futures. An error of this type appeared to be a very rare occurrence.
This customer could have tried to negotiate compensation for the situation but did not think to take screenshots at the moment. It was also a very small account balance not worth trifling over at the time merely intended to test the services of Infinity Futures. But with an error of this nature at such a critical moment this customer decided to take his business elsewhere.
Updated on 4/6/2017.