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TD Ameritrade Futures Trading Account Review: Margin Requirements, Leverage, Pricing, and ThinkOrSwim Platform

TD Ameritrade ThinkOrSwim Futures Trading

Investors and traders with an interest in futures trading may want to consider an account with TD Ameritrade, which now owns the trading platform Think Or Swim. TD Ameritrade acquired Think Or Swim (TOS) to be able to offer its high functionality as a platform to customers that trade actively, but TOS also brought another level of live futures trading to the TDA customer.

TD Ameritrade Futures Commissions

TOS hosts more than 50 futures products in a variety of categories, such as commodities, stock index futures, currencies and bonds. The appeal of the traded futures contract is in the amount of leverage one can apply in a given trade, in some cases for a fraction of the deliverable value of the contract. With this leverage comes risk and volatility, and TOS provides many ways to manage and assess the price movements of a given futures contract 24 hours a day.

The commission for trading futures on TOS is $2.25 per buy or sell contract (negotiable for active traders) plus exchange and regulatory fees, with no requirement to await a three day settlement like with stocks, ETFs and options. Once the contract is sold, the margin will be restored at the end of the trading day to fund new trades. Because of this unique character of futures, trades may be executed quickly and repetitively, to catch small price movements for profit, or to simply add to existing positions.

The TOS platform is proprietary software that downloads for most new computer operating systems, as well as an application for tablets and handheld devices. The operating system requirements changed recently during an upgrade, and older versions of Java are not supported.

TD Ameritrade Futures Margin Requirements

Your Margin account must maintain a minimum Net Liquidation value of $15,000 to be eligible for Intraday Margin. If, at any time, your account falls below this threshold your account will automatically revert to the TD Ameritrade Futures and Forex Margin requirement for the particular Futures contract held. TD Ameritrade Futures and Forex reserves the right to change this minimum threshold at any time and without notice. The Intraday Margin rate granted to customers is typically 25% of the TD Ameritrade Futures and Forex margin requirement for that particular Futures contract. TD Ameritrade Futures and Forex reserves the right to modify the Intraday Margin rate at any time and without notice.

Intraday Margin is not available to IRA accounts that have permission to trade Futures.

Intraday Margin does not apply to Options on Futures. If you hold or place an order for Options on Futures the system will automatically remove Intraday Margin for the entirety of the account. Any new position opened while the account holds the Options on Futures position(s) will not be opened with Intraday Margin and will revert to the TD Ameritrade Futures and Forex Initial/Overnight requirement.


Trading Futures on the TD Ameritrade TOS Platform

Once one has gained futures trading permission from TD Ameritrade and funded their account, the platform is available for trading. For those new to futures, there is a paper trading (also called virtual trading (read review)) side of TOS with equivalent functionality, but no funding, which is ideal for practicing and learning the platform. The first things that are obvious are how easy and intuitive it is to learn the system, and that the graphics have excellent visual clarity and smooth movement as price changes on the chart display.

TD Ameritrade Futures Trading

One can choose chart time frames from one minute up to a monthly chart depending on the preferred trading horizon, and easily select from hundreds of studies and chart tools for analyzing price direction, volume, momentum and technical levels. Drawing tools allow for custom trend lines and pointers as well as the ability to write text notes directly on the chart. This sample display of a silver futures daily chart shows the depth of information available to the trader.

TD Ameritrade Futures Trading Review

The selected candlestick chart is color coded for up or down daily price movement, moving averages are displayed in user-selected colors and drawn trendlines show support and resistance levels clearly. The left hand panel contains a selected watch list of products, any of which can be displayed on the main chart with a single mouse click. The lower panel shows daily futures contract volume and open interest. It is easy to see from these chart tools and studies that silver had been in a move lower for several months, contained by both declining trendlines and major moving averages.

Not shown on the right hand panel is the Active Trader tab, which reveals the moment to moment price movements, which offers the ability to trade by simply clicking either the bid or ask at a given price point. Trades can be executed in seconds, and hundreds of trades may be made through custom button configurations in a single session for professional price scalpers. The dashboard tab reveals the margin requirements for the displayed contract, as well as the amount of profit or loss for each tick, or increment of price. This link to TDA describes more of the futures trading features, as well as an overview of strategies and the educational resources available.

Pitfalls of Futures Trading With TD Ameritrade TOS

No trading platform is perfect and there can be glitches with the TOS execution or order routing system at times, and it is not immune to freezing up. However, a quick call to customer support, or a live chat right on the TOS platform, reveals their willingness to amend any system failure losses to the customer’s advantage. Ironically, another pitfall is the platforms ease of use. One could easily spend $100 to $200 a day on commissions, without any real trading profits to show for it. The futures market is generally open 24 hours a day, so time spent trading and level of activity has to be monitored to avoid account churning. As with any trading or investment strategy education is the key, and TOS has many resources to inform new traders on the risks and benefits of futures trading.

Nonetheless, if one has a strong inclination to begin futures trading, or is already active, the TOS platform should be explored as a strong candidate to enter this high velocity trading arena right from one’s home or office computer.

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TD Ameritrade Futures Trading reviewed by Rating: 4.5