Trading overseas futures - should I use a local or international broker?

[Nolly]

Hello,

I'm new to trading and I currently live in Australia and am interested in trading the e-mini S&P 500 and e-mini Dow.

Due to the Australian and US time zones being dramatically different I was wondering whether I would be best off with a US broker or whether I should still stick with a local broker in Australia where I live?

I was leaning towards a US broker - my logic being that if I'm trading the US markets with a US broker they're available by phone during those hours whereas the australian ones will be closed since it's middle of the night.

Does anyone have any advice on the pros or cons of using a local vs international broker to trade international markets? I think US is the way to go but would be curious to see if there is any advantages to staying local?

 

[chump]

Given you are new to trading best advice I can think of to give you is don't trade futures yet .The leaverage will destroy your capital before you know what you are doing.

 

[Nolly]

Given you are new to trading best advice I can think of to give you is don't trade futures yet .The leaverage will destroy your capital before you know what you are doing.

Thanks for the advice although I wasn't planning on trading with real money yet. I want to make use of the demo/sim account first so I can learn and experiment and only start trading with real money once I'm profitable paper trading. But to get a demo account I need to choose a broker so that's why I was wondering whether I'd be best off going with a local broker or a US one for what I'm trying to do? Not really sure of the pros or cons of each

 

[CFDplayer]

Thanks for the advice although I wasn't planning on trading with real money yet. I want to make use of the demo/sim account first so I can learn and experiment and only start trading with real money once I'm profitable paper trading. But to get a demo account I need to choose a broker so that's why I was wondering whether I'd be best off going with a local broker or a US one for what I'm trying to do? Not really sure of the pros or cons of each

Hi, do you mind be asked why you have time to foucs on trading US index when you are located in Australia?

If you are new,there is no need to open live account with any broker in the first 6 months,maybe you can try a tiny money in your local CFD providers,ie. CMC or IG and only trade spot index in short terms,say, a few minites or hours basis.And good luck.

 

[Nolly]

Hi, do you mind be asked why you have time to foucs on trading US index when you are located in Australia?

If you are new,there is no need to open live account with any broker in the first 6 months,maybe you can try a tiny money in your local CFD providers,ie. CMC or IG and only trade spot index in short terms,say, a few minites or hours basis.And good luck.

Well the main reason for the US market is that most of the material I'm studying all focuses on the ES or other US markets and I'm finding it's easier to follow along when I'm looking at the same thing. You're right about the time zone tho - being up at odd hours of the morning is a little hard. For that reason I'm much more interested in trading DAX and maybe even Eurostoxx because those European ones open late afternoon my time so I can trade it in the evenings after I get home.

Can you expand on your broker advice? From what I've seen the brokers only give you a demo account for 30 days. Like I was looking at Infinity or Velocity and I can get demo accounts with them for a limited time - and then after that I have to open a live account if I want to continue trading in simulation. So since those guys only need a couple of grand to open an account I was thinking just do that so I could continue paper trading on simulator. Is there anyway I can keep the demo account going for longer then 30 days without needing to open a live account?

 

[buggyfx]

Hi Nolly, as you said that you are also interested in trading DAX and maybe even Eurostoxx why don't you think for opening an account with an European broker. EU brokers have the advantages compared to the US ones because you can trade CFDs with them and other instruments which the US brokers don't have due to legal restrictions (check CFTC). You can find greater variety of stocks and instruments with a European broker (cannot talk to Australian regional ones because I am not familiar with). The other thing is that with futures trading you need higher initial deposit and greater margin for opening a position. With CFDs you can open even very small positions till you get used to it and become a real trader (that's of course after enough training on the demo ) On the stock exchange there's a better chance to make trades at better prices compared to CFDs, but for a beginner small amount trading even at worse spread is preferable.
Regarding the demo accounts, there are a lot of brokers who allow demo trading for longer periods than 1 month e.g. LiteForex, Deltastock, FxPro.

 

[Nolly]

Hi Nolly, as you said that you are also interested in trading DAX and maybe even Eurostoxx why don't you think for opening an account with an European broker. EU brokers have the advantages compared to the US ones because you can trade CFDs with them and other instruments which the US brokers don't have due to legal restrictions (check CFTC). You can find greater variety of stocks and instruments with a European broker (cannot talk to Australian regional ones because I am not familiar with). The other thing is that with futures trading you need higher initial deposit and greater margin for opening a position. With CFDs you can open even very small positions till you get used to it and become a real trader (that's of course after enough training on the demo ) On the stock exchange there's a better chance to make trades at better prices compared to CFDs, but for a beginner small amount trading even at worse spread is preferable.
Regarding the demo accounts, there are a lot of brokers who allow demo trading for longer periods than 1 month e.g. LiteForex, Deltastock, FxPro.

Thanks for the suggestions and I will look into those demo accounts you suggested to see if I can use one of them for a while. Interesting idea about going with a european broker. I never considered that since all markets I looked at were US except DAX (and maybe eurostoxx). Can you recommend any good european brokers I can look at for when I do go live?

 

[dcraig1]

Interactive Brokers is probably the best for international futures, giving you access to Asia, Europe and the US from a single account. You can fund your account in AUD (or any other major currency) and do not have to worry about currency conversion to the currency an instrument is denominated in. Any profit or loss accrues in the currency that a trade occurs in. You can convert that P&L to your base currency at any time at your leisure.

You can also trade stocks, options and forex from the same universal account. The universal account is a major plus as you do not have to hold margin requirements in multiple currencies.

IB has good commission rates, is generally very reliable and fast executions. It is also one of the most financially stable brokers. It also has very good margin lending rates and pays good interest on cash balances.


IB also provides some of the cheapest real time data. Free for some markets. If you wish to study a number of markets, this can reduce your monthly costs considerably.

The ES trades in absolutely horrible hours for Australian time zones. Not many people are at their most alert at 4 AM. Consider Asian or European markets as a viable alternative.

Stock index futures that you may consider, that trade at more sociable hours, include:

Australia: SPI [free data]
Sth Korea: K200 [free data]
Japan: SGXNK (Nikkei traded on Singapore Exchange) [free data]
Hong Kong: HSI [100 HKD per month]
Germany: DAX [13 euro per month]
Europe: ESTX50 [included with DAX]

HSI and DAX are the most volatile of these markets.

Data costs are from IB. They would be much higher from third party data providers.

I cannot understand the obsession with the ES. If anybody starts hand waving about liquidity, just ignore them. There is more than enough liquidity in quite a number of international markets to make you very, very well off if you are successful at trading.

Finally, be aware that trading SIFs is very difficult and there is a huge learning curve. If you are not prepared to put huge amounts of time, then don't bother.

 

[buggyfx]

I myself am trading with Deltastock so I can tell you personally they are ok - tight spreads on majors, low commissions on CFDs, own platform with Level 2 included.
And if you insist on MT4 you can try FXPro (a friend of mine is talking nice things for them). Their conditions are also good.
Success in trading

 

[Nolly]

Interactive Brokers is probably the best for international futures, giving you access to Asia, Europe and the US from a single account. You can fund your account in AUD (or any other major currency) and do not have to worry about currency conversion to the currency an instrument is denominated in. Any profit or loss accrues in the currency that a trade occurs in. You can convert that P&L to your base currency at any time at your leisure.

You can also trade stocks, options and forex from the same universal account. The universal account is a major plus as you do not have to hold margin requirements in multiple currencies.

IB has good commission rates, is generally very reliable and fast executions. It is also one of the most financially stable brokers. It also has very good margin lending rates and pays good interest on cash balances.


IB also provides some of the cheapest real time data. Free for some markets. If you wish to study a number of markets, this can reduce your monthly costs considerably.

The ES trades in absolutely horrible hours for Australian time zones. Not many people are at their most alert at 4 AM. Consider Asian or European markets as a viable alternative.

Stock index futures that you may consider, that trade at more sociable hours, include:

Australia: SPI [free data]
Sth Korea: K200 [free data]
Japan: SGXNK (Nikkei traded on Singapore Exchange) [free data]
Hong Kong: HSI [100 HKD per month]
Germany: DAX [13 euro per month]
Europe: ESTX50 [included with DAX]

HSI and DAX are the most volatile of these markets.

Data costs are from IB. They would be much higher from third party data providers.

I cannot understand the obsession with the ES. If anybody starts hand waving about liquidity, just ignore them. There is more than enough liquidity in quite a number of international markets to make you very, very well off if you are successful at trading.

Finally, be aware that trading SIFs is very difficult and there is a huge learning curve. If you are not prepared to put huge amounts of time, then don't bother.

Thank you and that was a huge help. I had a look at Interactive Brokers and they look very good - it seems like they have everything so I don't have to limit myself to futures if something else looks interesting. I think when I go live I will go with them. In the meantime I'll check out the ones buggy mentioned since I can get 3 month demo accounts without needing a live account so that will give me plenty of time to experiment for free.

Also I see what you mean about the ES and it's nice to know the others are also liquid enough for now. My focus on the ES was probably 50/50 between most of my learning materials focusing on it and the liquidity worries with the other ones. You've just put my mind at rest.

By the way this is a little off-topic now from what I originally asked... but out of curiosity do you know how well the currency futures (6B & 6E) normally go during australian/european hours? I was following 6E, 6B and the DAX yesterday and I really liked the currency pairs. Moreso then DAX because looking at brokers the margins are way higher on that thing. So I was thinking of maybe starting with 6E/6B and then moving to DAX later but I'm not too sure how good those currency futures are to trade?

 

[dcraig1]

Thank you and that was a huge help. I had a look at Interactive Brokers and they look very good - it seems like they have everything so I don't have to limit myself to futures if something else looks interesting. I think when I go live I will go with them. In the meantime I'll check out the ones buggy mentioned since I can get 3 month demo accounts without needing a live account so that will give me plenty of time to experiment for free.

Also I see what you mean about the ES and it's nice to know the others are also liquid enough for now. My focus on the ES was probably 50/50 between most of my learning materials focusing on it and the liquidity worries with the other ones. You've just put my mind at rest.

By the way this is a little off-topic now from what I originally asked... but out of curiosity do you know how well the currency futures (6B & 6E) normally go during australian/european hours? I was following 6E, 6B and the DAX yesterday and I really liked the currency pairs. Moreso then DAX because looking at brokers the margins are way higher on that thing. So I was thinking of maybe starting with 6E/6B and then moving to DAX later but I'm not too sure how good those currency futures are to trade?

I don't trade forex, so somebody else would be better to answer your questions about the best hours of the day to trade currency futures.

Yes, the margin requirements for the DAX are high. This partly reflects the fact that DAX is a big contract. As a guesstimate one DAX is equal to 3 -4 ES contracts. On the plus side, it is only just over 3 euros for a round trip on the DAX. Which makes it much cheaper to trade than ES, YM etc.

One other contract I forgot to mention is Kospi (Sth Korea) options. I have no personal experience, but it is said to be the most liquid options contract in the world. Apparently it trades very much like a futures contract intraday. It is much smaller than a futures contract so it might be good to start with to limit possible damage.

IB margin requirements may be higher than some other brokers. In general, IB follows the exchange recommendations for margin. They can (and have in the past) raised margin requirements during periods of extreme market volatility. I regard this as a good thing, as the last thing you want is your broker going under due to inadequate capital backing their market exposure.