What is a Guaranteed Introducing Broker (GIB)?
GIBs have an exclusive relationship with one FCM. All of the accounts of the GIB are held by the FCM. The FCM uses its capital to “guarantee” the operations of the IB as well as oversee compliance. GIBs don’t have the capital required by NFA to be classified as an Independent IB.
What is meant by Transaction Fees or Service Fees?
Approximately 99% of the time these are nothing more than veiled commissions. What you say? Yep, if you’re being charged a Transaction Fee it’s likely just another method of raising your commissions without saying your commissions are higher than you think that they are. There are occasions that they are used to “cover” the cost of your trading platform fees to make it appear that there is no charge for the trading platform and that you’re getting it for free. Other than that…well… give us a call if you want to discuss this in more detail.
What is Risk Capital?
This a term used in reference to how much money you plan to keep in your account. In plain English it really means: How much money you can afford to lose and not take food off of your table, make you late on your mortgage, car or rent payment if your trading strategy is wrong. If you can’t afford to realize the loss of all or most of your Risk Capital without negatively impacting your life DO NOT OPEN A FUTURES TRADING ACCOUNT.
What is an Independent Introducing Broker (IIB)?
An IIB may have a clearing relationship with multiple FCMs. IIBs meet the capital, reporting and record keeping requirements of the NFA.
What is the Commodity Futures Trade Commission (CFTC)?
The U.S. Commodity Futures Trading Commission (CFTC) is an independent agency of the US government created in 1974 that regulates futures and option markets.
What is the National Futures Association (NFA)?
The National Futures Association (NFA) is the self-regulatory organization for the U.S. derivatives industry, including on-exchange traded futures, retail off-exchange foreign currency (Forex) and OTC derivatives (swaps).
Who regulates you?
Check CFTC & NFA above.
What are your account minimums?
Let’s answer that with a question: What do you want to trade? You need to have the FULL margin requirement for the contract(s) you want to trade and hold.
Why are your day trading margins so high?
I only have to have around $500 to Day Trade at Bob & Dave’s Futures World & Pancake House. Well, you should stay over there. We are very risk conscious and you not having sufficient equity to cover your margin requirements just do not work for us. Try keeping that position(s) overnight with only $500 and let us know how that works out for you. Also, the folks at the CME Group aren’t really big on FCMs that let you trade with inadequate margin.
I can’t always be on my computer. Do you have a 24 hour trade desk that I can call?
Yes we do. There is an additional fee for each trade that you make through the desk. Open an account and ask to be setup with the desk and we’ll fix you up.
I have a strategy that I think is very good. Can I run this by you to get your thoughts?
The short answer is no. We are established for Self-Directed Traders. We don’t offer you any advice or recommendations and we do not review trading strategies. If you wish to have someone review your strategy we suggest you work with a mid-level or full service Broker. We do know a few that do that type of review and we will give a short list for you to interview if you wish to do so.
When I call your office I get an annoying announcement about the call being recorded. Why is that necessary?
Well, we agree that the announcement is annoying and a bit of overkill in the grand scheme of things. All calls to Brokerages regarding new accounts and orders are recorded. That is done for YOUR protection and to avoid the “he said she said” issue. While online trading has greatly reduced such issues conversations about commissions and fees, account equity requirements, etc. also need to be recorded to avoid any information discussed being misunderstood or, in some cases, being flat out wrong. Is the announcement necessary? This is a very subjectively interpreted action taken by an Administrator that we don’t necessarily agree with. Is the recording of the call necessary? Absolutely!
These Q&A’s/definitions are fluid. The content may change from time to time so we suggest that you check back occasionally if anything is of particular concern.