New guy question; hope it's not too naive. I came across an interesting article, but I don't know what I'm talking about. Perhaps it's way off. In a nut shell they say forex is better than futures because its more liquid, can be traded all day, small commissions, less slippage, greater leverage, and reduced risk via automatic margin calls. Is there exaggeration here, and if so, how do you think such issues should be properly conceive of? Please and thank you. Would you say these points are represented accurately? More specifically, I'm asking that because of these aspects of forex, would if function better for a beginning trader, rather than stocks or futures? It sounds like certain pit falls have been removed from the overall challenge. Or reduced. Here's the article "The forex market also boasts of a bunch of advantages over the futures market, similar to its advantages over stocks. But wait, there’s more… So much more! Liquidity In the forex market, $4 trillion is traded daily, making it the largest and most liquid market in the world. This market can absorb trading volume and transaction sizes that dwarf the capacity of any other market. The futures market trades a puny $30 billion per day. Thirty billion? Peanuts!The futures markets can’t compete with its relatively limited liquidity. The forex market is always liquid, meaning positions can be liquidated and stop orders executed with little or no slippage except in extremely volatile market conditions. 24-Hour Market At 5:00 pm EST Sunday, trading begins as markets open in Sydney. At 7:00 pm EST the Tokyo market opens, followed by London at 3:00 am EST. And finally, New York opens at 8:00 am EST and closes at 4:00 p.m. EST. Before New York trading closes, the Sydney market is back open – it’s a 24-hour seamless market!As a trader, this allows you to react to favorable or unfavorable news by trading immediately. If important data comes in from the United Kingdom or Japan while the U.S. futures market is closed, the next day’s opening could be a wild ride. (Overnight markets in futures currency contracts exist, but they are thinly traded, not very liquid, and are difficult for the average investor to access.) Minimal or no commissions With Electronic Communications Brokers becoming more popular and prevalent over the past couple of years, there is the chance that a broker may require you to pay commissions. But really, the commission fees are peanuts compared to what you pay in the futures market. The competition among brokers is so fierce that you will most likely get the best quotes and very low transaction costs. Price Certainty When trading forex, you get rapid execution and price certainty under normal market conditions. In contrast, the futures and equities markets do not offer price certainty or instant trade execution. Even with the advent of electronic trading and limited guarantees of execution speed, the prices for fills for futures and equities on market orders are far from certain. The prices quoted by brokers often represent the LAST trade, not necessarily the price for which the contract will be filled. Guaranteed Limited Risk Traders must have position limits for the purpose of risk management. This number is set relative to the money in a trader’s account. Risk is minimized in the spot forex market because the online capabilities of the trading platform will automatically generate a margin call if the required margin amount exceeds the available trading capital in your account.During normal market conditions, all open positions will be closed immediately (during fast market conditions, your position could be closed beyond your stop loss level).In the futures market, your position may be liquidated at a loss bigger than what you had in your account, and you will be liable for any resulting deficit in the account. That sucks."
generally speaking brokers encourage you to play forex more than other couse for them is easier trade against, or they now is not that regulated. Depending on the broker somtimes when you have a wining trade they send it to the market where there is no liquidity so you will have a huge slippagge. Other times they open the spread or give you a not true quotation. Si in forex selecting the brokers could be de difference beween win or loose. Futures are regulated, so guaranties are bigger, couse is not that easy to scam you.
Except if your are swinging on really astronomous huge sizes, and except if you are scalping for tiny pips, brokers really do not matter : get the trading screen recorded and compares with another datafeed. It is OK to send a copy of the recorder with another datafeed records, if there is any funny thing going on. Sorry to break the news: if you are losing, it is not really the broker's fault.
I trade Forex and DAX being an index, rest of the Spread sizes are too big to bother with index wise. You can open a FX account for less and trade at 10cents per pip if you want, which makes for a better learning tool than straight into 2K+ account and $12 per pt or whatever. 24hour is good on forex, some times the spreads get huge, 1 hour after US close for approx 2 hours then back to normal again, or limited movement so might aswell be closed. I guess 1.2pips area on EURUSD, going upto near 4pips on GBPAUD, but 4.3pts on YM fixed, spread 1 Comm's 2 = 3 on a Futures account ? so not a lot in it. FX doesn't have real Volume of Level 2 DOM stuff, not an issue to me so fine, or many of the fancy charting options, also pointless to me. Margin can be better on FX is required. I'd trade them the same and don't really see a difference in how they move via a M1 chart so, which ever you can afford, FX Does trade better out side of your working hours if your in the USA and East coast I guess.
You are SO SO funny. If you have a spread of 3 to enter and to out in EUR / USD directly you CANNOT WIN (or maybe you dont really know whats really happening of forex Xdd ). Who do you think I am Xddd..
About 1.2 with FXCM for EU most of the time, so not 3 and yeah you can still get 10-20pip moves on EU to cover your Spread if needs be, personally EU's too slow for me but never mind. GBPCHF is the baby at the moment, HUGE moves
This sounds like marketing material from someone who is either an introducing broker or teaches trading using Forex. Not to say that there aren't some valid points. Is the market 'more liquid'? Depends which currency pair as compared to which futures contract. EUR/USD has a one pip spread, but the ES, YM, NQ, and TF stock index futures contracts also have a one tick spread. No difference here. All of them can handle huge size, but that's not likely to be a consideration for most retail traders. As for 'traded all day', futures also trade 24 hrs pretty much during the Globex session. The question is how volatile is the market? Currencies move more than the stock index futures at night due to the European traders, but they also die down halfway into the New York session while stock index futures can have some good moves going into the New York close. That's if you're intra-day trading of course. Trading currencies during the Asian session is usually a futile task unless there's some big macroeconomic noise or a significant news release that sets a trend rocking. Greater leverage? After the new FINRA regulations FX is limited to 100:1 leverage. Futures have 20:1 built in leverage, but currencies move less than futures do, so that equalizes things. The good thing about FX is that the leverage is highly adjustable if your broker offers micro and nano lots (the vast majority do), whereas with futures each contract you add is a pretty big step up in terms of leverage. Reduced risk with automatic margin calls is also true. With futures if you get stuck with a lock limit market, you can get badly hurt. But this usually affects position traders much more than day traders. Markets like stock index futures are much less likely to go lock limit than agriculturals, for example, which aren't really good day trading vehicles to begin with. Also, if you hold your FX position over the weekend you can get badly hurt with a strong gap, as happened with the Swiss franc. Some brokers forgave negative balances, but it's not always the case. In the end, I think that the main determinant of which market you trade should be how well it fits your personality. I find that I do better with stock index futures than with FX. Obviously there are also capital requirements that can make that choice for you, which is why FX I think is the best market for people to start with simply because it lets you get a little skin in the game and gives you a feeling of what it's like to risk.
Im not talking about fxcm of course, probably there could be a thousand of brokers or more. I was talking about first look for a cheap spread.Average moves in eur/usd is 10 pips, if you are intraday (wich is most wanna be) and you have more than 1.5 or 2 pips you are done. WEll if you wanna enter 1 position per pair and day is ok.
Prefering gbpchf currently, 3 cost going 20-40 frequently. There are other pairs available thankfully.
Probably most important advantage is low capital for entry. As small as 5 bucks. For Futures it is 2K $, and it means long and tedious practice on demo if you don't want to play giveaway trader for market sharks. The main drawback of Fx is that far less predictable. The point there is to find some sound correlation between direction of price move and some Thing (solid technical pattern or fundamental event) but with numerous other factors, market noise and other it's never the same twice. But it's still possible. I vote for Fx because...I do manage to make some money there and it's quite enough to not being distracted on exchange traded, more predictable futures or options