I don't follow. If you're in a carry trade that pays positive intrest you will realize the increase in value (equivalent to capital gains) but you will lose the positive intrest (equivalent to a dividend). Right? Also, as optioncoach mentions here: "CME FX tracks the spot very well almost pip for pip with differences due to the prmeium/carry depending on how far out to expiration you are. They are liquid and spreads are 1 pip on most majors during regular US hours." If you rollover on the wrong side of a trade, that can hurt you. Correct? JJ
Yeah, you're right. I shouldn't take this nonsense so seriously. But when I'm staring at the screens waiting for the next setup I need something to do. I guys I'll just have to leave these guys alone. *** So, back to the CME EuroFx, are my assumptions about how the contract trades correct? If so, they tell the OP what the strengths and weaknesses of trading the CME product(s) are, and if not, they should be corrected by someone who actually trades the products and can give him the benefit of his experience. Jimmy Jam
In SPOT FX, the interest is paid/received daily, with the broker keeping a spread. In Futs it is built into the price. So the price differential between lets say March08 FUT and SPOT CASH equals the cashflow from the interest rate differential. Main difference is that there is not interest rate spread. If the rate spread is 3,5% / 4,5% at your FX broker, in futs you will receive/pay 4%. If you trade for interest (carry-whatever) futs might be a very nice choice for you.
It seems that CME Euro FX compensates for the differences in trading SPOT FX very well. I hope the OP had his original question answered, as, while this is currently a very unregulated market, and on the Futs side, a relatively "new market", there is extraordinary opportunity here where a lot of the major brokerages are trying to make inroads. What that means is that there will be more currency pairs that are setup to trade as Futs in the future, with the attendant high volume required to trade size and make some serious coin. Good trading, Jimmy Jam
Lots of currency pairs trade at the CME fx and many are quite liquid with 1 pip for the majors spread. Do nto forget that the futures have a notional value. Like the EURUSD is $125,000 per contract or $12.50 per pip. So if you were trading $1,000,000 lots in forex you can simply do 8 futures contracts. GBP is $62,500 notional per contract so 16. So I think it can handle the size one is doing, especially if you are a smaller trader doing $100,000 lots which means you can do 1 future for example on EUR which has a lot of volume. All depends on what you are interested in.
What are typical commissions on the Euro FX per contract, per RT? Also, what are the fills like in real life? I'm currently demoing some software just to get a feel for things and of course the fills are instant...
-I pay $5.64/RT @ TS which is a little high, I trade low volume. - Fills are instantaneous, unless you are trading NFP or FED announcement, then well....you know how it goes. el surdo
Thanks Surdo. Do the instantaneous fills apply to market orders? How about slippage? I mostly scalp, most of the time using market orders to quickly get in and out in fast moving conditions. Having the confidence that you can easily get in and out with no order hang ups, etc makes things a lot easier to manage.
EC, like any other liquid instrument will have wider spreads during major econ. release. If you use a market order during a release, you could be surprised! Under normal trading conditions, you will have under 1 tick (average) slippage on 5 contracts. e s