Forex Futures vs. Spot Forex

Discussion in 'Forex' started by CPTrader, Sep 30, 2003.

  1. I've traded both forex futures and spot futures (via online brokers) and I've noticed that the slippage is actually higher in the spot market than the futures market. By slippage I mean, orders that would be filled say via limit orders in the forex futures mkt don't get filled in the spot forex market due to the pip spread. Has anyone else noticed this? Any comments, suggestions?
  2. I think that what you are talking about has nothing to do with slippage. As you said, your limit order sometimes does not get filled because of the spread. After watching the forex markets for a while, I noticed that brokers like to hit stops rather than limits. When I was new at this, I used to set my limits and stops without even taking the spread into consideration. To solve this problem, I now set my stops and limits 7-13 pips away from where I would normally put them without the spread. So for example, if you have a limit order to buy EUR/USD at 1.1620, set it to 1.1627 instead. I also never set my stops/limits at numbers divisible by 5. It may seem odd to do this, but brokers and big banks, who are able to move the market a few pips, love round numbers and psychological levels and they will not think twice about taking out your stop.
  3. ramora


    It depends on the time of day. During the morning when the Europe and US markets overlap the futures market is very liquid. In the evening the fx market will fill closer to your desired price than the futures market (in my experience).

    I have both a fx account and a futures account (IB) and use both depending on the time of day.

    In the evening I use OANDA for fx as their spread during the Asian market is 2-3 pips most of the time. Also OANDA trades 24/7 through the weekend (in case something terrible happens it is nice to have, never used it yet however)... 'guarantees' fills at the price you enter but the spread is a little wider. Looking at them now....

    I like having an alternative trading system if something should go wrong with either trading software package.

    Good luck,