FOREX VS. Index Futures

Discussion in 'Index Futures' started by 4x Steven, Oct 23, 2005.

  1. Here is what I know so far:

    Note: -a tick in Futures = a pip in Forex
    -in Forex the spread is the equivalent of the bid/ask in futures.
    "the spread" is the difference between the bid and the ask.
    -in Forex indexes are not traded. the conversion rate between
    2 currencies is what is traded. such as euro vs dollar
    or pound vs. yen.

    ***2 to 5 pip(tick) fixed spread (3 most common on majors)

    ***no commisions (most reputable brokers)

    ***Leverage from 50:1 to 200:1 (100:1 most common)

    ***Margin is fixed (you typically can choose,1% to 5% common)

    ***Instant execution at the exact price you click on (the broker you
    choose is very important here)

    ***Limited liability gaurentee (many of the top brokers have this in
    place. you can never owe more than is in your account)

    ***Massive liquididty all times ( equal fills during market hours
    as there is in off hours-instant)(no limit up or down markets)

    ***Trades 24 hours from sunday 5:00pm to friday 5:00pm. Closed to
    trading friday night through sunday night


    ***Bid and Ask 1 to ??? spread. ( i have been told 1 to 3 ticks
    is average)

    ***Commision range from $5 to $12 dollars per round turn

    ***Leverage???? ( somebody help me out here)

    ***Margin???? ( more help here please !!!!)

    ***Liability Unlimited (no gaurentee on fills or stops and you can
    lose more than is in your account if you cannot get out.

    ***Executiion slippage???( help me on the range here futures people)
    (I understand it varies greatly on volume and volatility)

    ***Hours of trade??? ( help me out please!!)

    **Liquidity varies (slippage and no fills when volume is low
    or high)

    I am looking for the futures people to fill in the blanks on
    leverage, margin and hours. Also please correct anything else I have wrong.

    From what I have been told so far, the Forex spread is the
    same as the Futures bid and ask scenario. When you add the Futures
    commisions the results seem to be the same as the Forex spread.

    So, if all things are equal on the spread, I will take the leverage,
    liquidity and execution adavantages of Forex when trading currency.

    What is your take on this?????................
  2. Leverage: in Forex, I'd say that anything above 10x is too hot. Currencies can move very drastically and extremely fast. I have already blown up several forex accounts (papertrading) when trying to scalp with a leverage of 50. You just have to get stopped out a few times right after you've opened the account, then come a spike or two and you are gone.

    Liquidity: most US index futures are very liquid, you would have to be a hedge fund or sth. like that to worry about this. IMO, this is really irrelevant.

    Execution advantages: just read through the forex related threads to know how many 4x traders are complaining about execution problems and stop orders that aren't honoured. You won't hear these complaints in that extent from futures traders !

  3. Hello Marsupilami,

    Thanks for your input on this.

    The spirit of this thread is to paint a clear picture of the differences, advantages and disadvantages of Currency Futures vs. Forex.

    As far as leverage goes, I would summize it like this: If you are new to trading Forex, don't trade with real money unless you consistently build up demo accounts. If you are new to real money, always start with a mini account ( $1 per pip or tick). If you are winning, leverage is good. If you are losing, leverage is bad. Smart money management is neccessary no matter what you trade.

    As far as execution and fills goes, I would assume that there is a huge disparity in the quality of brokers in Futures as there is in Forex. Research, research, research. I use ACM ( Execution has been flawless. I have heard good things about GFT too.

    Please give some statistics on your fills in Futures. Such as: 1 tick slippage, 3 ticks or even 1 -3 tick depending on whatever. please elaborate. Also mention the Futures brokers that are trustworthy in your opinion.

    Look forward to your comments!
  4. TickJob


    Look like forex is better instrument. The only disadvantage is the spreads but then IB can have the lowest spread of 1pip:D

  5. Tickjob, What broker are those tables from? Is it possible to get even more liberal maintenance margin at other brokers?
  6. Excellent charts Tickjob. Thanx!!!! Great contribution.