FX v Futures on FX

Discussion in 'Forex' started by Juba, Apr 3, 2005.

  1. Juba



    I am inexperienced trader and is considering trading FX or Futures on FX.

    Can anybody explain to me why should one trade FX spot when there is FX Futures which are
    1) volatile to the same degree at least
    2) closely follow spot especially front months
    3) have lower commissions (commission per trade/round turn)
    4) higher tick value compared to mini forex (Compared to 100 000 lots)
    5) Regulated and Real Exchanges no betting on rate with dealer
    6) No conflict of interests
    7) Tighter spreads. Market Depth provided.
    8) Availability of Mini contracts (lower margin lower/lower tick value/lower commission per round turn if needed)
    9) 24 hour trading(Globex)

    Please Help me, Do I miss something



    Am I missing something
  2. if you'll be trading the other major pairs and exotics then futures has the disadvantage
  3. Juba


    Yes if one is interested in exotics. as for currency pairs for majors as I know futures exist for all of major pairs and even for some exotics.

  4. Juba,
    If you are trading only the majors- and with reasonable size- then futures are better. If you are trading small size then forex allows you small contracts, that is the only major advantage.
  5. hjay23



    I don't think you are missing anything.

    The old argument was that the Globex Futures markets simply do not provide the proper liquidity or volume to attract the major buyers and sellers. But the CME has done a very good job of rectifying this situation, especially over the last year. By providing better fills for the large, international banks, Hedge Funds, major Brokers, and other large institutional players, Globex is becoming more and more the 'smarter' solution to your Forex quandaries. (IMO)
    Of course, the CME tried to do this over 30 yrs ago, with FX being the first non-physical based commodity market, but whos keeping track of time?

    The Futures are not truly a 24 hr market, as they do close @5:00 pm est and re-Open @6:00.

  6. Juba


    Thanks for replays

    If there are no other arguments against futures trading (let's wait for them from spot traders) it is not difficult to guess which market I will choose. But let's wait.

  7. Both have their advantages.

    Some benefits of Spot:

    - no monthly fees for front end

    - no monthly seat lease fees

    - no pro rata algorithim (or is Globex FIFO?)
  8. Juba


    Globex is fifo yes. no pro rata algorithm.
  9. frogy


    Try trading cable during the London session and I think you will prefer spot: especially if the market is volatile.
  10. Any more ideas on this from experienced spot & futures traders?

    Many thanks
    #10     Jun 9, 2005