Discussion in 'Forex Trading' started by filter, Apr 16, 2010.
Forx over currency future?
leverage ? anything else?
When I put on currency trades, I always used CME futures, since by my understanding "retail forex" is essentially an OTC contract traded against your own broker (potential for conflict of interest, perhaps? ), whereas futures are an open, public market on which any party can take either side of a trade (and in particular, on which competition exists for setting the best bid/ask).
even it's "retail forex", as long as the quote is correct, what's the issue here? can the broker delay the quote or increase the bid/ask price?
Trading Currency Futures pretty much assures there is no manipulation from your broker - but for this you pay commissions whereas trading the actual currency pairs, your broker makes commissions off the spread............some brokers keep the spread tight and still charge commissions depending on various criteria that differs from broker to broker.
For example, trading FX futures, commissions might be $3.00 per contract per round trip vs trading actual retail currencies where there is a 3 pip spread that'll cost you $3.00 as soon as you enter the trade with a mini account.
So while trading "retail forex", the broker sure as heck can - and seems able and ready to manipulate the spread at will.
consider www.nadex.com it is regulated, fixed risk and can start with very small amount $$...
Smaller account minimums ($25, just search for microlot forex) and guaranteed no additional margin call on account blow up (most forex providers).
Is there a difference in leverage between the two?
I dunno why people think the market works like this it doesnt .. the main difference comes from the market structure.. FX is an OTC and is globally linked through EBS and Interbank exchange.. the rates are passed to the brokers and works as a unified market structure than uses dealers , MMdealers, auction market structure and dealer auction market style depending on region/broker/country/and regulated rules.. generally most brokers are passthrough brokers that push the orders directly into the market.. some will absorb with there own inventory the excess that cant be readily price matched and move the price to fill the orders held in the order book for the dealer.. when they liquidate the excess into the market it moves the market as well..
in addition the major difference between markets is the structure that the market opperates under.. dealer or auction market structure.. or hybrid dealer/auction market structure.. each different structure effects price movement differently when orders are opened.
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