Reasons to Trade Forex: Futures vs. Forex

Not simply the stock market is to blame. Similar to its advantages over stocks, the forex market (FX) also boasts a number of advantages over the futures market.

July 12, 2022 - 10:36 AM 440 views

Reasons to Trade Forex Futures vs Forex

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Not simply the stock market is to blame. Similar to its advantages over stocks, the forex market (FX) also boasts a number of advantages over the futures market.

But hold on, there's more... a much more!

Liquidity

The forex market (FX) market is the biggest and most liquid market in the world, with daily trades totaling $6.6 trillion.

The trading volume and transaction amounts on this market can far exceed those on any other exchange.

A meagre $30 billion is traded each day on the futures market. How many are there? Peanuts!

Due to its relatively low liquidity, the futures markets are unable to compete.

With the exception of exceptionally turbulent market situations, the forex market (FX) is always liquid, meaning positions can be closed out and stop orders can be carried out with little to no slippage.

24-Hour Market

Sunday trading starts when markets open in Sydney at 5:00 p.m. EST.

Tokyo's market opens at 7:00 p.m. EST, and London's at 3:30 a.m. EST.

Finally, New York is open from 8:00 am to 4:00 pm Eastern Standard Time.

The Sydney market is back open before New York trading closes; it is a smooth 24-hour market!

As a trader, this enables you to act swiftly in response to positive or negative news.

The opening of the U.S. futures market the next day might be an exciting ride if significant data from the United Kingdom or Japan comes in while the market is closed.

Although liquidity is increasing, overnight futures markets are largely underutilized compared to the spot forex market (FX).

Minimal or No Commissions

There is a potential that a broker will ask you to pay commissions given how common and popular electronic communications brokers have become in recent years.

The commission costs, however, are nothing in comparison to what you would spend in the futures market.

Due to the intense competition among spot forex brokers, you are likely to receive the best quotations and incur very cheap transaction charges.

Price Certainty

Under typical market conditions, forex trading provides speedy execution and price certainty. The futures and equity markets, in comparison, do not provide quick deal execution or price assurance.

The pricing for fills for futures and equity market orders are far from assured, despite the introduction of computerized trading and the limited guarantees of execution speed.

Brokers frequently give prices that reflect the LAST deal rather than necessarily the price at which the contract will be filled.

Guaranteed Limited Risk

Position limits are necessary for traders to manage risk. In relation to the amount of money in a trader's account, this figure is set.

The online capabilities of the trading platform will immediately produce a margin call if the required margin amount exceeds the available trading capital in your account, minimizing risk in the spot FX market.

Position limits are necessary for traders to manage risk. In relation to the amount of money in a trader's account, this figure is set.

The online capabilities of the trading platform will immediately produce a margin call if the required margin amount exceeds the available trading capital in your account, minimising risk in the spot forex market (FX) market.

In a typical market environment, all open positions will be quickly closed (during fast market conditions, your position could be closed beyond your stop loss level).

Your position could be liquidated in the futures market at a loss greater than what you had in your account, and you would be responsible for covering the shortfall that resulted. That's awful.

In a typical market environment, all open positions will be quickly closed (during fast market conditions, your position could be closed beyond your stop loss level).

Your position could be liquidated in the futures market at a loss greater than what you had in your account, and you would be responsible for covering the shortfall that resulted. That's awful.

ADVANTAGES

FOREX

FUTURES

24-Hour Trading

YES

No

Minimal or no Commission

YES

No

Up to 500:1 Leverage

YES

No

Price Certainty

YES

No

Guaranteed Limited Risk

YES

No

The Forex vs. Futures Scorecard suggests that Mr. Forex is UNBEATABLE! Now let's meet the successful forex traders.

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