FOREX verses FUTURES

[commanderco]

I am interested to hear the pros and cons of trading FOREX or FUTURES or trading both
for that matter.

I trade CME glbx, not because it is preferable to Forex, but simply that was my learning
path and because it works for me.

However, it is time for this narrow sighted view to be expanded or at least reviewed,
and I would greatly appreciate your collective thoughts.

Most importantly; I have only been a member of T2W for a short time, but I am greatly
impressed by the wisdom and generosity of Members.

 

[Rhody Trader]

When you say "FUTURES" are you speaking of foreign exchange contracts? Or are you instead referring to other instruments like indices, energy, fixed income, etc.?

 

[commanderco]

When you say "FUTURES" are you speaking of foreign exchange contracts? Or are you instead referring to other instruments like indices, energy, fixed income, etc.?

I am thinking only in terms of currencies at this stage.

The SPOT market v CME for IMM for example

 

[Rhody Trader]

In that case, I think the biggest advantage of spot over futures is the flexibility one can get in terms of position size. If you were to trade with Oanda, you could literally make trades of any denomination you like, without being restricted to fixed lot sizes.

Also, there are more trading vehicles working with spot than in the futures market. Yes, in futures you can trade all the majors fairly easily. Trading cross-rates (Euro-Yen, for example), however, is not as simple or as cost effective.

You may also find that the transaction costs are lower in spot. In most cases there are no commissions. There is a bid/offer spread, but that exists in the futures market too. Spot spreads might be a bit tighter, though.

Many of the advantages which exist on the spot side come from the simple fact that spot volume way, way outstrips futures volume.

 

[commanderco]

Rhody,
Thanks Rhody I appreciate the points you have made.


Any thoughts as to a recommended Spot Brokerage with
a straight forward platform.

 

[Rhody Trader]

I use Oanda's FXTrade because of the position size flexibility. They also have a demo platform which trades exactly like the live one, and which is perpetual (no expiration).

 

[commanderco]

I use Oanda's FXTrade because of the position size flexibility. They also have a demo platform which trades exactly like the live one, and which is perpetual (no expiration).

Rhody,

Is Oanda a Refco company?

 

[Rhody Trader]

No. The parent of Oanda is actually Olsen (www.olsen.ch), which is a company based on some pretty high level financial research.

 

[jcwonder8]

No. The parent of Oanda is actually Olsen (www.olsen.ch), which is a company based on some pretty high level financial research.

http://www.cme.com/edu/fx/tradingfx/trdfxcme1569.html
Have a look at this link, setting out some advantages of CME Futures. The spread on the EUR futures is often only 1 pip in my experience and globex fills through interactive brokers are incredibly quick. Less liquidity in the other contracts which I don't trade but don't know how material this is as arbitrage should keep futures price in line with spot I'd have thought.