The Euro FX (EC) Contract

[brownsfan019]

I have visited the chat room recently and was surprised that no one was familiar with or trading the Euro FX contract. For information purposes, thought I would start a thread here for current and future use.

In a nutshell, the EC is similar to the Eur/Usd in Forex trading. The obvious big difference being that the EC is traded at the CME and is under the same regulations as the other contracts being traded there. I personally do not touch Forex due to the lack of regulation currently there. The EC provides a way to trade in currencies with the same futures brokerage account you currently have and diversify into currencies.

Here is a link to the CME site on the EC: CME Euro FX Futures & Options

In my trading, here are my observations on this contract:

• It has the potential to trend much more than the US indexes.
• Each tick is $12.50, so if you like the ER2 at $10/tick, this may be of interest to you.
• It does not move in conjunction with the indexes, thereby providing an instrument to trade that is ‘independentâ€℠¢ of the US indexes. For me, this has provided trading opportunities when the indexes are not providing much action.
• The volume is good – approx. 150,000 contracts per day currently. This is more than YM or ER2.
• Commissions are slightly higher than on the indexes since this is a full-sized contract, not a mini. There is a mini-EC; however, the volume there has never taken off. While the commissions are higher, any good broker will negotiate based on your expected trading volume and they ARE NOT that much more than indexes, regardless of what your broker may tell you.
• Depending on your charting platform, you may already have this feed or need to turn it on.

I have traded the EC for well over one year now, and it is a perfect addition to the indexes that so many of us trade. While the Forex arena is not for me, this contract provides a way to enter the currency market without entering something so unregulated. Now, once the CME FX Marketplace is up and running, that may be a different story (Reuters and CME To Create FXMarketSpace).

Good Trading!

Note: Some charting services do not use EC for the ticker symbol. When you do a symbol lookup, make sure to seach for the Euro FX contract, not the mini.

[notouch]

I hear that FXMarketSpace is not going to be available at all to retail traders. There are a couple of good options for trading spot FX. I use IdealPro from Interactive Brokers. Orders go straight to interbank liquidity providers like Deutsche Bank and Bear Stearns. Whatever you do don't use a retail FX bucketshop. Cable (GBP/USD) is more tradeable than EUR/USD. It's great for swing trades - one position every week or two. Look at Tuesday's inverted hammer candlestick on the daily chart and tell me you couldn't have spotted that as a reversal.

CME has a $5 a point GBP/USD contract but liquidity is not great. I don't see any benefit to using it over IdealPro.

[brownsfan019]

notouch - we'll see about FX Marketplace. Till then, the EC is plenty for me when also trading the US indexes.

[torero]

brownsfan, I traded EC a little in the past but was not getting much results until I found GBPUSD and little by little other pairs, a whole new world of uncorrelated instruments you can trade just in the forex alone, so US indices have no influence on these animals.

I think the bucketshops (dealing desk) are there and changing as well. I've been using MBtrading FX (ie. non-dealing desk), quotes and orders go straight to spot so most of the major pairs are 1-2 pips max. It's true there are some unscrupulous brokers out there but there are many traders who found the right brokers and have no problems with forex at all. So I think the idea of lack of regulations should not hinder anyone from trading forex, it's a matter of doing proper research before committing your money.

[notouch]

Looking at the GLOBEX GBP contract this morning liquidity seems alright and spreads are the same if not lower than IdealPro (seems to be 1 pip most of the time) so I might go with GLOBEX in future. It should be fine for my swing trades and $5 a pip is ideal for me.

[brownsfan019]

Obviously we have different views of forex, but I really started this thread as a way to discuss the EC. I guess that could probably be another thread in itself - forex vs currency futures.

Good trading.

[torero]

ok, sorry about that.

[notouch]

	Quote:	brownsfan019
	Obviously we have different views of forex, but I really started this thread as a way to discuss the EC. I guess that could probably be another thread in itself - forex vs currency futures. Good trading.

You can't separate the EC from EUR/USD spot. It doesn't have a life of its own at all so I can't see what sort of discussion you expect to have about it. Sorry to be blunt.

[brownsfan019]

	Quote:	notouch
	You can't separate the EC from EUR/USD spot. It doesn't have a life of its own at all so I can't see what sort of discussion you expect to have about it. Sorry to be blunt.

Well, there's plenty of discussions about the ES, YM, ER2 and NQ, so why should this be any different? This is a futures contract, posted in the futures forum; therefore, I assumed the discussion could revolve around the EC futures contract.

As for your comments, the EC does in fact have a life of its own. Every day about 150,000 contracts trade through it. Traders like myself trade the EC and don't touch the spot, so it does appear to have a life of its own.

I apologize for taking time to write up a post about this contract and trying to discuss it. It was purely done to help educate and stimulate discussion on this futures contract that many traders overlook. That's it. As I said, if you want to start a futures vs. forex thread, go for it and I'm sure people will chime in.

[Buk]

	Quote:	brownsfan019
	As I said, if you want to start a futures vs. forex thread, go for it and I'm sure people will chime in.

there's one already sleeping in the basement here..........



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