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jake g

Forex and Futures

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New guy question; hope it's not too naive.

 

I came across an interesting article, but I don't know what I'm talking about. Perhaps it's way off. In a nut shell they say forex is better than futures because its more liquid, can be traded all day, small commissions, less slippage, greater leverage, and reduced risk via automatic margin calls. Is there exaggeration here, and if so, how do you think such issues should be properly conceive of? Please and thank you. Would you say these points are represented accurately?

 

More specifically, I'm asking that because of these aspects of forex, would if function better for a beginning trader, rather than stocks or futures? It sounds like certain pit falls have been removed from the overall challenge. Or reduced.

 

Here's the article

 

"The forex market also boasts of a bunch of advantages over the futures market, similar to its advantages over stocks. But wait, there’s more… So much more!

 

Liquidity

 

In the forex market, $4 trillion is traded daily, making it the largest and most liquid market in the world. This market can absorb trading volume and transaction sizes that dwarf the capacity of any other market. The futures market trades a puny $30 billion per day. Thirty billion? Peanuts!The futures markets can’t compete with its relatively limited liquidity. The forex market is always liquid, meaning positions can be liquidated and stop orders executed with little or no slippage except in extremely volatile market conditions.

 

24-Hour Market

 

At 5:00 pm EST Sunday, trading begins as markets open in Sydney. At 7:00 pm EST the Tokyo market opens, followed by London at 3:00 am EST. And finally, New York opens at 8:00 am EST and closes at 4:00 p.m. EST. Before New York trading closes, the Sydney market is back open – it’s a 24-hour seamless market!As a trader, this allows you to react to favorable or unfavorable news by trading immediately. If important data comes in from the United Kingdom or Japan while the U.S. futures market is closed, the next day’s opening could be a wild ride. (Overnight markets in futures currency contracts exist, but they are thinly traded, not very liquid, and are difficult for the average investor to access.)

 

Minimal or no commissions

 

With Electronic Communications Brokers becoming more popular and prevalent over the past couple of years, there is the chance that a broker may require you to pay commissions. But really, the commission fees are peanuts compared to what you pay in the futures market. The competition among brokers is so fierce that you will most likely get the best quotes and very low transaction costs.

 

Price Certainty

 

When trading forex, you get rapid execution and price certainty under normal market conditions. In contrast, the futures and equities markets do not offer price certainty or instant trade execution. Even with the advent of electronic trading and limited guarantees of execution speed, the prices for fills for futures and equities on market orders are far from certain. The prices quoted by brokers often represent the LAST trade, not necessarily the price for which the contract will be filled.

 

Guaranteed Limited Risk

 

Traders must have position limits for the purpose of risk management. This number is set relative to the money in a trader’s account. Risk is minimized in the spot forex market because the online capabilities of the trading platform will automatically generate a margin call if the required margin amount exceeds the available trading capital in your account. During normal market conditions, all open positions will be closed immediately (during fast market conditions, your position could be closed beyond your stop loss level).In the futures market, your position may be liquidated at a loss bigger than what you had in your account, and you will be liable for any resulting deficit in the account. That sucks."

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Hello and welcome.

 

I will take a crack at answering your question.

 

I personally believe Forex is an excellent place for beginning traders for 1 simple reason. Very granular risk management. What do I mean by that? In Forex you have the option to risk anywhere from under 10 cents per pip/point on a trade on up to any amount. In the futures market the minimum you can risk is locked into the contract size.

 

As for the other points raised in the article I will comment on them each

 

Liquidity:

It is true the Forex is one of the most liquid markets, but at the level you and I trade this is almost a non factor. This is more of a concern if you are trading huge lots and need to get a good price on your fill with lots of size.

 

24-Hour Market:

This is also true however this isn't necessarily a major "plus" for forex. Just because it is open 24 hours doesn't mean you should be trading it 24 hours. It does have the advantage however of allowing you to trade the Asian market hours in the evening say after you are home from your day job when the US futures markets are closed.

 

Minimal or no commissions:

This is a bit of a deceptive statement. While a forex broker may not charge commisions like you would have in futures, what you do have to account for is the pip spread. Typically when a broker charges no commisions you will have a bit larger of a spread. This is just a very general statement and commissions and spreads vary widely. It's best to do some homework on the brokers and look for one with direct order filling (no middle man or order desk) and low comissions/spreads. I personally use MB Trading (no affiliation).

 

Price Certainty:

This is almost an outright false statement in my opinion. Execution of your order depends on many things to include your broker, market conditions, and liquidity. You can get slow and bad fills in forex just as you would in Futures trading. It's all about finding a good broker here.

 

 

Guaranteed Limited Risk

Ths is a very very deceptive statement. You and you alone are responsible for limiting your risk, whether that be with a protective stop loss, or trading at a responsible level of leverage or both. These factors are the same accross all markets and platforms. There is nothing "guaranteed" here. Forex does however allow you to really limit risk and trade smaller than you could in the Future markets.

 

Hope this answers your questions.

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The foreign exchange market is the place where currencies are traded.The need to exchange currencies is the primary reason why the forex market is the largest, most liquid financial market in the world.

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New guy question; hope it's not too naive.

 

I came across an interesting article, but I don't know what I'm talking about. Perhaps it's way off. In a nut shell they say forex is better than futures because its more liquid, can be traded all day, small commissions, less slippage, greater leverage, and reduced risk via automatic margin calls. Is there exaggeration here, and if so, how do you think such issues should be properly conceive of? Please and thank you. Would you say these points are represented accurately?

 

More specifically, I'm asking that because of these aspects of forex, would if function better for a beginning trader, rather than stocks or futures? It sounds like certain pit falls have been removed from the overall challenge. Or reduced.

 

Here's the article

 

"The forex market also boasts of a bunch of advantages over the futures market, similar to its advantages over stocks. But wait, there’s more… So much more!

 

To begin with, any article that begins with "but wait, there's more, so much more" can be discounted at the outset, much less one that also ends with "that sucks".

 

Second, forex is a terrible market for beginners in that it encourages exactly those behaviors that doom beginners to failure, not the least of which is overtrading.

 

Third, before you come within a country mile of leverage, you need to learn how to trade. Forex is not the place to learn how to trade.

 

Fourth, unless you want to become a scalper, learn how to trade before focusing on daytrading. Otherwise you'll be thrashed around in a maelstrom of conflicting forces you don't understand and won't have a hope in hell of managing.

 

Begin by developing a thoroughly-tested and consistently-profitable trading plan. Without one, you will fail.

 

When you get to the point of choosing your market, characterize all that you're interested in (see Appendix E, here). Only then will you know whether or not that market might meet your objectives.

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Third, before you come within a country mile of leverage, you need to learn how to trade. Forex is not the place to learn how to trade.

 

 

I totally agree. I will add that no market is good for learning how to trade.

 

An individual who wants to trade a market should know how to trade first and then learn to trade a particular market.

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he foreign exchange market is a global decentralized or over-the-counter market for the trading of currencies. This market determines the foreign exchange rate. It includes all aspects of buying, selling and exchanging currencies at current or determined prices.

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  • Topics

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    •   Date : 21st February 2019.

      MACRO EVENTS & NEWS OF 21st February 2019.



      FX News Today Asian equities initially rallied after Fed minutes promised patience on further policy action but most have moved down from earlier highs. Hopes that the US and China are nearing a deal on trade have risen after an unnamed source cited by Reuters said the two sides have started to outline commitments in principle in what is described as the most significant progress yet. The JPY225 closed with a gain of just 0.15%, while the Topix was unchanged from yesterday. The Hang Seng is up 0.03% and mainland China indices are also little changed. The AUS200 outperformed and rallied 0.70%, after better than expected jobs data. US futures are stronger after Reuters reports outlined progress in US-Sino trade talks and European futures are also moving higher. The March WTI futures are trading at USD 57.33 per barrel. Charts of the Day


      Main Macro Events Today EU PMIs – EU Manufacturing PMI is expected to have declined to 50.3 in February, compared to 50.5 last month, dangerously close to the 50 threshold. Services PMI is expected to have increased to 51.4, compared to 51.2 in January, hence pushing the overall Composite PMI higher to 51.1, compared to 51.0 in the previous month. Philly Fed Index – The Philly Fed Manufacturing Index is expected to have declined to 14, compared to 17 in January, still registering a positive effect. Durable Goods – Durable goods are expected to come out registering positive growth for December, compared to negative for November. US PMIs – Manufacturing is expected to have declined in the US, similar to the EU, reaching 54.7 compared to 54.9 last month, while Services are expected to have slightly grown to 54.3 compared to 54.2 in January. Existing Home Sales – Home Sales are expected to have remained at more or less the same levels, at 5M, compared to 4.99M last month. CB Leading Index – The Conference Board Index is expected to have shown a 0.1% m/m increase in January, compared to the 0.1% m/m contraction in December. Support and Resistance
       
      Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

      Please note that times displayed based on local time zone and are from time of writing this report.

      Click HERE to access the full HotForex Economic calendar.

      Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!

      Click HERE to READ more Market news.

      Andria Pichidi
      Market Analyst
      HotForex

      Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • hello everyone, lets all have a good 2019  best of luck to all.a good start so far. and hoping for more good news in the future
    • Ethereum (ETH) Daily Price Forecast – February 20 ETH/USD Medium-term Trend: Bullish ·         Resistance Levels: $240, $250, $260 ·         Support Levels: $140, $130, $120 Yesterday, February 19, the price of Ethereum was in a bullish trend. The crypto’s price was trading at $151.68 when the crypto was resisted. The crypto was resisted at the $150 price level and the price fell to the support of the 12-day EMA. The bullish trend has been terminated but the ETH price is trading at  $145.76 as at the time of writing. On the upside, the crypto’s price will rise if crypto’s price is sustained above the EMAs while the bulls break the $150 price level. Meanwhile, the MACD line and the signal line are above the zero line which indicates a buy signal. Also, the crypto’s price is above the 12-day EMA and the 26-day EMA which indicates that price is likely to rise. ETH/USD Short-term Trend: Bullish On the 1-hour chart, the crypto's price is in a bullish trend zone. The previous bullish trend has been terminated as price made a downward fall. The ETH price has fallen to the support of the $140 price level and the bulls are expected to defend the support level. On the downside, if the bears break the $140 price level, the crypto will further depreciate.
      Meanwhile, the MACD line and the signal are above the zero line which indicates a buy signal. Also, the crypto’s price is below the EMAs which indicate that price is likely to fall.     The views and opinions expressed here do not reflect that of BitcoinExchangeGuide.com and do not constitute financial advice. Always do your own research.                                                                                                                 Top of Form                             Source: www.bitcoinexchangeguide.com
    •   Date : 20th February 2019.

      MACRO EVENTS & NEWS OF 20th February 2019.



      FX News Today Bund yields lower in opening trade, Equity markets mostly higher in Asia. Stock markets in Asia remained underpinned by hopes of a US-Sino trade deal. Wall Street closed higher, helped by positive earnings at Walmart Inc. Fresh. President Trump meanwhile suggested that March 1 tariff deadline is not cast in stone, so there is hope that further tariffs can be avoided. Japan’s exports fell 8.4% in January, while imports declined 0.6% y/y. The contraction in exports seems consistent with escalating concern that Japan’s export sector will be dented this year by global trade frictions and the slowing in China’s economy. The Yuan lifted after a Bloomberg report saying the US was looking for a pledge from China that it will not devalue its yuan currency as part of the trade deal. USDJPY has climbed to 110.91 from 110.60, amid cautious risk-on theme WTI crude edged out fresh 3-month high of $56.77. Charts of the Day


      Main Macro Events Today Juncker and May meet for another round of crunch talks in Brussels today. EU Consumer Confidence – The overall Eurozone number Consumer Price Index (M/M) on course to be confirmed at 1.4% y/y. FOMC minutes – The focus turns on the FOMC minutes to the January 29, 30 policy meeting as we look to glean more information on the Fed’s pivot to a more dovish point of view, even as rates were left unchanged. We did get a glimpse from Chairman Powell’s press conference, where he noted tighter financial conditions, along with tame inflation. And he said the onus is on price pressures to force a rate move. Australian labour data – The unemployment rate is seen holding steady at 5.0%. Support and Resistance

      Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

      Please note that times displayed based on local time zone and are from time of writing this report.

      Click HERE to access the full HotForex Economic calendar.

      Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!

      Click HERE to READ more Market news.

      Andria Pichidi
      Market Analyst
      HotForex

      Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • Forex trading is a genuine business and in that capacity ought to be moved toward like one. Obviously there are a chosen few traders who begun without a FX training and have turned out to be fruitful .
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