The arguments presented in most books on FOREX are simply not valid in my humble opinion.
I`m talking about GLOBEX futures that are traded electronically.
I do obviously see the advantages over equities, but in my opinion GLOBEX futures seems like a much safer marketplace especially if you are a short term trader.
If you like holding trades for weeks, I don`t think any marketplace have any particular advantage except that liquidity is always good in terms of exiting a trade.
Spot is generally cheaper, it’s definitely more flexible and it’s more liquid. You can get fractional position sizing, fixed spreads if you’re trading retail (that has advantages and disadvantages) and you’ll always find a buyer/seller for your trade.
I wouldn’t say futures are safer, particularly if you’re trading high volume and encounter all the issues of having to disguise your orders and stops.
There are pitfalls with retail market makers in FX sure, but use a bit of common sense and only trade with the big well-established firms and you’ll be fine. And you can always use ECNs if you’re concerned with conflicts of interest.
The only advantage of futures I can think of is volume information. I don’t trade them, so anyone who does, shout up. I’m wracking my brains to think of other futures advantages…
Aside from the volume thats pretty much it. I like spot becuase like you said anytime of day is good to trade. The currency futures( I used to trade them) Are highly illequid at night( I am in the us and I like to trade london times as well) The fractional sizing is key. I like to find a zone I want start a position in and then size into it. Futures with the margin and no fractional sizing is tougher. And some places have a tight enough spread that the commission and spread are almost the same. Plus margin is key. I dont have to put more money at risk for the same thing. If I trade the Euro on the cme the margin is like 6k or something for 12.50 a pip. I used tight stop losses which are hard stops, so I dont worry about my risk management. So with spot I can put up like 300 bucks for the same position. So If I keep 25k in my spot acount or my futures account I can diversfy myself more trading spot and make more money. With the same risk I would use in futures or anyother istrument.
Hello everybody. I�m trying to learn a few things about Forex, to be able to find a good way to make some money. Is it a good one?? Thank you for your help.
Well, one thing I wanted to add in favor of futures is that your funds are FDIC insured up to 100k, so even if your broker goes bankrupt you will not lose your money.
The same cannot be said for any retail fx broker, to my knowledge.
Hello Johnny this is an Interesting point of view but what is exactly the article you suggest? can you link it please? I would like to know it. Thanks:p