spot forex and futures? whats the benefit? futures brokers are much cheaper?
Thursday, April 3, 2014
, Posted by Ryanita at 7:57 AM
David C
Hi
FXCM has been recommended to me for trading spot forex currency pairs.
I mainly trade emini futures through a futures broker at $4.75 per contract per round trip.
It seems much more expensive in the spread commission of 3 pips to trade currency pairs through FXCM to get the same profit per pip.
What is the benefit of using FXCM or any other spot broker when I can just get $4.75 per round trip through a futures broker, I just can't see the point of paying a 3 pip spread.
Am I missing something?
Julia dear, please stay in Africa if you have nothing relevant to contribute.
Answer
The only real advantage of Forex vs. currency futures is that Forex allows you to scale as small as you want to trade, while futures is only available with a contract size that may be too large for many accounts to safely handle. A person with a smaller account may find the ability to trade even a fractional micro-lot reason enough to switch.
Perceived advantages may include the increased liquidity of the major pairs on spot vs futures, but in reality the other side of your position is almost always taken by your forex broker, because he expects and usually wants you to lose.
Another advantage some point to is that it is much less likely to run through a stop in Forex than in futures, but at the same time I would submit that it is much more likely that the Forex shops would shade the price enough to trigger stops just to take their customers out of trades, which you don't see on the regulated futures exchange.
Some say that forex has no commissions, but in reality, as you have noted, the spread is much more expensive than the commission.
Others point to the fact that you can open a Forex account at many firms for less than $100 and receive 400-1 margin, however, could also be suicidal to your account to use this type of leverage.
I have traded Forex for many years and educate traders as well, and I would encourage all of my clients to stick with the futures unless their account is under $10k. I have noticed that the business has become increasingly dishonest - there are only a couple of shops that are truly legitimate - one, Dukascopy, is excellent, but is increasingly difficult for Americans to deal with since the IRS crackdown on Swiss accounts and requires a very large minimum account size. I switched to currency futures two years ago and you couldn't pay me to go back to Forex.
The only real advantage of Forex vs. currency futures is that Forex allows you to scale as small as you want to trade, while futures is only available with a contract size that may be too large for many accounts to safely handle. A person with a smaller account may find the ability to trade even a fractional micro-lot reason enough to switch.
Perceived advantages may include the increased liquidity of the major pairs on spot vs futures, but in reality the other side of your position is almost always taken by your forex broker, because he expects and usually wants you to lose.
Another advantage some point to is that it is much less likely to run through a stop in Forex than in futures, but at the same time I would submit that it is much more likely that the Forex shops would shade the price enough to trigger stops just to take their customers out of trades, which you don't see on the regulated futures exchange.
Some say that forex has no commissions, but in reality, as you have noted, the spread is much more expensive than the commission.
Others point to the fact that you can open a Forex account at many firms for less than $100 and receive 400-1 margin, however, could also be suicidal to your account to use this type of leverage.
I have traded Forex for many years and educate traders as well, and I would encourage all of my clients to stick with the futures unless their account is under $10k. I have noticed that the business has become increasingly dishonest - there are only a couple of shops that are truly legitimate - one, Dukascopy, is excellent, but is increasingly difficult for Americans to deal with since the IRS crackdown on Swiss accounts and requires a very large minimum account size. I switched to currency futures two years ago and you couldn't pay me to go back to Forex.
oil vs forex????????
Mi R
Which one is easier to predict and which one is more volatile?
Does anybody know which broker offers online oil trade?Also do oil brokers offer leverage like in forex?
Answer
Most all futures brokers can help you with oil, depending on WHICH oil you want to trade. Most liquid is light crude on NYmex. Forex leverage is higher than oil, but has significant differences in how markets work.
Most all futures brokers can help you with oil, depending on WHICH oil you want to trade. Most liquid is light crude on NYmex. Forex leverage is higher than oil, but has significant differences in how markets work.
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