Forex vs Futures

The Forex market offers a plethora of advantages compared to the futures market as well as the equity market. But there is more, much more..
forex versus future

Liquidity

In the Forex market, 5.3 trillion US dollars are traded every day, making this market the largest and most liquid in the world. This market is able to absorb trading volume and transaction sizes that ridicule the capacity of any other market. The futures market totals about 30 billion per day. 30 billion? A trifle!
Futures markets cannot compete with their limited liquidity. The Forex market is constantly liquid, which means that positions can be closed and stop orders executed with little or no slippage except in extreme cases of high market volatility.

A market open 24 hours a day

At 5pm on Sundays, the trading session starts in Sydney. The Tokyo market opens at 7pm followed by the London market at 3am (EST). Then New York opens from 8am to 4pm (EST). Before the New York market closes, the Sydney market opens again. It’s a 24-hour market.
As a trader, this allows you to react to favourable or unfavourable news by trading it immediately. If important data comes from the United Kingdom or Japan while the US futures market is closed, the opening the next day could be eventful (night markets on futures contracts exist for currencies but lack liquidity and are difficult for the average investor to access).

Minimum or non-existent commissions

Thanks to the ECB (Electronic Communications Brokers) system, which has become more popular and dominant in recent years, it is possible that a broker will ask you to pay commissions. But these commissions are insignificant compared to what you have to pay on the futures market. Competition among brokers is so fierce that you will most of the time benefit from the best quotes and very low transaction prices.

Price certainty

By trading Forex, you get fast execution and price certainty under normal market conditions. This contrasts with futures and equity markets, which offer no price certainty or immediate execution of transactions. Even with the advent of electronic trading and guarantees of speed of execution, the prices offered on the futures and equity markets remain highly uncertain. Prices quoted by brokers often illustrate the LAST trade, not necessarily the price for which the contract will be honoured.

Guaranteed risk limit

Traders should have limits on their risk management positions. This price is valued according to the capital on the trader’s account. Risk is minimized in the spot Forex market because the capabilities of online trading platforms will generate a margin call if the amount of margin required exceeds the available trading capital in your account.

During normal market conditions, any outstanding positions will be immediately closed (during periods of high volatility, your position may be closed above the level of your stop loss).

In the market place, your position may be closed at a loss greater than the capacity of your account and your account will therefore be in deficit. That’s the downside of this activity.

AdvantagesForexFuture
24-hour tradingYESNo
Minimum commission or no commission at allYESNo
Lever up to 201900e0 500:1YESNo
Price certaintyYESNo
Limit of the guaranteed riskYESNo

Judging by Forex’s scores against the futures market, it seems undeniable that Forex wins all the votes! Now it’s time to meet the winners who trade in the Forex market.