Forex Market VS Futures
The spot FX market is a $ 1.9 trillion
daily market, 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. If you compare this to the $ 191 billion
per day futures market, it becomes clear that the futures markets provide
only limited liquidity. The spot market is always liquid, meaning positions
can be liquidated and stop orders executed without slippage.
Execution Quality and Speed
The futures market is known for inconsistent
execution, both in terms of pricing and execution time. Every futures
trader has experienced a half hour wait for a market order to be filled
that has been executed at a price far away from where the market was
supposed to be trading. Even with electronic trading and limited guarantees
of execution speed, the price for fills on market orders is far from
certain. The FX market offers instantaneous execution and price certainty.
On the FX trading station, traders execute directly off real-time streaming
prices. There is no discrepancy between the displayed price and the
execution price. This holds true even during volatile times and fast
moving markets. In the futures market, execution is uncertain because
all orders must be done on the exchange. This creates a situation where
liquidity is limited by the number of participants, which in turn limits
quantities that can be traded at a given price. Real-time streaming
prices ensure that market orders, stops, and limits are executed without
slippage and/or partial fills.
Commission Free Trading
In the futures market, traders must
pay a spread and a commission. All traded financial products have a
"bid" (buy) price, and an "ask" (sell) price, with
the difference defining the spread, or cost of execution. Up until recently,
lack of transparency in the futures market has disguised the spread.
Now online trading platforms, which show the depth of the market by
including both the buy and sell price, allow traders to see the real
cost of the trade. Because the currency market offers round-the-clock
liquidity, traders receive tight, competitive spreads both intra-day
and night. Futures traders are more vulnerable to liquidity risk and
typically receive wider dealing spreads, especially during after-hours
trading. FX day trading charges no commission or transactions fees to
trade currencies online or over the phone. The over-the-counter structure
of the currency market eliminates exchange and clearing fees, which
in turn lowers transaction costs. Costs are further reduced by the efficiencies
created by a purely electronic market place that allows clients to deal
directly with the market maker, eliminating both ticket costs and middlemen.
All clients have access to deal-able bid/ask quotes. In the futures
market, the prices represent the LAST trade, not necessarily the price
for which the contract will be filled. This lack of transparency hides
the true cost of the trade.
Reporting and Back Office
In the spot market,
traders can see the value of their positions and account equity move
up and down with the market in real time. The key information for every
account is re-calculated and updated every time the exchange rates change.
Traders have immediate access to detailed information regarding every
open position, open order, and the generated P/L per trade. Traders
also have 24-hour access to full, real-time snapshots of their account
statement since inception, or on a daily, weekly, monthly or yearly
basis. As a trader, this means you never have to approximate your account
equity or be uncertain in regards to available margin.
the purpose of risk management, traders must have position limits. This
number is set relative to the money in a trader?s account. Risk is minimized
in the spot FX market because the online capabilities of the trading
platform will automatically generate a margin call if the required margin
amount exceeds the dollar value of the account as a result of trading
losses. All open positions will be closed immediately regardless of
the size or the nature of positions held within the account. If the
futures market moves against you, your position may be liquidated at
a loss and you will be liable for any resulting deficit in the account
Did you know that more and
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It's just you, an Internet connection and a computer. That's all you
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then may be for you.
How much profit can actually
be made? A well-trained currency trader can earn above-average profits
of 2% to 20% or more in a single month, week, or even a day.
The market offers exciting
profit potential in volatile times when other markets are unstable and
insecure. Risk can be managed very advantageously to minimize the downside
while still maximizing the upside potential.
UNLOCK THE INCOME
POTENTIAL OF FX TRADING BY LEARNING HOW TO TRADE PROFITABLY IN THIS
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