Why Trade Forex: Forex vs. Futures

It's not simply the stock market that's causing problems. Similar to its benefits over stocks, the forex market has a number of advantages over the futures market.

But hold on, there's more... There's so much more!

Liquidity

“Mr. Futures, our short shorts look cool!”

The FX market trades $6.6 trillion a day, making it the world's largest and most liquid market.

This market can handle trade volumes and transaction quantities that no other market can match.

The daily volume of transaction in the futures market is a meager $30 billion. Thirty billion dollars？ Peanuts!

With its limited liquidity, the futures markets are unable to compete.

With the exception of exceptionally turbulent market situations, the forex market is always liquid, meaning that positions may be liquidated and stop orders executed with little or no slippage.

Market Open 24 Hours

As markets open in Sydney at 5:00 p.m. EST on Sunday, trading begins.

Tokyo opens at 7:00 p.m. EST, followed by London at 3:00 a.m. EST.

Finally, New York is open from 8:00 a.m. to 4:00 p.m. Eastern Standard Time.

Before the New York market shuts, the Sydney market reopens — it's a smooth 24-hour market!

As a trader, this allows you to trade rapidly in response to positive or negative news.

If significant data from the UK or Japan arrives while the US futures market is closed, the next day's opening might be a wild ride.

Futures contracts have overnight markets, and while liquidity is rising, they are still thinly traded in comparison to the spot currency market.

Commissions are minimal or non-existent.

With the rise in popularity and use of Electronic Communications Brokers in recent years, there is a potential that a broker will ask you to pay commissions.

However, the commission fees are negligible when compared to the costs of trading futures.

Because spot forex brokers compete so fiercely, you will almost certainly receive the best quotations and transaction fees.

Price Consistency

Under typical market conditions, you can trade forex with swift execution and price assurance. The futures and equity markets, on the other hand, do not provide price certainty or quick deal execution.

The pricing for fills for futures and stocks on market orders are far from assured, even with the advent of electronic trading and minimal guarantees of execution time.

Brokerage pricing are frequently indicative of the LAST deal, not necessarily the price at which the contract will be completed.

Risk Reduction Guaranteed

For risk management purposes, traders must have position limitations. This figure is based on the amount of money in a trader's account.

In the spot forex market, risk is minimized because the trading platform's online capabilities will immediately produce a margin call if the required margin amount exceeds the available trading capital in your account.

All open positions will be closed immediately during regular market conditions (during fast market conditions, your position could be closed beyond your stop loss level).

Your position in the futures market may be liquidated at a loss greater than the amount in your account, and you will be responsible for any ensuing account deficit. That's a bummer.

Mr. Forex appears to be UNBEATABLE based on the Forex vs. Futures Scorecard! Now let's meet the winners in the FX market.