Advantages of Trading FX Futures over Spot FX? Do they trend similar Technically?

K

kent

I am a spot fx trader and I trade only gbp/jpy and I have no idea about forex futures or any futures market. I want to understand how forex futures work and trying to see whether I can switch to Futures to trade in regular hours (assuming it can be daytraded in US equity market hours). Spot fx esp gbp/jpy moves good in London market open + 2 or 3 hours which is pretty late at night in US. I want avoid trading in those wee hours.

1) is there any specific difference in spot fx and fx futures in terms of how they move ? For example if I see gbp/jpy in spot fx and corresponding FX future instrument specific that pair or ccy, will they move /behave similarly at a given time?

2) Apart from knowing the exact volume in futures (compared to spot fx where there is no volume available), what are the +/- of forex futures compared to spot fx?

Thanks.
 
Charts look the same to me, still on Spot here, not a concern really.

Futures you'll have to trade in $10 or similar increments.

Futures, faster fill, you'll be able to see all open orders via a DOM aswell.

Futures less margin 50:1 area, you can get 200:1 spot.

Futures, tighter spreads I expect but factoring in the comms likely cost similar.
 
Hey Kent you could write a book on this.

First and most important thing is the simple term bucketshop.

Spot FX is traded by bucketshops who basically have the ability to control your trade. I think you will find that about 95% of FX traders here won't use a bucket shop. Any1 who trades spot usually with get put on my ignore list.

Ok, now that is out of the way. A big thing for me is sending through limit orders, with spot you pay a spread however with the Future you have to ability to enter the trade technically 1/2 a pip in ur favor.

Lastly with the future you have the ability to close out the trade whenever you want. With spot ur broker "bucketshop" can re-quote you. From what I understand they do this to squeeze more $$ from you.

Your basically getting milked with SPOT IMO.

They can also quote different prices to what the market is actually doing, let me tell you, this aint to your advantage either. Called stop hunting, it pushes the odds even more against you. Say the market moved 17 pips against you they will quote it as 20.


Futures and spot are like 2 fish tanks, one with happy tropical coloured fish with with fluro coral.

The other been a tank full of sharks that haven't eaten for a week.

GL.
 
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Fxcm who I use play it straight winning or losing thankfully, about the only fx broker from the sound of it.

There is a story on here recently a spot trader, the bid opened to 200 spread not visible any where else, cost him his 25k account instantly and put him in debt with them.
 
When ib raised the spot min to $10 million the legit US retail spot market dried up. They always said spot was for gamblers and bucket shops but that was simply not true. Now in US it is. The main difference with futures comes when rolling out. Front months are similar during rth, but back months become difficultly thin after hours. Even small positions cannot be exited at the market.
 
LOL, when Onada first came out, they were like 2 seconds slower than futures when reports came out which told me they were feeding their own data to the masses, but I sent them funds to open an account and all I did with partner was trade reports with them 24 hours a day, futures would spike in one direction and we immediately went other direction at Onada, amazing it too them so long to catch up.

Unless it is some currency pairing I want to get into, I seldom trade Forex, don't trust the data, sometimes slow and I don't know of anyone trading their options and often thought you can get in but not out well, whereas futures I am very use to them.

Robert Morse said:
IMO, unless you are trading FX at a big bank on an institutional platform, I'd prefer the transparency of the FX futures market on the CME.

Bob
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Bob, how reliable is forex options?

Thanks.
 
kent said:
1) is there any specific difference in spot fx and fx futures in terms of how they move ?
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To all intents and purposes, if you trade the front month during RTH, none at all.


kent said:
2) Apart from knowing the exact volume in futures (compared to spot fx where there is no volume available), what are the +/- of forex futures compared to spot fx?
More...


For me, when I switched during 2015 from spot forex (which I'd traded for years) to futures, the availability of volume was certainly the big reason.

For many people, there's also the fact that they'll be doing business with a better class of broker and have lower dealing costs. (I was using IB anyway, to trade spot, rather than a horrible counterparty market-maker type of forex "pretend broker", so that wasn't really a consideration.)

This is anecdotal, of course, but for me the switch from spot to futures was a really good thing, and I wish I'd done it much earlier.


Turveyd said:
Futures less margin
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You mean "more margin" - lower leverage. ;)
 
Xela said:
To all intents and purposes, if you trade the front month during RTH, none at all.





For me, when I switched during 2015 from spot forex (which I'd traded for years) to futures, the availability of volume was certainly the big reason.

For many people, there's also the fact that they'll be doing business with a better class of broker and have lower dealing costs. (I was using IB anyway, to trade spot, rather than a horrible counterparty market-maker type of forex "pretend broker", so that wasn't really a consideration.)

This is anecdotal, of course, but for me the switch from spot to futures was a really good thing, and I wish I'd done it much earlier.





You mean "more margin" - lower leverage. ;)
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What is your assessment of the back months after hours? It takes me a long time almost a month to roll out and I only like to be rolling out of one contract at a time, that's why I need the back months, and I don't like to be frozen in after hours simply because there is not enough on the other side.
 
Thanks all for your input. I have traded with good fx spot brokers and bad ones (fxcm who intentionally started slipping my orders or moving the price to hit my stops (while other broker's feed was normal) and I closed my account immediately after this).

I am yet to see a good +ve side of futures when comparing to spot fx (I do not need to know the volume). Assuming I am trading with a well regulated US broker (Oanda), what advantage I have over forex futures trading vs Spot Fx. I just want to see whether I can avoid trading in the late night/early hours of the day but unfortunately the gbpjpy moves pretty good only in those hours.

Suppose spot fx for GBPJPY moves good at 2.00 AM EST will the Fx Futures for GBPJPY move also similar at 2.00 EST or it moves on various other factors anything specific to futures market? If it is similar what distinct advantage one has on Fx Futures over Spot FX?
 
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