Currency futures - why?

Future and other derivatives market is muddy and unclear after MF global fiasco, exchange has NOT demonstrated any good faith toward interests of smaller player. I am sure this thing will keep in back mind of most people who playing with them.

Try staying with spot/physical market, leverage is still manageable, counterpart risk is your banks/brokers, decentralized, and no one know your position size.
 
Quote from rmorse:

I was just using IBM as an example. A firm as big as IBM that wants to hedge out currency risk, can do it in many different ways. I was making a point to the original question. You would only use Spot FX, for transaction at that time. You need a forward contact like futures to price out activities in the future. These futures contracts are a very important part of defining future costs of doing business. Big and small firms use them.

We often look at the markets from only the traders point of view. Without hedgers, few futures markets would attract any interest. You pointed out that many FX forward contracts might be OTC. That might be true. But, the party selling the contract to a hedger, will want to layoff their risk somewhere. Without pricing from a public exchange, spreads would widen and so would depth and liquidity in the OTC market.

Bob
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We're on the same page I think. I should have been more clear concerning the banks/mms laying off risk - they would be using the exchange traded contracts more often than a company would and simply until they could match their outstanding swaps. The price discovery and transparency in exchange traded contracts keeps the market in check but the standardized sizes/settlements also make them somewhat impractical for most commercial hedging purposes, no?
 
young turks trade the futures cause they have to go home to the wife, kids, mortgage and mow the lawn.

they also think the 3 guys who still have jobs over at the sec et al. are still regulating the markets.

old guys trade spot, cause we don't sleep and make buckets of cash in the overnite london session.

we also have no debt and greens keepers trim up the estate.

cheers,

s

:cool:
 

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Quote from jo0477:
We're on the same page I think. I should have been more clear concerning the banks/mms laying off risk - they would be using the exchange traded contracts more often than a company would and simply until they could match their outstanding swaps. The price discovery and transparency in exchange traded contracts keeps the market in check but the standardized sizes/settlements also make them somewhat impractical for most commercial hedging purposes, no?
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For all effects and purposes, relative to the OTC mkt, there is very little liquidity in FX futures. This may change going fwd, obviously.
 
Quote from number22:

Future and other derivatives market is muddy and unclear after MF global fiasco, exchange has NOT demonstrated any good faith toward interests of smaller player. I am sure this thing will keep in back mind of most people who playing with them.

Try staying with spot/physical market, leverage is still manageable, counterpart risk is your banks/brokers, decentralized, and no one know your position size.
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you are correct and liquid 24/6.

regulatory in the USA is a joke and this bozo the clown is in charge at the fed.

http://www.youtube.com/watch?v=N-KJnBfva18&feature=rela

the " teflon jon " speaks.
full confidence in the futures market.

why is there a shortfall............?

" i know nothing...."

http://www.youtube.com/watch?v=1eJYYnnTJ3s&feature=related

why is this guy and half of goldman not in jail..........?

check the panama bank accounts.

s
 
There's one other major reason one might prefer to trade the futures instead of cash market, and that is interest rates. Depending on what currency pair you wish to trade, you may end up having to pay interest to hold a position in the cash market, whereas no matter what pair you trade in the futures market, you are not liable for any interest payments.

Of course, this only applies if you are holding the position for longer than a day, and assumes you're trading a pair that would require you to pay the interest differential. In cases where you would benefit by receiving the interest differential (aka carry trade), obviously you'd want to stick with the cash market.
 
Why do so many people post questions on ET that can simply be answered by a Google search? Is it because they are lazy?
 
Quote from NetTecture:

There is also cuonterparty risk. With Forex you make specific deals with counterparties - what you do when this blows?

With Futures your counterparty is always the exchange.
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would that be the regulated security like REFCO, of MFGlobal?
 
Quote from shopster:

young turks trade the futures cause they have to go home to the wife, kids, mortgage and mow the lawn.

they also think the 3 guys who still have jobs over at the sec et al. are still regulating the markets.

old guys trade spot, cause we don't sleep and make buckets of cash in the overnite london session.

we also have no debt and greens keepers trim up the estate.

cheers,

s

:cool:
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I'm an old guy who trades spot from 5 or 6am est until about 11:30am, then trot odd and enjoy the hell out of my life away from screen slavery & charts' servitude.

I also appreciate the fact that FX symbols habitually make $1,000 to $2,000 per contract price moves open to closed trades... and there are no commission costs to pay, either :cool:
 
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