Forex Account vs Futures Account

B

bettles

I have been trading Forex on and off for about 4 years now. When I've mentioned this to some people who actively trade in markets other than stocks, several times I've gotten the reaction "Why would you want to trade Forex?". When I say to speculate on currency trends, they say "You could do that a lot better in the futures market".

Why would the futures market be considered better? I trade with Oanda, which allows me to pick any size trade - even as small as a single Euro for example. In the futures markets, there is one contract size, so a small trader such as myself cannot scale trades well. I was thinking maybe the transaction costs are higher, but I don't really see this. The spread I pay, at least for the Euro, is a pip or less. So assuming a trade the same size as a futures contract, I am only going to be paying around $10 round trip. I don't think most futures brokers are going to be less than that. Perhaps the transaction costs for Forex only become significant for larger trades? Or am I missing some other disadvantage to trading with a Forex account vs. a futures account?
 
You're opening up a can of worms asking that question!

I'm a die hard cash forex trader who trades a derivative through a dealing desk broker with fixed spreads and have done for years without any problems (once I'd found the right broker that is!), and there are plenty of people here who would call me crazy and this is why.....

http://www.cme.com/edu/events/od/Trading_CME_FX_Futures/CME_FX.swf

http://www.fxfutures.com/content/spot/index.php?show=1

According to the gurus I'm doing everything wrong, I should be bankrupt long ago, but all I can say is it works for me so my view is why would I want to fix what ain't broke :)
 
Thanks for the links, Cabletrader. The 2nd one especially is helpful.

On the 2nd link, I think the only exhibit that really bothers me is what could happen to the money in my account if the firm itself goes under. That is definitely a consideration, and reason to keep the minimum account balance that still allows effective trading for the size I'm interested in.

I'm not particularly bothered by the others. Price data not matching up with the futures data - I've found it tracks well enough for me and I can always refer to the futures data if need be. Spreads are not a problem (at least with my trading size). As far as the firm being on the other side of the trade - does not bother me since, as long as my predictions are correct, I will make the same money regardless who is on the other side.
 
It sounds like you know what you're doing, you've been around the markets a while.

I think the thing which bothers some people is the apparent conflict of interest, you win they lose, so it would seem in their interest to 'help' you lose (or gain less). In reality it's not as simple as that for mainstream marketmakers, they hedge exposure to limit their risk anyway. Sure they make things difficult for anyone who tries to take advantage (ie news scalpers) but that's a good thing, they're protecting their bottom line and therefore more likely to stay solvent and in business.

There is without doubt price manipulation but it can work both ways, prices are smoothed so in a manic market things still appear serene. It's said that some brokers take manipulation further and feed individual prices depending on the client's positions but I haven't see that for myself so it could be just another conspiracy theory. It would be far too easy for a trader to expose such a tactic anyway so I think it's highly unlikely.

Another benefit is they take pretty much everything thrown at them, I've never had an order partially filled or slippage on a stop unless the market gapped over the weekend, but that can work both ways as well.

From a safety of funds perspective there was a thread on it recently. It depends on which country your broker is located and what regulatory authority they operate under. For most of these brokers it's so quick and easy to fund an account that it's unnecesary to have excess funds on deposit over and above margin requirements and a buffer for unrealized loss. Once sufficient trading profits have been made the initial deposit could be withdrawn leaving only gains at risk. I know it's still your money but there's a psychological difference I think.

With the exception of the occasional accounting error or platform issue I haven't experienced any major problems. At one time I was suspicious of prices being too far off market and had Reuters 3000 xtra running alongside but prices were surprisingly close most of the time.

(I should be getting commission for this, I sound like an advert!)

Marketmaking is a competitive business and they all try and offer something extra to entice punters through the door. I found it helpful to draw up a checklist of things I wanted from a broker to meet my trading style and from there a shortlist of potential firms that met my needs. I then tried them out with a small account to see how they performed in live trading.

At the end of the day they're just providing a product like any other business, and no business is ever perfect.
 
I am only going to be paying around $10 round trip. I don't think most futures brokers are going to be less than that.
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5$ or lower ,by no minimum per month

mbtrading.com,ampfutures.com and some 10 anothers




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Perhaps the transaction costs for Forex only become significant for larger trades? Or am I missing some other disadvantage to trading with a Forex account vs. a futures account?


ECN spot forex are only mbt,hotspotfx

most of future broekrs offer ECN
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Why would the futures market be considered better? I trade with Oanda, which allows me to pick any size trade

Size yes ,but no single click entry capability ...
 
Quote from ssss:
I am only going to be paying around $10 round trip. I don't think most futures brokers are going to be less than that.


5$ or lower ,by no minimum per month

mbtrading.com,ampfutures.com and some 10 anothers
More...

~$5 (commission) + $12.50 (1 tick spread on 6E) = $17.50 with futures, not $5. Compare that to what a given forex dealer charges in spread + commission, if any, on 125,000 EUR/USD. Need to compare apples to apples, the total cost of a trade. Of course, most traders (non-scalpers) would be better off focusing on other factors first.

Quote from ssss:

Perhaps the transaction costs for Forex only become significant for larger trades? Or am I missing some other disadvantage to trading with a Forex account vs. a futures account?


ECN spot forex are only mbt,hotspotfx

most of future broekrs offer ECN
More...

Forex ECNs include MBT/EFX, HotspotFX, HotspotFXi, IB, Currenex (through many portals), FXall, LavaFX and a few lesser known ones, not "only mbt, hotspotfx."

Quote from ssss:

Why would the futures market be considered better? I trade with Oanda, which allows me to pick any size trade


Size yes ,but no single click entry capability ...
More...

They do offer single click, as cabletrader has already pointed out.

You're doing great, ssss, 0 for 3. :)

bettles, I see that you've just joined... forex vs. futures is a constant subject of discussion on ET, going back years. Do a search, there's tons of info.
 
~$5 (commission) + $12.50 (1 tick spread on 6E) = $17.50 with futures, not $5. Compare that to what a given forex dealer charges in spread + commission, if any, on 125,000 EUR/USD. Need to compare apples to apples, the total cost of a trade. Of course, most traders (non-scalpers) would be better off focusing on other factors first.


But oute is not true as in CME GLOBEX . By all forex broker
with ECN only fraction of liquidity . Oanda as market maker can not live without manipulationg quote and alsov have spread
for EUR/USD 0.9
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Forex ECNs include MBT/EFX, HotspotFX, HotspotFXi, IB, Currenex (through many portals), FXall, LavaFX and a few lesser known ones, not "only mbt, hotspotfx."

Yes , ducascopy not regulated and hotspot and MBT have capital lower as CFTC wish -20 mln $ ,they have only 6-7 mln$
IB is public noted ,but market maker through TMWD

FXall and LAVA FX are new name for author -knew not ...

FXall is regulated by the FSA and has received an American Institute of Certified Public Accountant's (AICPA) Statement on Auditing Standards No. 70 (SAS 70) report which provides a rigorous independent assessment of our controls. The internationally-recognized SAS 70 report examines, through an independent third-party assessment process, the adequacy of controls surrounding the FXall Trading environment.

IS it FSA ? U.K. -is not the matter author tested reaction of FSA on complaint and compared with CFTC .

London is not the matter ,atleast for author
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Oanda have a single click facility on the order ticket

Atleast on demo author tested all was possible can be pressed ,no reaction

it is not dome as OEC -shut down confiramtion/notification order and press on bar
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bettles, I see that you've just joined... forex vs. futures is a constant subject of discussion on ET, going back years. Do a search, there's tons of info.
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Very can be ,author is conservativ SEC and all which related to
SEC is better from security point of view . All another customized propaganda from industry with average retail account life 45-60 days .
 
~$5 (commission) + $12.50 (1 tick spread on 6E) = $17.50 with futures, not $5. Compare that to what a given forex dealer charges in spread + commission, if any, on 125,000 EUR/USD. Need to compare apples to apples, the total cost of a trade. Of course, most traders (non-scalpers) would be better off focusing on other factors first.

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Yes you are right ,author is very suspicios to praxis integration of commission in spread . It is source of manipulatig of
quote on secondary market .

IBKR ,HotspotFX,MBT/EFX demanded commission extra and have best spread atleast 1 by only fraction
of global liquidity -it can be alsov only secondary market

Commission must be

IBKR account minimum 5000$ for international clients ,Hotspotfx -7500$ ,Currenex -7500$
MBT -400$

No doubt better to have 3 accounts with 2000 $ each ,as one with 6000$ .OXPS offer 0 account minimu , amfutures -2000 $
&

https://www.lavatrading.com/index.php

no demo offered -can not say any ...
 
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