Futures pricing vs spot forex pricing

Darkside · Jul 26, 2007

Assuming one is using the front month contract for futures, would one be able to reasonably use futures charts to trade spot fx? Are they similar enough?

To clarify- I would be trading one an end of day basis with a holding period of 2-3 days - 1 month or more.....

would the prices be close enough to use the charts?

This may seem stupid, and hell, it may be stupid....but I was wondering...so I'd appreciate anyone's patience who could answer this question without ripping me a new one. LOL

nazzdack · Jul 26, 2007

Yes. The spot and futures price have to be "equivalent", otherwise the market would be giving away "free money".

Darkside · Jul 26, 2007

Awesome, so it wouldn't be too crazy to use futures charts on spot forex? Unnecessary and silly maybe, but possible?

Thanks again.

Trader KGB · Jul 26, 2007

Some futures (CHF, CAD, JPY) have different tick sizes vs spot, so the charts will not be exactly the same, but equivalent from a % standpoint. More discussion here:

http://www.elitetrader.com/vb/showthread.php?s=&threadid=98817

Darkside · Jul 26, 2007

Thanks KGB.

Thats exactly what I was looking for.

Surdo · Jul 26, 2007

I only trade Fx futures but use SPOT charts for my analysis.
If you watch SPOT, it usually leads the futures, if you are using a longer TF , it really does not matter.

surdo

brownsfan019 · Jul 26, 2007

Good observation - you could use the futures charts to trade the fx, esp if you need volume in your analysis.

Darkside · Jul 26, 2007

Yeah I was looking into SMR charts, as I really like the almost spartan set up. Keeps me focused and they have the charts more specifically geared to my style of trading, well at least the shorter term style.

Thanks for the info and the ideas.