What am I missing?

S

Sashe

I know a lot of traders who trade FX spot with spread ranging 3-5 pips. When I trade FX let's say EUR/USD -I use Eurofutures where spread is 1 pip.
Futures following the spot tick by tick most of the time so basically they serve as the proxy for the spot or the other way around (less the time value spread)
I really dont understand why people would trade the spot and give away 2-4 pips? Is that the leverage/margin reqs? May be liquidity but I have no problems flipping 8-10 contracts.
 
Many spot FX brokers give their clients free RT charts and data. I know some of them give out 1:200 leverage and don't call margin until the client's a/c burst! This just fit the gamblers who are playing the spot FX.
 
Sashe:

I left currency futures 3 years ago to trade exclusively in the spot market. Loved it, good intra-day trends, could trade overnight, plenty of liquidity, no commission, free platform, ridiculous leverage, filled at the price requested, ect. Keep in mind I was paying $25.00 RT & the e/$ spread was more like 3-4 pips. About 6 months ago I was shocked to see the futures spread on the e/$ at 1 pip & sometimes flat & add to it the fact that a round trip cost less than $4.00 so I went back to the CME contracts. I have to agree, no problem with liquidity, minimal slippage, & I'm seeing a much better bottom line. With that, I'll always have spot dealers but I hope this competition will cause these firms to tighten up the spread. 3-4 pips on the e/$ is rape!
 
A big draw to spot, at least for me, is the cost of entry. I can open a trade for as litle as a dollar if I so choose. The broker that I use does not have standard lots so I can tailor my risk management to fit a small account. My account size would not even allow me to open a positoin with the CME, much less have any reasonable money management practice.

Also the spot is 24 hours so the only time I have to worry about gaps is on Sunday evening after the weekend close. The 24-hour nature also fits my schedule better because I have a regular job to work during the day.

I also have a 2 pip spread on EURUSD with no commission and no fees for charts and data.

On the other hand I have not traded anything but spot so I am partially biased.
 
Quote from Burtakus:



I also have a 2 pip spread on EURUSD with no commission and no fees for charts and data.
More...

That sounds very good. Who are you trading with?

Peace,
:)RS
 
1 euurofuts margin is $1,259. At least when I checked margin thru TWS I got this number.
I was under impression that futs are open 24 hr also, if not-what's the schedule? I was able to trade it at day and night.
 
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