Whats the main difference between FX futures and FX?

C

c_323_h

ive been looking at different brokers only to find that a lot of the ones that im interested in offer everything but forex, however, they offer FX futures. would someone please tell me what the differences between the two are and possibly some advantages and disadvantages? thanks a lot
 
Spot FX - interbank market
FX Futs - Futures exchange (FE)

Spot FX - "flow" info available to the major players - Citi, UBS, etc
FX Futs - FE provides volume and time&sales data.

Spot FX - "Dealable" quotes only (I love that term)
FX Futs - FE provides real-time quotes, avaliable from a number of vendors.

Spot FX - unless you have major cashola and can open like a half-mil+ account with Citi or UBS (respectable bucketshops) you have to open an account with one of the other players (bog standard bucketshops, in which case you'll also need to provide your own lubricant) :p
FX Futs - Standard Futures account rules

Spot FX - many pairs
FX Futs - limited contracts and pairs

Spot FX - not aware of liquidity issues - unless you are Soros or Buffett
FX Futs - liquidity could be a problem for some contracts depending on trading style/system.

Spot FX - touted as commission free, when you calculate the cash on the pip spread made by the bucketshop on each trade, you are realise that you are being given a right royal shafting
FX Futs - A few bucks per contract - depends on broker

Both - If you believe any stops are guaranteed then you are dreaming.

Spot FX - What is regulation? "Sorry Sir, your order was filled during a period when we did not have dealable quotes, therefore your order was not really filled (even though we said it was), and neither is your paper profit." :D
FX Futs - CFTC - although busted trades do happen especially when wealthy fat-finger F***s up.!
 
not to mention the futures are exactly that "futures" or forward contracts on spot. In other words futures have the interest-rate differential to the expiry date BUILT-IN. This has interesting implications I think:

1) enter into a spot trade with a broker: long-EUR/USD and exit on the day the future expires
2) enter into a futures trade: long-EUR/USD and exit on futures expiry day

All other things being equal you will be financially better off in the 2nd transaction because the forward has LIBOR interest rates built whereas the broker will charge you LIBOR+X on your short-side and pay you LIBOR-X on you long-side...

Q1
 
Quote from Equalizer:
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Spot FX - What is regulation? "Sorry Sir, your order was filled during a period when we did not have dealable quotes, therefore your order was not really filled (even though we said it was), and neither is your paper profit."
More...


Spot fx dealing desk, cont'd: "Sorry, sir, the charted price is a misquote, your limit order is not filled. The price was 'never there'. But try again, we may have some more customers to stop out at that price later."
 
Spot fx has some secret guaranteed return system unavailable or heretofore undiscovered by those trading futures. The only catch is that it apparently doesn't seem to work with one's own capital.
 
so when trading currency futures, there is no big spread to pay like in FX? when you place a trade in FX your automatically down $30+ per lot because of the spread. is this the same thing as in futures?
 
Quote from c_323_h:

so when trading currency futures, there is no big spread to pay like in FX? when you place a trade in FX your automatically down $30+ per lot because of the spread. is this the same thing as in futures?
More...

Try Oanda (FXtrade.com) for low spreads. Especially if you trade small size, fxspot is the way to go.
 
Quote from c_323_h:

so when trading currency futures, there is no big spread to pay like in FX? when you place a trade in FX your automatically down $30+ per lot because of the spread . . . ?
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Correct, when trading spot fx, you're down the spread, and you have the risk that your stop will be hunted and your limit (take profit) order will be jobbed, i.e., dishonored, when your limit price is breached. Even playing small, those are poor odds.
 
Quote from illiquid:

Spot fx has some secret guaranteed return system unavailable or heretofore undiscovered by those trading futures. The only catch is that it apparently doesn't seem to work with one's own capital.
More...

Speaking of spot forex and systems, below is a recent systems shill on Moneytec. The shill doesn’t even bother disguising the initial wreckage – demand must be that good. The post conveniently comes with embedded hyperlink to something called w*w.fx-review.c*m, presumably a site sponsored by spot fx dealers:

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“Until the past two weeks, those of you who have been following the Vortex system for a long period will have gained a great deal of respect for the results and the ease of following. The past two weeks, however, have shown that serious flaws exist in the system and that certain extraordinary market conditions have exposed them. This has lead to large losses which obviously cannot be sustained.

The purpose of this email is three-fold:

Firstly, whilst I cannot take blame for the losses, I do feel very sorry for those of you who have lost much. I know how it feels and I wish I could have prevented it.

Secondly, I am announcing the closure of the Vortex signals for the immediate future. I will be evaluating possibilities going forward, but it would be unwise to continue with the same system in its current form.

Thirdly, I have developed an intra-day system with the following characteristics. a) maximum stops 20 pips, target 30 pips per day on average, trading begins at 6AM CET and continues until the day shows a profit, whereupon we stop for the day, trading 3 ccys only.”
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