You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
Whats the main difference between FX futures and FX?
- Thread starter c_323_h
- Start date
Att :Trading Wise
Dear Sir
You stated -"please enlighten me"
Author suspect ,that you knew ,but ready to say second time
1. Exist tactic win spread , this possibility promouted from
pure agent as hotspotfx. Skilled operator with this tactic
can win large profit .
In case of commision incorporation in spread it is not
possible.
2.Bucket-shop - fxcm/refco,mgforex,oanda &
Commision incorporation in spread
Pure agent /hotspotfx,IB/ -commision fees
Dear Sir
You stated -"please enlighten me"
Author suspect ,that you knew ,but ready to say second time
1. Exist tactic win spread , this possibility promouted from
pure agent as hotspotfx. Skilled operator with this tactic
can win large profit .
In case of commision incorporation in spread it is not
possible.
2.Bucket-shop - fxcm/refco,mgforex,oanda &
Commision incorporation in spread
Pure agent /hotspotfx,IB/ -commision fees
Well, it's certainly possible, if somewhat cumbersome, depending on the currency pair.Quote from qtip:
I am new to the Forex markets and still learning...
A friend of mine said he trades the spot forex.
He watches the different forex pairs and makes trades using the currency futures. Is this possible? I thought the spot forex and futures currencies had different price quotes???
thanks!
The price difference -- premium or discount -- between a currency future and corresponding spot forex pair reflects the interest rate differential between the 2 currencies, accrued between now and the future's expiration date. In spot, you receive interest on the currency you are long and pay interest on the currency you are short. In futures, you don't -- the differential is built into the price quote.
Take a look at the approximate closing prices (bid / ask), at 5 pm EST Friday, for some of the majors:
EUR/USD 1.2040 / 42
6EU5 1.2070 / 72 (+30 pips)
GBP/USD 1.7524 / 28
6BU5 1.7491 / 95 (-33 pips)
So, Euro FX Sep. 05 future trades at a premium to Euro spot, while Pound Sep. 05 future trades at a discount to cable. As expected, reflecting that short-term rates are £ < $ < E. (For simplicity's sake, we're ignoring short-term deposit rate vs. lending rate.)
That premium / discount will converge to 0 by the future's expiration date, 2 business days before the 3rd Wednesday in September.
Those are the so-called "direct quotation" currency pairs: how many dollars per 1 unit of currency. For "inverse quotation" pairs (how many units of currency per 1 dollar), it gets more cumbersome:
USD/CHF 1.2950 / 53
6SU5 0.7758 / 61
USD/JPY 112.22 / 24
6JU5 0.008965 / 67
(All CME currency futures are direct quotation, for better or for worse.) Same principle, but now the future and spot move in opposite directions -- the charts are mirror images, flipped over the horizontal (time) axis. The inverse of 0.7758 / 61 is 1.2890 / 85, so Swiss Franc future trades at an implied premium of 35-37 pips over swissy spot. Similarly, Yen future trades at an implied discount of 69-70 pips under ¥ spot. Consistent with the interest rates ¥ < $ < CHF.
To complicate matters just a bit further, the premium / discount is anything but fixed, even on a given day. Sure, arbs are supposed to keep it in a fairly narrow range, typically, within 1-2 pips. But during fast markets it can and does get out of line. In a spike, I've seen it off by 10, 20 and more pips many times.
I think to do what your friend is doing would require some way to convert between spot and futures, on the fly. Such as a super-imposed chart, or a real-time Excel spreadsheet, etc. Maybe you could ask him what he's rigged up.
Quote from late apex:
Well, it's certainly possible, if somewhat cumbersome, depending on the currency pair.
The price difference -- premium or discount -- between a currency future and corresponding spot forex pair reflects the interest rate differential between the 2 currencies, accrued between now and the future's expiration date. In spot, you receive interest on the currency you are long and pay interest on the currency you are short. In futures, you don't -- the differential is built into the price quote.
Take a look at the approximate closing prices (bid / ask), at 5 pm EST Friday, for some of the majors:
EUR/USD 1.2040 / 42
6EU5 1.2070 / 72 (+30 pips)
GBP/USD 1.7524 / 28
6BU5 1.7491 / 95 (-33 pips)
So, Euro FX Sep. 05 future trades at a premium to Euro spot, while Pound Sep. 05 future trades at a discount to cable. As expected, reflecting that short-term rates are £ < $ < E. (For simplicity's sake, we're ignoring short-term deposit rate vs. lending rate.)
That premium / discount will converge to 0 by the future's expiration date, 2 business days before the 3rd Wednesday in September.
Those are the so-called "direct quotation" currency pairs: how many dollars per 1 unit of currency. For "inverse quotation" pairs (how many units of currency per 1 dollar), it gets more cumbersome:
USD/CHF 1.2950 / 53
6SU5 0.7758 / 61
USD/JPY 112.22 / 24
6JU5 0.008965 / 67
(All CME currency futures are direct quotation, for better or for worse.) Same principle, but now the future and spot move in opposite directions -- the charts are mirror images, flipped over the horizontal (time) axis. The inverse of 0.7758 / 61 is 1.2890 / 85, so Swiss Franc future trades at an implied premium of 35-37 pips over swissy spot. Similarly, Yen future trades at an implied discount of 69-70 pips under ¥ spot. Consistent with the interest rates ¥ < $ < CHF.
To complicate matters just a bit further, the premium / discount is anything but fixed, even on a given day. Sure, arbs are supposed to keep it in a fairly narrow range, typically, within 1-2 pips. But during fast markets it can and does get out of line. In a spike, I've seen it off by 10, 20 and more pips many times.
I think to do what your friend is doing would require some way to convert between spot and futures, on the fly. Such as a super-imposed chart, or a real-time Excel spreadsheet, etc. Maybe you could ask him what he's rigged up.
Thanks for the answer. I think your right, from the way you have explained it, he must be doing the calculations quickly. However, from your post, it would just make life easier to follow the Futures Currency quotes and trade the futures currency
OR
Follow the Spot Forex quotes and trade the Spot Forex.
There seems to be no reason to mix and match the two.
Yep, it would make life easier not to mix'n'match. Easier is not necessarily more profitable, though, in trading...Quote from qtip:
Thanks for the answer. I think your right, from the way you have explained it, he must be doing the calculations quickly. However, from your post, it would just make life easier to follow the Futures Currency quotes and trade the futures currency
OR
Follow the Spot Forex quotes and trade the Spot Forex.
There seems to be no reason to mix and match the two.
I can think of a few plausible reasons to simultaneously watch spot and trade futures. But I don't want to put words into another trader's mouth. Maybe you could ask him why he does it that way and let us know what he says?
Quote from Chood:
It was not my intention to be unfair to fx-review.com. I perused that site after reading your reply and found its "Forum" section. There, among other items, was the promotional post below from the same systems seller I quoted in my earlier post -- you know, the one who blew out his customers' accounts, and who added that he felt their pain, but "it's not my fault."
Also, on fx-review.com, I found reviews of systems sellers who sharply discount their monthly fees to purchasers who use particular spot fx dealers. Right, I get it: I win by betting my cash on your system at your dealer. Shouldn't someone warn the dealer? I mean let's not break him. But back to the first point. Here's the come-on post of the systems seller, showing why these types of promotions, wherever found (including honest review sites), are costly to the unknowing or naive:
___________________________________________________
âTeam Forex and one other provider on this board are the only ones so far willing to show a live trading report to prove we are profitable.
Team Forex is also offering a FREE 30 day trial and after that you only pay us if you make money, month by month.
I would like to throw out a challenge to all the other signals companies to do the same.
Don't make claims of thousands of pips per month unless you are willing to:
1. Show a live account statement
2. Offer a fair trial period
3. Be willing to have your trade statement audited by an independant [sic] party.â
___________________________________________________
Then, in reply to the promotion, this request from a wannabe is posted in the same thread:
___________________________________________________
âWhereabouts in your website can I see your results?â
___________________________________________________
His results? He blew out his customers' accounts, as said.
-----------------------------------------------------------------------
Below is an udate of interest on TeamForex, the subject of above posts. CFTC has grabbed hold, apparently.
Update comes courtesy of a poster on Moneytec. (I'd note that TeamForex and its guru, James de Wet, advertised on the promotion site fxstreet.com. Such sites, it appears more or more, are hardly more than fronts for these scamsters.)
[UPDATE:]
"Well folks here it is the begining of the end; for those of you who would not listen to sound advice here is your proof that Team Forex and their market maker(s) were not looking out for your best interest at any time.
http://www.cftc.gov/opa/enf05/opa5126-05.htm