Why not trade futures??

E

everytick

I want to know why people don't trade currency futures rather then these other dealers like fxcm etc.

I understand spreads are tighter with futures.
I also believe the emini futures aren't very liquid however. But the pit traded are, and you can still get better fills?

Please correct me if I'm wrong.

I just don't understand the advantages for the serious trader who wants to keep costs down.

Thanks
 
Here are some of the advantages/disadvantages of trading with these new fx shops.

24hr trading: Globex offers the same
Higher leverage: Some offer upt o 100x, but how high do you really want to be leveraged?
Guaranteed spread: But can't get btwn spread. Although the spread is not guaranteed in the futures market, they are usually pretty good. JPY/CHF 2-4pips, EUR 1-3pips for eminis
No commission: You pay the spread
Fast executions: What you click is what you get (usually)

Caveat:
- The couterparty of your trade is the firm and not another customer
- Your trades are not crosses on a regulated exchange
- CFTC registered, but not SIPC insured, so your funds are not insured should the firm go bust (heaven forbit)

Refco recently launched their version of fx trading at www.refcofx.com (not affiliated)
 
The electronic currency futures are misleading. The CME offers their full sized currency contracts side by side in both the pit and on Globex. These full sized contracts are very liquid on Globex.

'6E' is the exchange symbol for the full sized euro contract on Globex.

'E7' is the mini euro contract.
 
Quote from everytick:

I want to know why people don't trade currency futures rather then these other dealers like fxcm etc.

I understand spreads are tighter with futures.
I also believe the emini futures aren't very liquid however. But the pit traded are, and you can still get better fills?

Please correct me if I'm wrong.

I just don't understand the advantages for the serious trader who wants to keep costs down.

Thanks
More...

>>I also believe the emini futures aren't very liquid however.<<

Why exactly do you believe this?

Doesn't sound to me like your speaking from experience.
Did you just hear things here and there about low liquidity from people and now area wondering?

check out the facts and numbers on :

www.cme.com


-momo
 
1) FX is more liquid than FX Futures (1500G$ /day against 8.8G$/month for FX Futures)
2) Globex is not a true 24hres, they have some close period in the day, FX is full 24hres
3) Stop on FX are guaranty
4) As mentioned above, leverage, no commission, no data fee, but the spread can be different from which firm you use. Some have very tight spread as low as 2 PIPS, and some other can have 4 or 5 PIPS.
 
Quote from 3dog:

The electronic currency futures are misleading. The CME offers their full sized currency contracts side by side in both the pit and on Globex. These full sized contracts are very liquid on Globex.

'6E' is the exchange symbol for the full sized euro contract on Globex.

'E7' is the mini euro contract.
More...

That's right! The "normal" contract i.e $125,000 EUR is the most liquid Globex currency contract. The so called mini's are virtually untradeable. There is a misconception that everything on the screen is a mini version of the pit traded contracts. That's only true in stock indices. Treasuries and currencies are the real full sized version of their pit traded brothers.
 
Quote from North Pesos:

1) FX is more liquid than FX Futures (1500G$ /day against 8.8G$/month for FX Futures)
2) Globex is not a true 24hres, they have some close period in the day, FX is full 24hres
3) Stop on FX are guaranty
4) As mentioned above, leverage, no commission, no data fee, but the spread can be different from which firm you use. Some have very tight spread as low as 2 PIPS, and some other can have 4 or 5 PIPS.
More...

I think the liquidity issue is somewhat misleading. Trading with an FX dealer is not trading the interbank market. You are basically trading a derivative of interbank. There is plenty of liquidity available in the futures for the majors.

The quotes you are getting on your screen from an fx dealer are not true interbank quotes, but rather what your dealer is prepared to deal at. Do you honestly think a big hedge firm doesn't have quotes from all its dealing banks on the screen?

The commission issue is a nonstarter. IB charges $4.80 a RT for a full sized futures contract, plus you have the opportunity to get the spread. There is no fee for holding overnight.
 
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