I trade both spot and futures full time and can tell you that FX futures micros have crappy liquidity, stay away from them. If you trade thru a very reputable FX spot ECN broker like IB or MBT, or Duka; then you will have no problem trading spot.
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Why would anyone trade spot fx
- Thread starter ChkitOut
- Start date
I trade both spot and futures full time and can tell you that FX futures micros have crappy liquidity, stay away from them. If you trade thru a very reputable FX spot ECN broker like IB or MBT, or Duka; then you will have no problem trading spot.
Quote from cvds16:
if you can trade eur/usd at oanda with 0.9 pips spread and no commissions it doesn't make any sense whatsoever to trade those futures UNLESS you want to trade the news and I bet there isn't any liquidity then either ... So I don't understand people that want to trade those micro-futures ...
2 more crucial differences, you can affect the market when trading futures and you can sit on the bid/ask i.e. you dont have to enter @market everytime you want in.
Not true. If the price in a limit buy order is above the best ask at the time the order arrives at an exchange, the order is immediately executed against the best ask, which will result in price improvement.Quote from Hurricane:
You'll never get any price improvement with a futures limit order since there's just a single order book at CME.
Just for a reference, CME doesn't have market orders. So, to emulte a market buy order brokers send a limit buy order with a price much higher than the current price range... and these orders are executed at best ask. If what you were saying was true, anyone who tried to send a market order to CME via a broker would have received a fill very far from the market.
Quote from LeeD:
Not true. If the price in a limit buy order is above the best ask at the time the order arrives at an exchange, the order is immediately executed against the best ask, which will result in price improvement.
Yes. I meant an order that isn't executable when placed. You won't get screwed by CME if your buy limit price is above the current market (and conversely for sell orders) but I don't consider this "price improvement".
Well, price improvement only happens when the market has moved by the time your order reaches the market. It's ususally not solely from the goodwill of the broker.Quote from Hurricane:
Yes. I meant an order that isn't executable when placed. You won't get screwed by CME if your buy limit price is above the current market (and conversely for sell orders) but I don't consider this "price improvement".
With CME, it takes an order some hundreds of milliseconds to reach the echange. If while the order is being placed it effectively becomes a market order due to market moving you get price improvement.
I don't see how it is different from a forex broker.
Quote from LeeD:
I don't see how it is different from a forex broker.
I can only speak to forex through IB as I haven't used any other broker (or bucket shop). Price improvement is certainly not due to their generosity but due to the fact that there's no central market/order book for forex and IB acts only as a broker (i.e. they don't take the other side of the trade). Here's a real example from my trading on Thursday, January 20.
MARKET AT 4:00 PM EST FOR USD.CAD - Bid .99680 Ask 0.99690
ORDER PLACED - Limit sell 100k USD.CAD @ 0.99710
EXECUTION AT 4:03 PM EST - Sold 100k USD.CAD @ 0.99713
A small difference but the price improvement was worth more than IB's commission. The differences are usually of this magniture but 1/2 to 1 pip isn't unusual and on occassion I've gotten several extra pips. That could never happen at CME. Mind you, I've done futures trading and as mentioned by others, it has advantages including easier tax reporting.
You also can get price improvement for stock limit orders placed at NYSE. This is less common than it use to be but if a large offsetting order is placed while your order is on their books, the price to clear the order can jump over your price and the NYSE specialist will complete your order at a better price. This won't happen when the order is placed at an ECN since the orders are only matched electronically, the same as CME.
Its cheap and easy to start doing.
Why would anyone trade spot fx?
IMO, it's because you can start out "being a trader" with a very small trading account. Results may very!
I like to keep things simple, if I have two accounts 1) Cash & 1) Future and I place the exact same trade in both accounts.... Buy 1 Euro @ 1.3500 and the trade is GOOD and I Sell 1 Euro @ 1.3510 to close the trade, what are my results?
Futures Account: 10 points X $12.50 = $125.00
Cash Account: 10 point X $10.00 = $100.00
Figure any reasonable commission (or pip spread) you wish ... You don't have to be a mathematician to analyze the results.
Why wouldn't you trade futures, leaving reasonable commissions and/or pip spreads out of the equation, for every 4 successful future trades (per...example), the Futures Trader is one trade ($100.00) ahead of the Cash Trader (in profit).
I think the REAL question is, How many Cash Forex accounts have less than $7,520.00 (required margin for Eur/USD futures) in them? :eek:
IMO, it's because you can start out "being a trader" with a very small trading account. Results may very!
I like to keep things simple, if I have two accounts 1) Cash & 1) Future and I place the exact same trade in both accounts.... Buy 1 Euro @ 1.3500 and the trade is GOOD and I Sell 1 Euro @ 1.3510 to close the trade, what are my results?
Futures Account: 10 points X $12.50 = $125.00
Cash Account: 10 point X $10.00 = $100.00
Figure any reasonable commission (or pip spread) you wish ... You don't have to be a mathematician to analyze the results.
Why wouldn't you trade futures, leaving reasonable commissions and/or pip spreads out of the equation, for every 4 successful future trades (per...example), the Futures Trader is one trade ($100.00) ahead of the Cash Trader (in profit).
I think the REAL question is, How many Cash Forex accounts have less than $7,520.00 (required margin for Eur/USD futures) in them? :eek: