How to trade forex futures
It’s not just the stock market. The forex market also boasts of a bunch of how to trade forex futures over the futures market, similar to its advantages over stocks.
Futures, our short shorts look cool! This market can absorb trading volume and transaction sizes that dwarf the capacity of any other market. The futures markets can’t compete with its relatively limited liquidity. The forex market is always liquid, meaning positions can be liquidated and stop orders executed with little or no slippage, with exception to extremely volatile market conditions. 24-Hour Market At 5:00 pm EST Sunday, trading begins as markets open in Sydney.
At 7:00 pm EST the Tokyo market opens, followed by London at 3:00 am EST. And finally, New York opens at 8:00 am EST and closes at 4:00 p. As a trader, this allows you to react to favorable or unfavorable news by trading immediately. If important data comes in from the United Kingdom or Japan while the U. Overnight markets in futures contracts do exist, and while liquidity is improving, they are still thinly traded relative to the spot forex market. Minimal or no commissions With Electronic Communications Brokers becoming more popular and prevalent over the past couple of years, there is the chance that a broker may require you to pay commissions. But really, the commission fees are peanuts compared to what you pay in the futures market.
The competition among spot forex brokers is so fierce that you will most likely get the best quotes and very low transaction costs. Price Certainty When trading forex, you get rapid execution and price certainty under normal market conditions. In contrast, the futures and equities markets do not offer price certainty or instant trade execution. Even with the advent of electronic trading and limited guarantees of execution speed, the prices for fills for futures and equities on market orders are far from certain. The prices quoted by brokers often represent the LAST trade, not necessarily the price for which the contract will be filled. Guaranteed Limited Risk Traders must have position limits for the purpose of risk management.