Spot Forex: Forex vs. Futures
Advantages of Forex |
 |
|
|
All trading begins and ends with money. From physical goods to time spent on services performed, everything is valued in money. Let's say you wanted to trade coffee from Mexico using Australian dollars in the futures market, you would first have to convert your dollars to pesos. Forex is considered to be a principal market on which many others are based because when purchasing goods or other financial instruments, you must often start by exchanging your currency for the local currency.
Futures traders often find the transition to forex a natural one. While there are many differences, such as market liquidity, pricing structure, available leverage and open hours, some of the concepts used in futures trading can be applied to forex.
Remember, both futures and forex trading involve risk. Because forex trading is not conducted on a regulated exchange, there are additional associated risks.
HIGHLY TRENDING MARKETS |
| Spot forex offers some of the smoothest trends available in any market. Plus, no other market comes close in terms of volume and participation, making it a haven for traders seeking fewer price gaps, erratic spikes and other choppy conditions found in lower-volume markets, such as futures or options. Because the market is open 5.5 days per week, market gaps (although possible) are limited, allowing for smoother trends and more consistent pricing. |
Attractive to all Types of Traders |
Both fundamental and technical traders may find the forex market appealing due to its trending nature. Technical traders use indicators to identify whether a currency is overbought or oversold and look for repeating market patterns displayed on price charts. Fundamental traders monitor worldwide cash flows and analyse currency supply and demand to take mid-to-long term positions. Spot forex market trends provide ideal conditions for both types of analysis.
Plus, due to the highly trending nature of the spot forex market, anyone from short-term scalpers to longer-term "buy and hold" position traders can find trading opportunities in the market. Spot forex trading can be a natural transition for those who already have some trading experience.
|
STREAMING PRICING WITH NO EXCHANGE FEES |
Futures traders are often charged extra for live pricing data and clearing, commission and exchange fees. When you trade spot forex with GFT, you won't see added charges; all you pay is the spread.*
In futures trading, you buy or sell based on the last price traded. But with spot forex trading, GFT streams live, tradable prices directly within its trading platforms, so the price you see is the price at which you actually buy or sell, and not just an approximate price.
* GFT is compensated by revenues from our activities as a currency dealer, rather than customer fees. These activities include revenue from buying, selling and converting, as well as holding currencies and interest on deposited funds and rollover fees.
|
LEVERAGED TRADING |
The high degree of leverage that may be used is one of the most significant benefits of spot forex trading. With GFT, you can control larger positions with less capital, using up to 100:1 leverage. Please note that without appropriate use of risk management, a high degree of leverage can lead to large losses as well as gains. |
CONSISTENT MARGINS |
| The high degree of leverage that may be used is one of the most significant benefits of spot forex trading. With GFT, you can control larger positions with less capital, using up to 100:1 leverage. Please note that without appropriate use of risk management, a high degree of leverage can lead to large losses as well as gains. |
24-HOUR TRADING, 5.5 DAYS A WEEK |
With spot forex, traders in any time zone can trade at any time of the day or night because as a market closes in one time zone, another is opening in the next time zone. For example, when the Australian market begins to slow, the markets in Germany, England and Switzerland are just opening. These are followed by the North American markets of the United States, Canada and Mexico. As these markets begin to slow, the Pacific Rim starts their trading day again.
Plus, trading spot forex gives you the opportunity to react instantly when news hits the wires, instead of having to wait for the market to open. You also don't have to stop trading because the futures pits have closed for the day. You'll enjoy continuous market opportunities and added flexibility that are not offered in futures. Conversely, futures are traded when the exchange is open for the day. While there may be "after hours" trading in futures, spreads are typically wide and order size and types are limited. This is due to a limited ability to manage risk when the futures markets are unofficially open.
|
CD01S.086.111008
|
|
|
