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Futures Versus Forex (Foreign Exchange Market)


abdulla1

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Todays current futures market is quite unlike the futures of the 19th century. Todays future market is a worldwide one that includes manufactured goods, financial currencies and treasury bonds, and agricultural products.

 

When you speculate on futures it is not the actual good that is speculated upon rather it is the contract for the goods that is traded as value. Every futures contract includes a buyer and a seller. The following is an example of a futures speculation: A farmer agrees to deliver 1000 bushels of corn to a baker at a price of $5.00 a bushel. If the daily price of corn futures falls to $4.00 a bushel, the farmer's account is credited with $1000 ($5.00 — $4.00 X 1000 bushels) and the baker's account is debited by the same amount. Futures accounts are settled every day.

 

Using the above as an example this is how the contract settlement would play out: If the price of corn futures is still at $4.00 the farmer will have made $1000 on the futures contract and the baker will have lost an equal amount. However, the baker can now purchase corn on the open market at $4.00 a bushel — $1000 less than the original contract, so the amount he lost on the futures contract is made up by the cheaper cost of corn. Also, the farmer must sell his corn on the open market for $4.00 a bushel, less than what he anticipated when entering the futures contract, but the profit generated by the futures contract makes up the difference.

 

Speculators profit by daily fluctuations in the futures market by choosing to buy from the seller (buying short) or from the buyer (buying long).

 

The FOREX market has advantages over the futures market. FOREX is the largest financial market in the world. It is a liquid market and stop orders can be executed more easily and with less slippage than in other markets. The FOREX market is open 5 days a week, 24 hours a day. Traders can take advantages of opportunities as they become available. FOREX transactions are usually instantly executed. FOREX transactions are commission free. Brokers earn money on the spread.

 

Some investors feel that due to built in safeguards that FOREX trading is safer than futures trading.

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  • 3 years later...

Futures has some kind of contract but forex is exchange and it could be done just in few seconds while in futures if you want bigger price then you must wait. the market of forex is very liquid and also it has more hours for us to trade with, i think around 24 hours per day is good enough for forex trader, isn't it?

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  • 6 months later...

Forex does not have contract that is nearly instant exchange or spot trading while as you said before futures are based on contract, but basically this two has the same way to make profit, which is buy low sell high. No matter how far you look and dive this is the basic that you should know and you will applied in future.

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In spot you don't have and trading in this place is very fast compared to futures. Basically i also don't see much difference, it is all about buy low and sell high just like you said before. One thing that make me interest in them, maybe because of the commodity such as Corn or even Natural Gas here.

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In spot you don't have and trading in this place is very fast compared to futures. Basically i also don't see much difference, it is all about buy low and sell high just like you said before. One thing that make me interest in them, maybe because of the commodity such as Corn or even Natural Gas here.

That's what makes different between futures and forex spot, but there's forex fordward which is similiar to futures where we have some kind of contract Now, i don't want to debating about it so much, i just want to said that futures and forex just a way it is all depend on traders if you want to earn through one of them or both.

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That is just for forex spot. Futures also affect forex and so do forex affect futures, even those two are different but interconnected to each other. As i said before futures bring a new environment to solo trader in forex, also that applied to futures trader. In the end this all is about speculation of the market.

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  • 2 weeks later...

Where did you get those information? What makes futures so it can affect foreign exchange and vice versa? As far as i know there aren't any much correlation even it is exist it won't be so much and not interconnected. Back to the topic, foreign exchange give me lucractive business while future is not, i prefer forex because it is simply more lucrative compared to futures.

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  • 2 weeks later...

Where did you get those information? What makes futures so it can affect foreign exchange and vice versa? As far as i know there aren't any much correlation even it is exist it won't be so much and not interconnected. Back to the topic, foreign exchange give me lucractive business while future is not, i prefer forex because it is simply more lucrative compared to futures.

Forex without doubt is one fo the most lucractive business especially in high risk context but futures also lucractive, it is only depend on you who trade it i see many people earn nice monthly income by do a speculation in futures. also in past Futures are profitable and more popular than forex.

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  • 1 month later...
  • 1 month later...

To be honest futures has less trading time and but a lot of different things also to trade usually non currency commodity like Oil, Gas, Palm Oil or Sugar or even Corn. This is funny to me which started from forex but actually this is different than forex since forex focused on currency and its movement is totally more volatile than futures.

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  • 3 weeks later...

But it still worthy even it has less trading time, commodity is normal thing in futures why you make it a fuss? I mean EURUSD could be compared to Oil, GBPUSD to Natural Gas, USDJPY to Corn and etc. Basically it is like forex and don't have so big difference except of its trading time.

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  • 1 month later...

Futures based on contract, well foreign exchange in this case spot also based on contract but it is different contract. Spot forex is so much well know with its OTC so the contract finished in relatively shorter time than futures. Forex market is much more liquid because there's no central exchange, as the consequences are spreads, executions and slippage varies from broker to broker. 

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  • 1 month later...

As we all know right now that foreign exchange market turnover is about $5.3 trillion which means that much is traded daily, making it the largest and most liquid market in the world. With this, forex market can absorb trading volume and transaction sizes that dwarf the capacity of any other market. While Futures is just around $30 billion per day.

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  • 1 month later...

But can you make profit from forex? Can you give me profit with that much you can at least earn with 4 digits dollars? I want to know how much people who can take an advantage of that big forex turnover and so on. Well i don't want to antagonize forex i still do it as my main job to earn money but people need to realize this business sometimes doesn't like what into our own mind.

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  • 4 months later...

One thing that i don't like in futures than spot( i trade in spot dude) that in the futures , your position may be liquidated at a loss bigger than what you had in your account, and you will be liable for any resulting deficit in the account. That sucks for someone who trade in spot forex too like me. Futures market also don't have any price certainity.

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  • 2 weeks later...

Huh? That is one of the worst thing i've ever seen in my life so far. Futures really show some promise but in fact that is not really good even if we want to compare it with spot,  Spot trading means instant or near instant trading which make is more compatible with modern platform such as internet, because you connect to the market in very fast way.

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Huh? That is one of the worst thing i've ever seen in my life so far. Futures really show some promise but in fact that is not really good even if we want to compare it with spot,  Spot trading means instant or near instant trading which make is more compatible with modern platform such as internet, because you connect to the market in very fast way.

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It has some promises LOL like when you buy the contract and the rest then is history. Spot here is good because that is not BS, the market will bring you closer with the other side who open a position. By doing this you can transact faster and as the result for this is the loss and the profit will be nearly instant if not instantly.

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  • 5 weeks later...

Futures are just like future, it is all about the promise we made. It is contract just like foreign exchange we know but futures contract is longer than spot forex. I am referring to fx spot here because that is where we are trying to grab more profit, right? In my new way to think not all are opposite, those all are just different.

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The concept is buy low sell high, that applies for foreign exchange and also for stock or even for futures this is the basic concept of trading, and the difference between those buy and sell price is our profit. Futures basically included forex, but futures more like a contract which need to be done in future, while Spot forex trading is nearly instant.

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  • 5 years later...

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