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Forex and Futures

  #5 (permalink)

asheville north carolina USA
 
Trading Experience: Beginner
Platform: ATC trader (OEC white label)
Broker/Data: ATC
Favorite Futures: futures
 
bourgeois pig's Avatar
 
Posts: 312 since Sep 2014
Thanks: 765 given, 271 received

I agree with sharpshoota and grausch. I do think that the "article" seems to be a sales pitch and is a bit aloof.

Now I have not traded FOREX so correct me if I am wrong. I have noticed that many FOREX brokers advertise "free commissions" like it is some benefit over futures. But you have to pay the spread between the bid/ask even on a limit. That seems to me like robbing Paul to pay Ringo. You are still paying to make the trade. The fact that many borkers advertise commision free trading is kind of shady since one is actually paying the spread. Call it what it is. a fee to place the trade. I am not sure if you have to pay the spread to exit the trade.....? THrow in the added spread during volatile market conditions and one FOREX trade could get expensive. Perhaps i am not understanding the pay the spread concept but a futures commision with most brokers that i have talked to cost the trader under 5 dollars round turn per contract. (there is the possibility of slippage in a fast moving market with a market order) Not sure if the "pay the spread" in FOREX trading is per contract or per trade regardless of contract total.......??

Some Pros to FOREX:
Lot size options offering the trader ability to limit exposure by not overleveraging with a smaller account. Even with a larger account it seems like a novice trader could benefit from the reps while forming a trading strategy in real time market and emotional fluctuations with mini or micro lots.

As for the cons, No central, regulated exchange, hence all of the overinflated sales pitches amongst other pitfalls. THis makes it very important to find a reputable broker.
Also, No VOlume data. Some trading methods rely on volume data and FOREX does not offer this.


Quoting 
During normal market conditions, all open positions will be closed immediately (during fast market conditions, your position could be closed beyond your stop loss level).
In the futures market, 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."

THis statement seems likea blatant fallacy. If my debate class memory serves me correctly, this statement is ad hominem.
I would think that any market could wipe out an over leveraged account during a volatile move against ones posistion. IF you have a market stop then it could get filled with major slippage and a limit stop could get jumped...... In any market..... and a negative balance could ensue.....in any market.

The liquidity claims FOREX brokers advertise seem ridiculous to me. Certainly there are futures markets that lack liquidity but there are also FOREX pairs that lack liquidity. Likewise there are futures markets with ample liquidity for small and big lot traders as there are in FOREX pairs.

I am not trashing FOREX, personally the smaller lot size appeals to me, I am just saying that some of the claims that FOREX brokers make seem a bit ridiculous.

"Napoleans severest comment on his beaten enemies - that they "saw to many things at once""- Hart
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