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Any advantages trading spot over futures?


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Any advantages trading spot over futures?

  #1 (permalink)
 jonc 
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Hi guys, are there any advantages in trading spot forex over futures. Futures has tighter spread and is more precise in pricing.

The only one I can think of is you can take a huge size in spot (or a smaller size than 1 future contract). But I suppose for most retail traders, futures is liquid enough. I doubt that many here trade more than 10 lots at one go.

Is there any other reason why I should be trading spot instead of futures?

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  #2 (permalink)
Tundi
Fullerton, CA
 
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jonc View Post
Hi guys, are there any advantages in trading spot forex over futures. Futures has tighter spread and is more precise in pricing.

The only one I can think of is you can take a huge size in spot (or a smaller size than 1 future contract). But I suppose for most retail traders, futures is liquid enough. I doubt that many here trade more than 10 lots at one go.

Is there any other reason why I should be trading spot instead of futures?

I think you answered your question.

Big players trade forex since the liquidity is deep.

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  #3 (permalink)
mRoss21
Dana Point
 
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The main reason to trade forex is the leverage. If you have a small account you can get a little more bang for your buck. That's what attracts nubies to forex.

If you can afford it, trade futures. A much cleaner market to trade.

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  #4 (permalink)
 
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 bluemele 
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mRoss21 View Post
The main reason to trade forex is the leverage. If you have a small account you can get a little more bang for your buck. That's what attracts nubies to forex.

If you can afford it, trade futures. A much cleaner market to trade.

Agree, spot is too easily manipulated by your broker/market makers.

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  #5 (permalink)
 rickey 
SF Bay Area, CA
 
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The futures market is regulated, transparent and you do not have counter party risk. The spot market is none of these things.

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  #6 (permalink)
 jonc 
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Guys, I think there is another advantage of spot forex over futures. But probably the type of traders mainly here in futures.io (formerly BMT) might not find it applicable.

The advantage is the forex pairs available. There are trading strategies that relies on trading a basket of currencies which move in tandem to each other. You will not be about to trade that way using the futures alone.

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  #7 (permalink)
 Traderji 
Australia
 
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EDIT - Deleted my questions. A web search found my answers. My Google Fu is strong!!

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  #8 (permalink)
Eduard Murton
Rio di Janeiro
 
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the magic so to say why big players trade with spot rather than futures is that spot contains higher liquidity, meaning you can gain higher profits at the end of your trading session/s and that so far it is kept as OTC and not controlled, except for the no hedging and the lower leverage requirements in the states

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  #9 (permalink)
 PaperTrader 
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Tundi View Post
I think you answered your question.

Big players trade forex since the liquidity is deep.


Eduard Murton View Post
the magic so to say why big players trade with spot rather than futures is that spot contains higher liquidity, meaning you can gain higher profits at the end of your trading session/s and that so far it is kept as OTC and not controlled, except for the no hedging and the lower leverage requirements in the states


Quoting 
A professional firm will not let you trade on forex/currencies so forget about those markets to begin with. You would most likely be offered S&P, EuroStoxx or Bunds, so if you want to learn to trade as the professionals do, you need to be thinking about working with one of these markets.


Quoting 
forex has no centralized exchange, no transparency on traded volume and counterparty risk in that the broker is usually also the market marker (excluding ecns) and can also go down with your money as a creditor (ala Refco FX). A prof. firm would generally trade currency futures over cash forex

I'm not sure how truth to that though

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  #10 (permalink)
Eduard Murton
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SevenEightSix View Post
I'm not sure how truth to that though

I suppose it is how you like to take the things. It is true that FOREX is not traded on any centralized exchanges like the stock market but this is the beauty of it because of that this market is that liquid and everybody want to tap into it and gain profits. As for the other quote concerning the professionalism of the traders - well there are different types - the market is pretty differentiated to big institutional investments, banks, hedgers, then intermediaries and then retailers. So to say that professional firms will prefer only the stock or the bond or the futures market is it pretty understated.

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