forex versus futures

Spot Forex vs. Currency Futures The “spot” market is the cash market which means the current value (exchange rate) of where the currency pair. Whereas trading in currency futures is cleared through a centralized exchange, like the Chicago Mercantile Exchange, trading in spot forex only. Contrary to the forex, futures are traded on formal exchanges. A key attribute of futures contracts is that all transactions are facilitated and. FOREX OPTION SYMBOLS

Futures Trading As mentioned above, a futures contract is an agreement between the buyer and seller to trade different assets at a given price in a specified time. The assets that are traded in futures are known as derivatives. The asset can be any commodity like gold, oil, etc. Investors generally use future trades to reduce risk, and it also has a date of expiry. The good thing about this is that there is no chance of any doubt or confusion because both parties discuss everything related to the trade.

Trade currency specification, expiration day, last trading day, delivery month are some important terms. Another important point that everyone should know is that the prices changes every day in the future and all the things related to prices must be discussed daily to avoid any confusion. Everyone knows that the market is uncertain and changes frequently.

This is why many investors go with the futures trading option because this is the best platform to avoid the risks and reduce the chances of losses. The interesting thing about futures is that the purpose it came into existence is risk management. The key difference between forex or spot trades and forex futures is that the former is over-the-counter OTC , meaning it's not subject to exchange rules and regulations, while the latter, forex futures, is transacted on established exchanges, primarily the Chicago Mercantile Exchange CME.

The lack of an intermediary exchange forces forex brokers to have different liquidity providers. This leads to lack of transparency, wider spreads, and discrepancies on price quotes. Forex futures are derivative contracts that are cash-settled when they expire on set dates, normally on the second business day prior to the third Wednesday in the following contract months March, June, September, December. Forex futures are traded for a number of reasons. Firstly, because of the various sizes of the contracts, they are a good tool for early investors who want to trade smaller positions, and conversely, because they are liquid, large-scale investors will use them to take on significant positions.

Forex futures can also be hedging strategies for companies who have upcoming payments in foreign exchange. For example, if a U. This compensation may impact how and where listings appear.

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