Reasons to trade Futures and not Forex

27 Nov

We get asked all the time: “Should I trade Futures or Forex?” Consider these points before committing your capital to Forex trading. We recommend trading Futures above Forex because of it’s fairer market structure, transparency, and reduced risk of manipulation by brokers.

Futures Forex
Exchange
characteristics
Centralized exchange run by the Chicago Mercantile Exchange. Decentralized exchange managed by brokers.
Order execution Single order matching mechanism. All trades are recorded and based on first in, first fill principle. Broker-managed order matching mechanism, i.e. broker could take the other side of your trade.
Spreads During day-trading hours, bid-ask spreads are typically tight and can not be manipulated by brokers. Spreads are generally wide, depend on the broker, and the currency pair. Brokers generate revenues on their spread policy.
Depth of market Data is available for 10 levels of bid and ask data. Everyone views the same data, i.e. improved transparency. Given the lack of a centralized market, forex brokers are unable to provide a depth of market. If they do, it’s always a limited view of their order book.
Volume analysis With data on the depth of market and order execution, volume profiling is possible and an essential element to successful trading. Volume profiling is near impossible given the lack of a centralized market.

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  1. Origins of "Trapped Traders" - BlueCrow Trading - Jan 3, 2015 @ 20:29

    […] commodities, etc. We focus on futures rather the forex, stocks or commodities for reasons discussed here. All trapped trader strategies are essentially variations of Brooks pioneering work and we’ve […]

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