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Chapter 2, Part III. There is quite different story with the futures market... Page 3

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 14, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    MYTH #3 FOREX market is 24/7 and futures market is not.

    False (mostly)

    Futures market has GLOBEX electronic session that has a break for trading with just 1 hour per day. So, the futures market is really a 23-hour market.​

    MYTH #4 FOREX has guaranteed limited risk that couldn’t be exceeded and futures market does not

    False

    I think that the futures market even safer from this point of view than spot FOREX. The point is that in the futures market you should transfer to your trading account so-called initial margin. It will be different for different currency pairs. This is a minimum amount of money that is demanded by the exchange for opening positions with 1 lot. Its value is calculated by the exchange and varies with the market’s volatility. Also there is maintenance margin that exists. This is an absolute minimum asset value per 1 contract. When your current loss on an open trade reduces the initial margin to the value of the maintenance margin your position will be closed by the exchange itself. For example, if the initial margin for a full contract ($125,000) on EUR/USD is $4320 per contract, the maintenance margin would be about -$3200. So, if you initially transferred only just the initial margin to your trading account, then, your position will be forcibly closed by the exchange when your current loss on position will be: 4320-3200 = $1120. So, you can never lose more, than the initially transferred money.

    On FOREX there is a look-alike system that exists, that also driven electronically. But the controller of this system is not an exchange but your FX broker itself. This offers a lesser level of safety.​
     
    #1 Sive Morten, Dec 14, 2013
    Lasted edited by : Feb 6, 2016
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