Part III. There is quite different story with the futures market… Pipruit: Commander, once you’ve said that futures market is also exchange traded, so maybe we should skip this part, because I expect nothing really new from this comparison, unlike stocks vs. FOREX… Commander in Pips: You think you’re very smart, eh? Although you’ve noted correctly about “Exchange traded”, indeed, futures and stock markets have a lot of common qualities. But at the same time, futures market has some extremely important differences that make currency futures more attractive than spot FOREX for many traders. Pipruit: Hm, and what are they? Commander in Pips: For example, you can trade currencies on futures market…but in the beginning, I will point qualities that are common for futures market as for stock market without many details, because we’ve talked about them already in previous part of this chapter. First of all we will talk about currency futures and not about overall futures market. What is common between futures and stock markets? 1. Both are exchange traded markets. This leads to additional fees and presenting of middlemen – brokerage firms, because places in the Trading Pit on the exchange to trade futures are also very expensive. 2. Both markets are highly regulated by government authorities and exchange itself. The SEC is watching over the stock market and the NFA (National Futures Association) watches over the futures markets. It means that both of these markets are safer than FOREX market in terms of government monitoring. Particularly, the NFA assures that market participants and, more specifically, solicitors such as brokerage firms, brokers, and commodity trading advisors are conducting business in an honest and candid manner. But it’s worthy to say here, that now many US FX brokers are becoming a member of NFA both to attract clients and to comply with new regulations. This is a positive sign. Most of these are well-known brokers with fairly good reputations. 3. As with stock brokers, futures brokers have the same quotes, because all quotes come from exchange and are fixed there. This is a big advantage, because you definitely know what price was valid at a definite period of time. You can track it up to the tick. The FOREX market can’t offer that. 4. Both markets use segregated accounts for client’s assets. We’ve talked about it in a previous chapter. This makes client’s assets safer. 5. Lot or contract sizes are strictly determined by the exchange. These can’t be changed by participants.