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Chapter 2, Part III. There is quite different story with the futures market... Page 7

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

    Aug 28, 2009
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    MYTH #12 You can’t see correct trading volume on FOREX or even the correct close price of the day.


    Indeed how could you see trading volume, if FOREX market is decentralized market, and there is no center where all orders flow? You can see some trading volumes that are provided by your FX broker but this information will not give you the overall picture, because you can’t see the trading volume of other brokers. The situation isquite different on the futures market, because the exchange is the one place where all orders flow and it shows the real trading volume on the whole market.

    The same situation is with daily close price. The FX market is 24/7 so it doesn’t have daily close. In fact the daily close price that you see depends on your FX broker and where is it situated. In the UK there will be one price, in Japan there will be another one, since they end the day at different times. On futures market every electronic GLOBEX session has a break for 1 hour. Besides, there is a Settlement (or Pit) trading session that exists and you can choose what quotes you would like to look at. This fact allows you to make correct technical analysis of the market. On FOREX it will be tricky due to the indefinite daily close price.
    Pipruit: Wow, say, the futures market looks attractive and different from stock market too, but still more expensive to start trading with. What should we do, sir?​
    Commander in Pips: Well, personally, I like the futures market. Yes it has its own difficulties compared to spot FOREX, but it also has a great advantage – higher safety and relatively low trading expenses. If you like to trade currencies – you may trade on spot market first, but when you’ll get solid profit and your assets are becoming greater, I think that the best way to continue trading is to shift into currency futures. That’s my conclusion on the comparison of these two markets.
    Pipruit: If I understand right, you mean that futures are preferable for trading than spot FOREX. Futures’ trading is cheaper and safer. Besides, answers on MYTH#1 and MYTH#3 tell us that liquidity itself can not really guarantee better orders and trade execution due to the different trading system and market structure of spot FOREX (Over-the-counter market) and Futures (exchange traded market). But it is difficult to start with futures directly, because it demands much larger start-up capital although it still provides you with solid leverage.​
    Commander in Pips: Yes, you’re absolutely right!

    P.S. This lesson was written by Sive Morten, who has been working for a large European Bank since April of 2000, and is currently a supervisor of the bank's risk assessment department. Sive's knowledge of forex market and banking industry is vast and quite complete. If you have any specific questions about forex, banking industry, or any other financial instruments, please post them below and Sive should answer soon.

    Note: FPA ranks are earned in the battles against scam, not in the classroom.
    RahmatH, Nachoga, jchoover111 and 2 others like this.
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