Futures For You by Carley Garner
SIDE BY SIDE
What are the advantages of trading forex and currency futures side by side?
If youíve been a regular reader of this column or have had the opportunity to read my latest book Currency Trading In The Futures And Forex Markets, you might have gathered I favor currency speculation in the futures markets relative to forex. There are several arguments for and against each venue, but the safety of regulation and customer segregated funds offered to futures traders appeals to me. That said, there are certainly times in which having access to the forex markets can be beneficial.
Three instances in which traders can benefit from trading forex are when:
Trading small quantities in off-market hours, or currency pairs other than the highly liquid EUR/USD
Iíve discussed the CME Groupís relatively new line of emicro currency futures before and weíve touched upon the fact that these products sometimes suffer from a lack of liquidity. Despite having good market makers to improve the ability of traders to execute at fair prices, there are times when efficient execution is challenging. In many instances, forex pair traders might find favorable execution using forex mini contracts (10,000 units) due to smaller pip spreads, particularly during the off-hours such as late afternoon. Tighter spreads lower the overall transaction costs and mitigate some of the frustrations of entering and exiting a market with slippage in pricing.