There are even more reasons to trade forex over futures.
Another reason is there is more price certainty.
When trading forex, you get rapid execution and price certainty under normal market conditions. In contrast, the futures and equities markets do not offer price certainty or instant trade execution.
Even with the advent of electronic trading and limited guarantees of execution speed, the prices for fills for futures and equities on market orders are far from certain.
In addition, the prices quoted by brokers often represent the LAST trade, not necessarily the price for which the contract will be filled.
Another reason is there is a guaranteed limit on risk.
In forex, traders must have position limits for the purpose of good risk management. This number is set relative to the money in a trader’s account.
Risk is minimized in the spot forex market. This is because the online capabilities of the trading platform will automatically generate a margin call if the required margin amount exceeds the available trading capital in your account.
During normal market conditions, all open positions will be closed immediately (during fast market conditions, your position could be closed beyond your stop loss level).
In the futures market, your position may be liquidated at a loss bigger than what you had in your account. If this happens, you will be liable for any resulting deficit in the account.
This chart explains the advantages.
|Minimal or no Commission||YES||No|
|Up to 500:1 Leverage||YES||No|
|Guaranteed Limited Risk||YES||No|
Judging by the Forex vs. Futures Scorecard, Forex looks UNBEATABLE!
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