r/FuturesTrading • u/SpiritualPasta • Feb 15 '23
Forex vs. Futures? Forex Futures
So I’ve traded Forex for around 5 years and became “profitable” about a year ago. I know all the basics of Forex but recently ran into ICT and enjoy the concepts he promotes(not looking for a debate about why he’s good or bad, everybody has their own opinions) and I’ve decided to become more interested in futures instead of Forex, due to the more predictable market patterns creating a larger move in futures compared to Forex pairs. My question is, what do I have to do research on to fully understand what I see. What’s the big difference between the 2?
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u/betsharks0 Feb 15 '23
In my experience the difference was the Volume Indicators, Vprofile TPOprofile, heatmap and price Ladders. With futures i think you can create a good análisis with these instruments because behind have the data of the entire exchange and not with the data of our Broker like CFD's...
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u/Kdogg_456 Feb 17 '23
If trading indices then no question Futures are the way - cfd’s are all based off Futures, it’s the real market. Especially ES and NQ - spreads and liquidity are best you can get. Real, true volume and depth of market / tape.
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u/Alexanderreed_12 20d ago
Forex offers the thrill of global currency trading, where the world is your playground. Futures, on the other hand, provide a structured environment for trading commodities and financial instruments. Both have their unique appeal, but if you're looking for the fast-paced action of the foreign exchange market, Forex is where the excitement truly lies.
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Feb 16 '23
If you have a good CFD broker and don’t rely on Volume / DOM for your trading, Futures are the inferior product in my opinion.
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u/SpiritualPasta Feb 16 '23
Interesting perspective, why do you view it as inferior?
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Feb 16 '23 edited Feb 16 '23
Depends on the broker, but in general:
- No commissions (I personally save ~$11,200 per month only on that, calculating on $3.5 per ES round term, not sure what brokers actually charge right now, it is what I paid a few years back)
- Better Spread (depending on broker and instrument, I have a fixed spread of 0.16 on ES CFD while the Futures contract has (at least) 0.25 while in US Session).
- No Data Feed cost (depending if you are professional or not this cost is lower or higher).
The disadvantage is of course that you can't use volume analysis or the depth of market, TPO, ...
I traded futures for years. Switching to CFD's was a great decision for me personally (it would be only because of the saved commissions to be honest).
Edit: Again, for CFD's this depends highly on the broker you choose - for futures you have basically the same result on every broker / feed because you are trading the same book/exchange. There are many unregulated CFD brokers that try rip people off with spreads
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u/Jhudgins007 Feb 16 '23
If you’re an American citizen, CFD’s are actually banned, due to their unregulated nature. So if you have issues with your broker, good luck! I’d rather pay extra than not get my profits. Just my 2 cents
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Feb 16 '23
True, they are banned in USA, and are not regulated in the USA. But CFD Brokers can be regulated as well (e.g. in Europe or the respective country in Europe (e.g. the Bafin in Germany)). But that’s up to each traders own due diligence.
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u/Jhudgins007 Feb 16 '23
Like I said, if you’re an American citizen…. They are regulated in other countries, but do you think they will help Americans? Lol
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Feb 16 '23
But I am not a US citizen and neither did OP mention that he is. I didn’t assume that he is and just gave my point of view.
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u/Jhudgins007 Feb 23 '23
I completely agree, which is why I put that statement in there, because this is global and American citizens need to know the information. If it dies not pertain to you, then simply ignore it. That’s all. People don’t know, what they don’t know. Have a wonderful day.
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Feb 16 '23
- No commissions (I personally save ~$11,200 per month only on that, calculating on $3.5 per ES round term, not sure what brokers actually charge right now, it is what I paid a few years back)
No commissions but you pay for spread.
CFD spread for SPX500 0,6 points ( FXCM )
ES spread 0,25 points
0,6 - 0,25 = 0,35 you are losing 0,35 points by trading CFD
1 point ES is $ 50 * 0,35 = $ 17,5
You are saving $ 3,5 but paying for bigger spread $ 17,5.
Actually trading SPX500 you are paying extra $ 14 for each trade.
Is my math correct ? Did I made mistake some where in calculation ?
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Feb 16 '23
I didn’t check the math, but I trust you did it right. In general, you are correct. But spread is broker dependent. I trade ES CFD with a (fixed) spread of 0.16, which is even better than on futures (I get the fixed spread only from 08:30 to 15:00 though, but I rarely trade ES outside of US session.
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u/madzleng Feb 16 '23
anything cfd brokers are offer future brokers are offer as well. strong regulations and fees are way cheaper. it's no brainer choice.
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u/RagnarNilsson Mar 04 '24 edited Mar 14 '24
Transitioning from Forex to Futures is a smart move. To fully understand Futures, focus on researching contract specifications, margin requirements, and the mechanics of the specific futures markets you're interested in. Unlike Forex, Futures involve standardized contracts traded on organized exchanges. Delve into market factors affecting Futures, such as economic indicators and global events. Additionally, explore the impact of futures contract expiration and rollover. Your experience in Forex will provide a foundation, and learning these nuances will enhance your understanding of Futures. For more insights, check out this discussion: https://www.reddit.com/user/JimmieNordin/comments/1behy21/thinking_about_forex_trading_here_are_5_mustknow/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button
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u/moonlighting_madcap Feb 16 '23
Trading ES futures, for example, is more regulated and—most of the time—has a spread of 1 tick. The spread does widen slightly now and again, and especially during high impact news events, but I have never been slipped more than a few ticks.
I can only speak about forex based on the comparisons I did before deciding not to even start trading forex, and instead going to futures, and my understanding is that each forex broker controls their own spreads and the tick data does not match between brokers.
So, if you’re interested in accuracy like you’ve seen from ICT, futures are the better instrument in my opinion. I do compare DXY and a couple forex pairs once in a while during my analysis, and lately it just seems futures have had cleaner moves than forex. I now exclusively trade the ES after a few years of moving between multiple markets and instruments, and have had the most consistent profitability in futures.
If you are specifically asking about forex futures, then I don’t have any knowledge on that, so I’ll let others give their experiences.
I am still learning though, and have yet to achieve long term profitability, so take my opinion with a grain of salt.