Forex vs. Futures

ZERO commissions and exchange fees

When trading on the futures market, you have to pay commissions and exchange fees; there is no escaping that fact. However, in the currency market, one can escape that fact, because you pay no commissions and no exchange fees. Best Forex Brokers usually eliminate all these added fees, because you are dealing directly with the market maker, via an electronic online exchange, therefore eliminating both the ticket costs and the intermediary's brokerage fees. When initiating any forex trade, there is still no cost. However, that cost is reflected in the bid/ask spread, that is also present in futures trading. Forex Brokers offer tight and consistent spreads of between one and three pips on their trading platforms. Price "slippage" or bad fills, is negated because (unlike with many other financial products) with brokers’ trading platforms, they offer firm, instant, execution, of two-way prices.

Instantaneous execution and firm prices

Prices quoted by forex brokers, often represent the last trade, and not necessarily the price for which the contract will be filled. Instant execution of price certainty is not a guaranteed, even with electronic trading and limited guarantees of execution speed, the price for fill, on forex market orders, is not, in any way certain. However, when working with best forex brokers, you are trading in real time streaming prices. This means, that your prices are immediately filled and there is no discrepancy between the displayed price and that of the execution price. With recommended forex brokers, this stays true, even when the markets are in a volatile and fast-moving mood.

24 Hour Forex Market Action and Liquidity

The currency market is a seamless 24-hour market, quite unlike most futures markets. And, "seamless" means something like this - on Sunday forex trading begins, as the markets in both Sydney and Singapore open for business. Then, the Tokyo market opens for business, followed by Hong-Kong, Frankfurt, Paris, London, and finally New York. Therefore, as a forex trader, you are in a position to react to favorable and/or unfavorable news, by instigating immediate trade. This means, that if important news/data, breaks in the UK or Japan, whilst the US or European futures markets are still closed, then the next days trading could be a roller-coaster ride. Overnight markets in futures currency contracts do, of course, exist, however, they can only be thinly traded, and they are not very liquid and are quite difficult for the average investor to access.

No Debit Balance Risk

At the best forex broker, you will never have a debit balance. Should your forex account fall below margin level, broker’s forex trading platform will close all your open positions. Therefore, should you be completely wrong, and there is a disastrous move against you, you can never lose more than the amount of money in your account. Moreover, by employing the stop loss orders your risk can be further limited and defined.

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