Many people are interested in both Forex futures trading and spot Forex trading and want to know whether the two are pretty much the same thing or whether they are very different. Both Forex futures trading and spot Forex trading are highly popular Forex trading strategies that are used by millions of Forex traders on a daily basis. Both methods are very similar but there are some important differences that any Forex trader should know about when deciding on a particular method.
Forex futures are essentially about the establishment of a futures contract between two parties that obligates both parties to a trade of a currency pair at some point in the future. The price point is set beforehand, and the seller can own the currency once the actual future is written, or they may have a chance at risking the currency pair in hope that it will be cheaper at some point before what is called the settlement date.
Spot Forex is a pretty much the same thing as futures except that with spot fx the actual trade of the currency happens right at the point of trade or at a short time there after. The price point is determined at the point of trade as well and this is not much different than with Forex futures. The actual physical exchange of currency doesn't happen right away with futures as it does with spot, and the exchange instead happens on what is called the delivery date, which is typically a date set in the near future.
Both Forex futures and spot Forex are very similar and in essence the primary difference is when the actual currency exchange takes place. Both can be used to leverage future predictions with market trends and both can be used with success by any knowledgeable Forex trader. Some have argued that with Forex futures the trader is simply speculating with their futures transactions and will hardly ever close out their positions before the appropriate settlement date. This is definitely true to a point because the majority of Forex futures contacts do not last until the official date of delivery due to premature settling by traders. In the end I think I prefer spot fx because of its more sturdy grounding in reality although I know people who do well with futures so it is up to you whether you prefer the levity of futures or the solidarity of spot.
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Forex futures are essentially about the establishment of a futures contract between two parties that obligates both parties to a trade of a currency pair at some point in the future. The price point is set beforehand, and the seller can own the currency once the actual future is written, or they may have a chance at risking the currency pair in hope that it will be cheaper at some point before what is called the settlement date.
Spot Forex is a pretty much the same thing as futures except that with spot fx the actual trade of the currency happens right at the point of trade or at a short time there after. The price point is determined at the point of trade as well and this is not much different than with Forex futures. The actual physical exchange of currency doesn't happen right away with futures as it does with spot, and the exchange instead happens on what is called the delivery date, which is typically a date set in the near future.
Both Forex futures and spot Forex are very similar and in essence the primary difference is when the actual currency exchange takes place. Both can be used to leverage future predictions with market trends and both can be used with success by any knowledgeable Forex trader. Some have argued that with Forex futures the trader is simply speculating with their futures transactions and will hardly ever close out their positions before the appropriate settlement date. This is definitely true to a point because the majority of Forex futures contacts do not last until the official date of delivery due to premature settling by traders. In the end I think I prefer spot fx because of its more sturdy grounding in reality although I know people who do well with futures so it is up to you whether you prefer the levity of futures or the solidarity of spot.
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