forex vs futures

The FOREX (Off Exchange Retail Foreign Currency) Market  is approximately 46 times larger than the combined world futures markets.[1] Greater day-to-day price stability enables trades with higher leverage than what is typical with futures.[2]

1)    High Leverage
t the standard account level, only 1% of the traded amount is required to be maintained on margin – this gives the investor an attractive leverage ratio of 100 to 1.

2)    Forex Provides Less Liability because if the funds in an account ever drop below margin requirements, any open positions will be closed, protecting the account from catastrophic losses. In the event there is a significant move against you, your liability will never exceed the value in your account.

3)    Forex is maximum liquidity
The forex market is the largest and most liquid in the world, with the spot foreign exchange market accounting for on average US$1.9 trillion in transactions every day. The foreign exchange market can absorb transaction sizes and trading volumes that dwarf the capacity of other markets. Stop-orders and liquidation of positions are executed without slippage.
 
4)    Forex trades 24 hours a day, 5.5 days a week
Forex trading is your window to the world economy.  Trading starts on Sunday at 5:00 PM Eastern Time with the opening of the markets in Sydney and Singapore. A couple of hours later, the Tokyo market is open. Next is London, which opens at 2:00 AM Eastern Time on Monday. By the time the day catches up to New York, the world currency markets have been at work for fifteen hours. This allows investors to determine the timing of their trades, enabling them to react instantly to any news or market pressures.
 
5)    Forex enables automatic rollovers
At 5:00 PM Eastern Time, all trades automatically rollover any open positions. Rolling over a position does include some carrying costs, which is true with futures as well. Rolling over a Forex position can sometimes make you money, since carrying cost is determined by the difference between interest rates for the two currencies. If you are long in the currency with the higher interest rate, you can gain on the spot rollover from the premium relationship of the long currency relative to the short currency. Gain is determined by the differential between the interest rates of the two currencies, and fluctuates with the movement of rates.

 

[1] INVESTools Inc.
[2] In volatile market conditions, substantial losses may occur