How to Trade Forex Futures?
Forex futures (futures contracts) - a document (contract) for fixing the conditions of sale or purchase of a standard amount of some asset at a specified time in the future. The price that is set by the state today.
So, today we look at Forex Futures - alternative to the usual buy / sell currency.
Terminology Trading Futures
Standard amount. F. bought and sold on the market in the form of standardized portions of the asset or commodity. These portions are called contracts or lots. This is the main difference from the forward futures contract. Conclusion going forwards on the OTC market (for example, the currency on the interbank market), respectively, the amount of goods can be any, as determined by agreement between the buyer and seller.
Standard deadlines. Deliveries Forex futures are made in a specific time frame, called days (day) supply. It was then exchanged for cash items. Futures contract has a finite lifetime, so if the last day of trading has expired, then the conclusion of the futures contract at a given date (of the contract) becomes impossible. Will set a new date and then start a new bargain F.
Standard prices. F. Cost fixed at the time when the deal is made, and can not be changed for either the buyer or seller for the day before, that when a contract - regardless of how the value of the underlying asset that underlies the futures contract. It is in view of the foregoing F. - the main tool to hedge currency risk, ie insurance.
Other features of futures contracts
It is generally accepted that since the fixation of the deal and the time of its execution must pass more than 2 working days. Otherwise, these transactions relate to Spot, Tom and Tod transactions.
Participants to enter into a futures contract, as well as for any other transaction, are two sides - the seller and the buyer. F. Buyer undertakes to purchase a particular asset within a specified time. F. Seller - to sell the asset in the stipulated time frame.
As already mentioned, both types of obligations imply a standard amount of a certain commodity (asset), a specific deadline in the future and a specific price set at the time of the futures contract.
Who uses futures contracts? Set of agents of the real economic sectors. For example, this equipment manufacturers or buyers - these players are aiming to reduce the risks. In contrast, F. sellers looking for an opportunity to make a profit on their shoulders take big risks.
In fact, the futures markets - is wholesale markets risk, ie a place where the risk is transferred from agents who "are not inclined to take risks," to those players who are ready for a fee to take that risk on themselves. In other words, successful Forex futures shifts risks to another player, and the sale involves taking on price risk. Not advisable to use backtesting strategy on futures.
According to the above, members of futures trading are divided into 2 categories: hedgers and speculators. Hedger wants to reduce the risk and speculative player risks to get more profit.
F. Exchange Today - the global market, which includes the implementation of industrial products, financial exchange, treasury bonds and various agricultural products. But we do not sell products, but only rights (contracts) for this product. Fast, convenient and profitable - if you know how to predict the future value of the asset.
Forex and Futures
Forex brokers allow currency traders to try their hand at trading futures contracts. Tool called CFD (Contract For Difference - contract for difference) and is represented by several assets: shares of IBM (# IBM), Microsoft (# MSFT) and others
Before deciding to trade (buying) these contracts carefully read the terms of trade with them. First, a CFD trade is only possible at certain times (during the U.S. trading session), and secondly, we can not sell the contract, but only to buy. In other words, we only play on the rise in the cost of the asset.
Of course, for a full trade FA need a broker who works exclusively with such contracts, because the Forex broker provides a very small amount of F. But first amiss and this option. If you like it, and you will make a profit, trade futures contracts can always be continued in a wider range.
Forex trading on the stock exchange or futures to speculate - the choice is yours. And both can be quite lucrative. Good luck!
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