Similarities of Forex Trading and Futures

There are a lot of similarities between forex trading and Futures. First, they both use the same charts, platforms, and pricing methods, enabling traders to predict the price movements of commodities, indices and currencies all from one account.

Second, they both have a similar trade implementation process, which allows traders to enter or exit the market in both rising and falling markets. Third, both forex and Futures generate profits through the spreads, unlike other trading instruments that involve commission charges and other finance fees.

Last, both trading instruments do not entitle the trader an actual ownership of the asset. For example, when a trader buys EUR/USD, the trader does not actually purchase euros and sell US dollars. Instead, the trader speculates the exchange rate. Similarly, when a trader purchases a Futures, the trader does not necessarily own any stocks, but he relatively predicts its principal price.

Differences of Forex Trading and Futures

The primary difference between the two is that forex trading offers pure currency trading, while Futures trading involves different types of contracts on various financial markets including metals, indices, and other commodities.

Forex trading is selling one currency in exchange for another currency and requires trading in uniform lot sizes. Conversely, in Futures trading, the trader is given the chance to choose from various contracts differing in currency type and increment value that depends on the country in which the asset originated.

Last, Futures trading is typically influenced by factors such as the supply and demand of a specific commodity or trend changes within business sectors. On the other hand, forex trading is influenced by global events including international policy changes and large employment shifts.

See Also

Spreads Pricing

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