Futures in Forex Trading | Forex Trading Future

Whats Futures in Forex Trading ?

Futures in forex trading is a binding agreement concluded for delivery of a particular commodity in future at a set price. A futures contract buyer assumes responsibility to purchase a commodity within a certain time frame. A futures contract seller takes obligation to promote the commodity around the specified time limits. Both obligations are associated with a standard volume of the specific commodity, they shall be implemented at the specific time in the future at a price fixed throughout the trade execution. This is to tell you, this operation must certainly be implemented till the date set in advance – it is specified in the futures contract specification.

By far the most wide spread commodities are the ones often found in everyday routine. Here they can indeed be:

• Gas
• Oil
• Gasoline
• Gold
• Corn
• Currency
• Steel
• Cotton
• Wood

The futures companies

The futures companies are more liquid in contrast to commodity one where futures are traded. Futures of these commodities are traded by several thousand traders daily. All are usually wanting to earn profit speculating on futures – buying commodities cheaper and selling at a greater price. The futures trading takes place about the futures stock market, one particular famous commodity and futures stock markets are:

• NYMEX (New York Merchantile Exchange)
• CBOT (Chicago Board of Trade)
• CME (Chicago Mercantile Exchange)
• IPE (International Petroleum Exchange)
• LIFFE (London International Financial Futures Exchange)
• LME (London Metals Exchange)

The entire process of futures trading is much like the process of trading on Forex. From the futures markets there exists similar principles of fundamental and technical analysis, exactly the same charts and indicators as well as the means of setting orders. Moreover, firstly, almost the entire package system was worked out special for its futures trading, the way it emerged much earlier than currency trading market. But worth noticing that futures trading has several significant distinctions: – A currency pair on Forex might end up being opened forever, i.e. once having bought pounds for dollars you could potentially hold this position for a rather long time – for months or maybe years. But it’s different with futures. A futures contract has an expiration date. If you don’t close position all by yourself it would be closed involuntary at a closing cost of the time and hour of futures contract maturity. It is important to stick to the validity time period of a futures contract and switch to a later contract on time. – The futures code is made from several parts. The primary symbols within the designation point to a commodity type (gold, cotton, oil etc.), the subsequent symbols show the year and month of futures delivery. For instance, NGQ0 means gas futures (NG – Natural Gas), Q – August, 0 – 2010 year. Here you will find the designations of months when futures are traded:

• January – F
• February – G
• March – H
• April – J
• May – K
• June – M
• July – N
• August – Q
• September – U
• October – V
• November – X
• December – Z -

The nearest expiration date of a futures contract is among the most liquid. This means that the cost of this asset is maximally near the real one and there’s a smallish chance of sharp price surge. – As things are known, Forex is a non-exchange market, the quotes are offered by a major wide range of banks and dealers. So its possible to trade at prices substantially distinctive from prices of other brokers/dealers. 

It really is impossible with futures. – The futures trading is run only for the stock markets in support of a specific seller or buyer determines the rates. Each quote does have its volume and price – it has a specific buyer and seller. The stock exchanges submit quotes for their websites for the previous trading session (trading day) accurately to each tick. – The length of futures contracts is strictly standardized of the stock exchange which sets the quantity and quality of an investment specified in it. Case in point, 1 futures contract for pig bulks (PB) stipulates a delivery of 40000 pounds of certain sized pig bulks; Gold future (GC) stipulates a 100 ounce delivery of gold for at least 995 countermark; a crude oil futures contract stipulates a 1000 barrel delivery of crude oil meeting a certain quality requirement. Price quotes of futures contracts are globally universal.