What is Currency Trading with the Futures of the Forex?

Foreign Exchange is an international financial market place where international currencies are bought and sold freely. This is known as currency trading. Currency trading is a non-stop cash market where traders speculate on changes in exchange rates. Currency trading operates through a global network of brokerages, banks, corporations and individual investors trading one currency for another. There is no central, physical exchange like financial equity markets. Trading takes place nearly 24 hours a day. Currency trading is extremely liquid because there are always willing buyers and sellers for each currency being traded, which means you can enter and exit a position quickly.

Most investors trade the Forex when they want to trade currencies. For larger investors, this would make perfect sense, as the Forex Market has a large trading volume with a daily average of $1.9 trillion. But for individual investors, there is a market more tailored to the small number of contracts they intend to trade...the Futures of the Forex.

With the Futures of the Forex, individual investors can trade the same currencies that are traded in the Forex market, but trade on the Chicago Mercantile Exchange. What is the benefit? There are several potential benefits to small investors for trading Futures and not Forex

First of all, over 90% of all Forex traders lose their portfolio within the first 6 months, just ask your broker. Most Forex traders use 20 minute charts, but Futures traders can profit from just smaller changes in currency, using 1-2 minute charts. Futures brokers are regulated by the SEC, not all Forex brokers are. Forex Futures are traded on a central exchange, the CME.

Futures have tighter spreads between the bid and the ask prices, just 1 tick. There is no interest charge or rollover fee every other day. Transactions costs are applied to the round turn, not both in and out. In fact, brokerage commissions + exchange + regulatory + transaction charges are less than the Forex PIP spread.

Investors receive better cost advantages with currency futures over the Forex spot. Here's an example of trading 1 Forex USD/EUR contract vs. 1 Futures of the Forex (6E) contract, with a contract size of $125,000 worth of euros. Each tick is worth 12.50. Futures commission and related fees are $5, the average charge by most brokerage firms for a round turn. A Forex trader with a 100,000 full-lot-size contract pays 2 PIPs on every transaction, in this case $20 per round turn transaction. And here's a significant difference as well. In order to profit from a Forex trade, the price must move beyond the number of PIPs that your broker takes. With Futures, you profit even when the price only moves 1 tick (1 price movement). The profit may be smaller on the first tick, but at least you make something. With Forex, your first price movements entirely belong to the broker. Forex traders always say...but there is no commission. They neglect to say that the broker takes the first price movements in compensation.

The major currency pairs being traded on the Futures Market are 6E (Euro), 6A (Australian Dollar), 6B (British Pound), 6C (Canadian Dollar), 6J (Japanese Yen). Before you decide to trade Forex currencies, check out Futures currencies. Shadowtraders specializes in training its students to take full advantage of currency trading with Futures. We have precise trades we put on to show you how to profit with short-term price movements. Look into Shadowtraders trading coursefor more information on trading the Forex of the Futures.

One major difference between Shadowtraders and other trading education companies is that most other education companies only train on the S&P 500 Emini Futures contract. At Shadowtraders, we specialize in identifying volatile instruments that we feel our students can and should profit from. We research these instruments for the time of day they can be traded, who trades them, how best to trade them, etc. That is our job, and we like to perform it well. Check out an example of our 6E chart to see how well we can identify trades long and short.

TRADING DISCLAIMER All TRADING involves high risk and YOU can LOSE a substantial amount of money, no matter what method you use. All trading involves high risk; past performance is not necessarily indicative of future results. Commission Rule 4.41(b)(1)(I) hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE IS RISK OF LOSS IN ALL TRADING. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. ALL RESULTS ARE HYPOTHETICAL. NO IMPLICATION IF BEING MADE THAT ANYONE UTILIZING ANY OF THE SERVICES OF SHADOWTRADERS HAS OR CAN OBTAIN SUCH PROFITS AND RESULTS. THIS INFORMATION IS NOT A RECOMMENDATION TO BUY OR SELL AT THIS TIME, BUT MERELY A PRESENTATION OF TRADES STRATEGIES. THE INFORMATION CONTAINED HEREIN HAS BEEN OBTAINED FROM SOURCES BELIEVED RELIABLE, BUT IS NOT GUARANTEED AS TO THE ACCURACY OR COMPLETENESS. PLEASE CHECK MARKET FUNDAMENTALS AND TECHNICAL CONDITIONS BEFORE CONSIDERING THESE OR ANY TRADES. This is not a prospectus; no offer on our part with respect to the sale or purchase of any securities is intended or implied, and nothing contained herein is to be construed as a recommendation to take a position in any market. It is possible that at this date or some subsequent date the officers, directors and/or shareholders of Shadowtraders and its affiliates own securities, or buy or sell securities mentioned in this publication or those not so mentioned. The intent of the Shadowtraders information supplied to SUBSCRIBER is for instructional purposes only. Shadowtraders information supplied to SUBSCRIBER is intended to be purely educational. The material presented herein has been obtained or derived from sources believed to be accurate, but we do not guarantee its accuracy. There have been no promises, guarantees or warranties suggesting that any trading will result in a profit or will not result in a loss. SUBSCRIBER is responsible for his own actions regarding an trading.


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