It’s not only the stock exchange. The forex market has a number of advantages over the futures market, as well as advantages over equities.
The FX market trades $6.6 trillion a day, making it the world’s largest and most liquid market.
This market can handle trading volumes and transaction sizes that surpass any other market.
The futures market only trades $30 billion every day. Thirty billion dollars? Peanuts!
Futures markets cannot compete with its low liquidity.
Except for exceptionally turbulent market situations, the forex market is always liquid, which means that positions may be liquidated and stop orders executed with little or no slippage.
24 Hour Market
Trading begins at 5:00 p.m. EST on Sunday, as markets open in Sydney.
Tokyo opens at 7:00 p.m. EST, followed by London at 3:00 a.m. EST.
Finally, New York is open from 8:00 a.m. to 4:00 p.m. EST. EST.
Before the New York trade closes, the Sydney market reopens – it’s a continuous 24-hour market!
This allows you to trade rapidly in response to beneficial or bad news as a trader.
If significant data from the United Kingdom or Japan arrives while the US futures market is closed, the next day’s opening might be a wild ride.
Overnight markets in futures contracts exist, and while liquidity is growing, they remain underutilized in comparison to the spot forex market.
Minimal or No Commissions
With Electronic Communications Brokers growing more popular and common in recent years, there is a possibility that a broker will need you to pay commissions.
However, the commission fees are negligible as compared to what you would spend in the futures market.
Because the competition among spot forex brokers is so severe, you will almost certainly get the best prices and the lowest transaction charges.
Under typical market conditions, forex trading provides quick execution and price certainty. Futures and equity markets, on the other hand, do not provide price certainty or quick deal execution.
Even with the advent of electronic trading and limited guarantees of execution speed, pricing for fills on market orders for futures and equities are far from assured.
Broker pricing frequently represent the LAST deal, not necessarily the price at which the contract will be filled.
Guaranteed Limited Risk
Position limits are necessary for traders to manage risk. This figure is determined in relation to the amount of money in a trader’s account. The risk in the spot forex market is reduced since the trading platform’s online capabilities will immediately produce a margin call if the required margin amount exceeds the available trading capital in your account.
All open positions will be closed immediately during regular market conditions (during fast market conditions, your position could be closed beyond your stop loss level).
In the futures market, your position may be liquidated at a loss greater than the amount in your account, and you will be liable for any ensuing shortfall.