Yesterday, i have share with you the difference between Forex trading & stocks trading. So today, we will focus on another instrument; Futures Trading.

The benefits of Forex trading over Futures trading are considerable. The dissimilarities between the two instruments range from philosophical realities such as the history of each, their target audience, and their relevance in the modern forex markets, to more tangible issues such as transactions fees, margin requirements, access to liquidity, ease of use and the technical and educational support offered by providers of each service. These differences are outlined below:

Better Liquidity

Superior liquidity is one of many advantages that Forex trading holds over futures market. This is due to the high volume traded in the cash market.

Tighter spread offer by Forex market

By inverting the futures price to compare it to cash, you can readily see that in the EURO/USD example, inverting the futures dealing price of .5894 – .5897 results in a cash price of 1.6958 – 1.6966, 8 pips vs. the 5-pip spread available in the Forex markets.

Forex markets offer higher leverage and lower margin rates than Futures trading.

When trading Futures, traders have one margin rate for “day” trades and another for “overnight” positions. These margin rates can vary depending on transaction size. When trading cash markets, you have access to the same margin rates day and night. Of course, trading on margin magnifies both your profits AND your losses.

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