Futures vs. Forex
- Fixed Capitalization – Only so many contracts issued making liquidity and execution much more cumbersome.
- Limited Participant – Only so many players to create market.
- Limited Trading Hours – One central trading floor.
- Higher Commissions – Pay to have order executed, plus a spread.
- Expiration – On every contract must make a decision or pay legal obligation.
- Premium Erosions – Closer to expiration the more time value erodes from price of contract placing a deadline for decision.
- Fast Markets – Due to events they could be a lopsided market and not enough buyers or sellers to match orders forcing specialist to close market and price to be adjusted. Fast Markets cause bankruptcies for investors
- No Fixed Capitalization – All the money in the world is traded.
- International Banks – Provide liquidity.
- No Central Trading Floor – Market open 24/6.
- No Commissions – Lower overheads for market to trade because its web based. The FCM and RB are compensated for their services through the spread between the bid/ask prices.
- No Expirations
- No Premiums
- No Fast Markets – Always buyer or seller because of size of market. Superior Liquidity