Forex Trading vs Futures Trading

Which is better? Forex or Futures Trading

When it comes to discussing forex trading vs. futures trading, there are several notable differences. To understand which is best, first we need to understand the similarities and differences. Ultimately which is best, forex or futures trading, will depend on which of the industries and instruments work best for your trading style. Although I do have a recommended “best” if you are deciding between the 2.

Futures Trading – Key Differences to Forex

CME Group – A Regulatory Body In Futures

First of all, unlike forex, there is an actual regulatory body, the CME Group, who overseas the futures industry. Forex doesn’t haven an equivalent. All trades for the various sub-futures markets (NYMEX, CBOT, COMEX, CME, etc) pass through the CME Group exchange. There are checks and balances. This isn’t to say the trades you take personally are scrutinized and ever denied, not at all. It does mean you won’t get any bad actors in the market, manipulating the price.

Data and Software Availability

In the world of Futures the software choices are abundant. Depending on your style of trading (chart trader, order flow, tape, indicators) as well as platform you use (Windows, Mac, or web based) the choices can range from old time firms like NinjaTrader to newer web based platforms like Project X.

Likewise, the data feed that streams your account information, your trades and the actual market data has multiple choices available. CQG and Rithmic are the 2 primary ones, although there are others as well. Depending on your software choice, this will determine which data feed you should choose.

Deep and Obvious Order Books

When a trader places a limit order, it will show in the order book. You can see transparently how many buyers and sellers are on both sides of the current price action. See lots of sellers piling on? Price will probably get driven down. It’s economics 101, and the added transparency can help in the futures market.

Forex Trading – Key Differences to Futures

Instruments Available

Unlike futures where you are trading contracts on the future prices of commodities, currencies, indicies and other, the forex market is strictly forex, currency rates vis a vis another, ie. “pairs”. For example what is the price of a Canadian Dollar (CAD) relative to the US Dollar (USD). The entire product/instrument selection is currency pairs. Worth noting in the futures markets, there are futures on currency prices, all relative to the USD (6C for example in futures is the CAD over the USD).

No Expirations and No Roll Over

In the futures market you trade contracts on futures, and they have expiration dates. As these approach, people “roll over” to the next futures contract. Some are monthly, some quarterly. In forex though, there are no contracts. This is an advantage as you don’t get abnormal volume near or after roll overs, or any confusion.

High Leverage Available

In forex, you trade on margin or leverage. 50:1 in retail trading in forex is common. Meaning for ever $1 you have you can trade up to $50 worth of pairs. Project forward, someone with $1,000 could be trading $50,000 worth of forex pairs. In futures, leverage depends on the product, and is stated more as “margin”. Instead of saying $1 gets your $50, each contract has a pre defined amount of margin you need in your account. So if risk is your game, Forex offers far more ability to go big or go home, but also can quickly wreck your account.

Which Is Better: Forex or Futures Trading?

Unfortunately, no one has the answer for you. “Better” depends on your definition. As you can tell above, while both forex and futures trading involve buying and selling instruments, deciding when to take your profits, when to cut your losses, the 2 industries have notable differences.

Personally I would say Futures trading is the more sophisticated, serious traders industry, but definitely the Forex industry is an interesting choice.

Conclusion

In my opinion, the futures market is far more safe and measured. By no means is trading anything “easy”, but futures advanced trading softwares, regulated centralized markets, and thick order books all lead to more opportunities for serious traders.

As well there are lots of opportunities for traders interested in the futures markets to trade with evaluation companies where you can earn funding to trade. Prove you are a good trader and they provide the capital. Be sure to check out my Deals on Futures Programs page for the latest. There’s a lot firms out there, and I only work with the best.

My Top Rated Funded Futures Programs

• Apex Trader Funding Review and Discount
• Thrive Trading Group Review and Discount
• Take Profit Trader Review and Discount
• My Funded Futures Review and Discount
• Tradeify Review and Discount

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Risk Disclosure:

Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones’ financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.

Hypothetical Performance Disclosure: 

Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown; in fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. 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 of 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 the 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 which can adversely affect trading results.

You can read more here: Risk Disclosure

Affiliate Disclosure:

The external links on my site and in my video descriptions to trader evaluation companies and software companies are primarily affiliate links. I earn a commission from these companies on any sale made from people visiting these links. That said, I only recommend companies and software I personally use and actually do recommend. Believe me, I turn down a lot of companies who approach me. You can read my full Affiliate Disclosure here.

Additional Disclosure:

The content provided is for informational purposes only. I do my best to keep the content current and accurate by updating it frequently. Sometimes the actual data, rules, requirements and other can differ from what’s stated on our website. CanadianFuturesTrader.ca is an independent website. You should always consult the rules, faqs, knowledge base and support of any of the websites and companies we link to or talk about on our site. The information on their site will always be what ultimately dictates the current rules of their program, software or other. While we are independent, we may be compensated for advertisements, sponsored products, or when you click on a link on our website. The contributors and authors are not registered or certified financial advisors. You should consult a financial professional before making any financial decisions.