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Difference Between Trading Futures and FX

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Is this right...Euro Future is $12.50/contract? If I only traded 1 contract with a 10 tick stop loss the risk is = 1 x $12.50 x 10 = $125?

 

So 2 contracts would be: 2 x $12.50 x 10=$ 250 risk?

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Thanks. Can I ask what do most people trade from CME?

 

Because it is a centralised exchange and it is much better regulated. Most of the FX 'brokers' are bookies (they are the counter party) I guess you could use the term market maker if you are being less emotive. Not only that they are setting the price that you bet on (as there is no centralised exchange and lax reporting requirements there is a degree of flexibility in the price they set).

 

More recently there are 'real' brokers emerging that give you actual transparent access to the underlying market (or a fair portion of it, remember it is not centralised). Still less regulated but at least in this case the broker is not the counter party. These DMA (direct market access) brokers charge a commission rather than manipulate the price you 'trade' at.

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Is this right...Euro Future is $12.50/contract? If I only traded 1 contract with a 10 tick stop loss the risk is = 1 x $12.50 x 10 = $125?

 

So 2 contracts would be: 2 x $12.50 x 10=$ 250 risk?

 

Yes that is correct.

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Do you think I could trade Euro/Usd Spot Fx by using Euro 6E Future chart/data feed? They move in sync and have proportional swings right?

 

yes you could - you could also trade gold using an oil chart.....but it would probably not make sense.

Spot FX is not a future....suggest you learn the difference otherwise it might start getting costly.

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I think it also depends on how you are using your charts and how you are trading. To get an idea of important areas, it might work okay if not well. I would always strongly prefer to chart the EXACT instrument I trade.

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More common is to do the reverse chart the spot and trade the future (for the reasons I explained before). I'm not sure why you would want to do it in reverse?

 

They are highly correlated as you can make/take delivery of the underlying currency on expiration f the futures contract.

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I want to use Volume Market Profile, Vwap, Footprint charts and delta Indicator...Basically they all have something in common: Volume....lol. In Spot Fx I never had this kind of stuff. Well see how it goes... Its only a $250 FX account...

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Ahh right, yes of course should have thought of that. What sort of size swings are you going for? With the 'bookie' type accounts bigger is better as it minimises the shenanigans with spreads and prices.

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Ahh right, yes of course should have thought of that. What sort of size swings are you going for? With the 'bookie' type accounts bigger is better as it minimises the shenanigans with spreads and prices.

 

Swing size? I dont know, I want to risk 10 to make 30 or more...'Bookie'? Whats that.

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I think futures is a much better play than the fx or CFD's. I run a program based on the big EC contract that I bought off a guy and it works pretty good for scalping some pips off the market. No spread or really any slippage so it's nice compared to FX or CFD.

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Swing size? I dont know, I want to risk 10 to make 30 or more...'Bookie'? Whats that.

 

Bookmaker read post #5 in this thread. Imho it is quite important to understand the implications.

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Ok. I understand now. Was still a little forex brainwashed. So instead of paying a spread you pay a commision? How much on average is it?

 

I think about $5 round trip per contract is average which is real cheap I think. I actually pay $4.80 but that is close enough. One tick is $12.50 profit/loss so you can make it back with just 1 pip/tick.

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I want to use Volume Market Profile, Vwap, Footprint charts and delta Indicator...Basically they all have something in common: Volume....lol. In Spot Fx I never had this kind of stuff. Well see how it goes... Its only a $250 FX account...

 

All of the following is my opinion from my experience. I've used these studies to trade the 6E for many years, and I believe you're setting yourself up for a lot of frustrations for a variety of reasons. It seems like a good idea but as Blowfish stated, "They (spot and futures) are highly correlated" but not exactly. His (Blowfish's) posts hold many of the concerns that will (again, imo) lead to frustration, and there is more!

 

I also chart a vwap on the cash market using tick data, prices respond well to these levels, however your statement, "I want to risk 10 to make 30 or more.." is about the wiggle room needed for the correlation, mainly the 10 point risk side. Another issue is your data feed, IB (Interactive Brokers) for instance processes their data in "snap shots" or "packets" .... Say a bar closes and gives you a sell signal, while the next bar is building and more "packets" are processed as they arrive (to your computer) that previous signal can "disappear" entirely or change significantly. I've found all the volume studies wiggle/change/move when using IB data, this isn't a major issue for most traders but it was for me when trying to trade with the precision offered by the vwap bands and maintaining tight stops (10 pts). Also as BF (Blowfish) stated, "Not only that they are setting the price that you bet on (as there is no centralized exchange and lax reporting requirements there is a degree of flexibility in the price they set)" this "degree of flexibility" will raise havoc with your (a) 10 point stop. Furthermore, when watching price action or "reading the tape" at significant price levels it's often hard to differentiate between the "tail and the dog." Another fact is these studies e.g. vwap are cpu intensive and can bring a run-of-the-mill processor to it's knees (depending on market volatility and the number of charts).

 

The studies you describe are fluid and next to (if not) impossible to code (on most retail platforms), this leaves traders with a lot of discretionary decisions to make during the most volatile (profitable) times in the market, knowing your market can be very helpful. These studies on stagnant EOD charts is absolutely nothing like what you'll experience during the heat of battle. To end on a positive note, I'll make two suggestions. Chart the futures with your studies and trade the mini futures contract. Or, if you must follow the path you described, expand your stops at least x2 as you begin to collect R/R data. Stops are imo market/movement specific and must be adjusted according to conditions throughout the day. Good luck :2c:

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I think about $5 round trip per contract is average which is real cheap I think. I actually pay $4.80 but that is close enough. One tick is $12.50 profit/loss so you can make it back with just 1 pip/tick.

 

Wow $5 is like only 0.4 pip/tick! When trading spot I had to add an extra 5 pips to my stop loss. Why? Because when price got within 5 pips of the actual stop it freakin closes you out. B.S. Is it like that in Futures? Is it possible to have a 5 tick SL?

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All of the following is my opinion from my experience. I've used these studies to trade the 6E for many years, and I believe you're setting yourself up for a lot of frustrations for a variety of reasons. It seems like a good idea but as Blowfish stated, "They (spot and futures) are highly correlated" but not exactly. His (Blowfish's) posts hold many of the concerns that will (again, imo) lead to frustration, and there is more!

 

I also chart a vwap on the cash market using tick data, prices respond well to these levels, however your statement, "I want to risk 10 to make 30 or more.." is about the wiggle room needed for the correlation, mainly the 10 point risk side. Another issue is your data feed, IB (Interactive Brokers) for instance processes their data in "snap shots" or "packets" .... Say a bar closes and gives you a sell signal, while the next bar is building and more "packets" are processed as they arrive (to your computer) that previous signal can "disappear" entirely or change significantly. I've found all the volume studies wiggle/change/move when using IB data, this isn't a major issue for most traders but it was for me when trying to trade with the precision offered by the vwap bands and maintaining tight stops (10 pts). Also as BF (Blowfish) stated, "Not only that they are setting the price that you bet on (as there is no centralized exchange and lax reporting requirements there is a degree of flexibility in the price they set)" this "degree of flexibility" will raise havoc with your (a) 10 point stop. Furthermore, when watching price action or "reading the tape" at significant price levels it's often hard to differentiate between the "tail and the dog." Another fact is these studies e.g. vwap are cpu intensive and can bring a run-of-the-mill processor to it's knees (depending on market volatility and the number of charts).

 

The studies you describe are fluid and next to (if not) impossible to code (on most retail platforms), this leaves traders with a lot of discretionary decisions to make during the most volatile (profitable) times in the market, knowing your market can be very helpful. These studies on stagnant EOD charts is absolutely nothing like what you'll experience during the heat of battle. To end on a positive note, I'll make two suggestions. Chart the futures with your studies and trade the mini futures contract. Or, if you must follow the path you described, expand your stops at least x2 as you begin to collect R/R data. Stops are imo market/movement specific and must be adjusted according to conditions throughout the day. Good luck :2c:

 

Thanks. I think im gonna try using the futures charts with spot only because I have the $250 left on the account and its not that much. If I turn it into $2000, I'll open a futures account. If I end up losing it, then I'll open a futures account. Either way I'll go to futures.:)

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Wow $5 is like only 0.4 pip/tick! When trading spot I had to add an extra 5 pips to my stop loss. Why? Because when price got within 5 pips of the actual stop it freakin closes you out. B.S. Is it like that in Futures? Is it possible to have a 5 tick SL?

 

I'm not a cash market trader, but I'm wondering if your statement above involves fractional pips, the fifth decimal place that some brokers quote prices in. As many have said up-thread, this is another one of the "tricks" bucket shops use (fractional pips) to offset the illusion of no commissions. It's all in the marketing :2c:

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I'm not a cash market trader, but I'm wondering if your statement above involves fractional pips, the fifth decimal place that some brokers quote prices in. As many have said up-thread, this is another one of the "tricks" bucket shops use (fractional pips) to offset the illusion of no commissions. It's all in the marketing :2c:

 

No regular pips. 4th decimal in Euro is a pip. And 5th is 0.x/pip. Now that I think of it, I think the closing out early before SL is hit is mostly a Mt4 thing...

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BlowFish is spot on in post #5. The only advantage of spotforex is indeed being able to trade microlots.

CME introduced de micro futs a couple years ago, tried them for a bit, but the volume was too low back then. Not sure if it has improved since.

 

Having traded both i have to say the tools for future trading are also a lot better, ie. i like Ninjatrader a lot better then i do MT4. I've read that some brokers like Forex.com offer Ninja for forex but most do not.

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