Here are some Pros and Cons of Trading Currency with Futures and Spot
Just for any newcomers, the FX SPOT market is what you trade with all the preferred brokers sponsored on this website. The FUTURES are traded with Brokers on the CBOT/CME...
The Futures Market
You can trade the dollar through the Chicago Mercantile Exchange’s (NYSE: CME) currency futures contracts. Currently, the CME offers contracts in about 16 currencies versus the dollar, and one generalized dollar index that tracks the dollar compared to a weighted basket of seven other currencies. To trade these contracts, you have to open an account with a futures broker. Here are some pros and cons to futures trading:
The Foreign Exchange Market (Forex)
The Forex market is used by institutions and speculators to exchange currencies around the world. In sheer turnover value terms, it is the largest financial market in the world. In the Foreign Exchange Market, all trading instruments are denominated in pairs, such as the euro / U.S. dollar pair, the U.S. dollar / Japanese Yen pair, or the euro / Japanese Yen pair. Almost all retail Forex trading is done in the spot market, meaning that the instruments are bought and sold for cash and have immediate delivery. In order to trade or invest in the dollar in the Forex currency market, you need to open an account with a Forex broker.

The Futures Market
You can trade the dollar through the Chicago Mercantile Exchange’s (NYSE: CME) currency futures contracts. Currently, the CME offers contracts in about 16 currencies versus the dollar, and one generalized dollar index that tracks the dollar compared to a weighted basket of seven other currencies. To trade these contracts, you have to open an account with a futures broker. Here are some pros and cons to futures trading:
- Advantages: Well-regulated, sufficient liquidity, highly leveraged, low transaction costs.
- Disadvantages: High leverage brings greater risk, so you have to keep up with expiring contracts.
- Bottom Line: Leverage makes this an instrument for seasoned and disciplined traders and investors; however, for those who have the experience and skill, this is the way to get the best bang for your trading dollar.
The Foreign Exchange Market (Forex)
The Forex market is used by institutions and speculators to exchange currencies around the world. In sheer turnover value terms, it is the largest financial market in the world. In the Foreign Exchange Market, all trading instruments are denominated in pairs, such as the euro / U.S. dollar pair, the U.S. dollar / Japanese Yen pair, or the euro / Japanese Yen pair. Almost all retail Forex trading is done in the spot market, meaning that the instruments are bought and sold for cash and have immediate delivery. In order to trade or invest in the dollar in the Forex currency market, you need to open an account with a Forex broker.
- Advantages: Highly liquid market, can achieve high leverage, very small account equity allowed by some brokers.
- Disadvantages: Poorly regulated – this is not an exchange-traded market...and almost all retail Forex trading is done with your broker taking the other side of your trade. Despite the claims of “free commissions,” this is a relatively high transaction cost markets because the spread and slippage on trades can be very high.
- Bottom Line: The lack of regulation makes this a “buyer beware” type of market. The hidden transaction costs are much higher than meets the eye. These factors combine to make this a less favorable choice for most traders and investors. However, adventurous traders and those willing to take on leverage and fight through bad fills in fast markets can find a very active market for currency trading in Forex
I found this on th web, forgot the website though. Sorry guys, Im sure its googable.
Best Of All, and I wish all the best of trading.