Forex Earning Trophy 4 Future

Day Trading Forex Futures with Pivot Points

Currency trading is increasing in popularity among individual investors, especially those in the United States. Just a few short years ago, it was relatively difficult and costly to access the spot Forex market. But barriers have been broken down, competition has increased, and costs have fallen. As a result, more and more retail traders are entering the realm of spot Forex trading.

But there's another way to enter the world of currency trading, and it's through the Chicago Mercantile Exchange (CME). The CME first offered Foreign Exchange (FX) futures in 1972. Today, the exchange offers futures on 41 currency pairs, options on 31 futures contracts, and over $60 billion in liquidity. Currency futures trade on the CME's renowned Globex platform, alongside other popular futures contracts such as the e-mini equity indices.

Spot vs. Futures

To be sure, there are a some big differences between the contracts that trade in the spot Forex market and the FX futures. Perhaps the biggest -- and arguably most important -- difference is that spot Forex contracts trade over the counter at no particular central location, while FX futures clear at the CME. The central clearing and guarantee of counterparty credit by the CME are huge benefits of FX futures over spot Forex contracts.

The dealing details differ dramatically between the two instruments. The table below details some of the biggest differences:

Over-the-counter (Spot, Forex) Foreign Exchange Futures

$2+ trillion daily turnover $60 billion in liquidity
Commission free Commissions
Guaranteed stops No guarantees
Fixed pip spread Bid/Ask spread
24 hour trading 23 hour trading
100:1 up to 400:1 leverage 20:1 to 50:1 leverage
Varying quote currencies All rates quoted in dollars
Plain vanilla & Exotic options Plain vanilla options
Mini accounts Mini contracts (limited)
Interest debits & credits Carrying costs
Automatic rollover 3 month expiration cycle