Some people argue that currency futures are "better" through trade on the forex market.
Let me break these arguments.
They argue that futures contracts are traded on a centralized exchange place against a centralized market. Then talk about how different forex brokers may offer different prices, because there is no centralized exchange regulated. Then talk about how Forex brokers retail prices can mask and expansion in the news. Some can even speak retail forex brokers "stop hunting."
It is true that spot forex is decentralized. It is true that the spot price of exchange may be different in different corridors. It is true that Forex brokers can dell retail prices. It is true that Forex brokers can extend the difference in the news.
But the truth is a lack of liquidity and widening spreads can easily occur in a futures contract as well. The widening spreads are not limited to the conduct of exchange.The widening spreads and is generally associated with the fact that the market is illiquid and buyers and sellers are hard to find. It is true that some forex brokers widen the gap in new detail above and beyond normal and keep them high for a prolonged period of time after a few press releases. I've seen it happen.
If this is the case, then you do not trade with that broker, or you can trade with a broker, organize everything around your strategy to avoid such situations.
Generally, people who defend the currency futures contracts are usually super fast sellers or traders who simply want to mark some of the market. If you are a businessman, then the currency futures may be better for you because you might be able to get better margins and more consistent prices. There are many arbitrage and market sellers of currencies.
In fact, the more money is not made or scalping price arbitrage between different platforms. The money and more money is made from the global macro trading.
The dealer may be trying to do 5 or 10 ticks in Eurofx futures contract. I do not care about these movements. I am afraid of catching the next 50 pips or 100 pips movement of spot market EUR / USD. I know I'll pay much more than trying to scalp a few ticks off of the futures contract. There is almost no space for the money if you catch Pip 100 movements for movement 5.
Who cares if the price is out for a tenth of a pip here, or half a pip between different forex brokers. If you are scalping for 5 or 10 pips, then you could take care of these things. But if you're looking for Pip 50 or 100 or 500 operations, so do not worry about the price discrepancy. That arbitrators and quantitative funds try to get that tenth of a pip pip or medium between the platforms.
When I PIP 100 profit on EUR / USD, I do not care if I have one tenth the price of half Pip or worse in the input and output. Of course, I enjoyed getting the best price possible, but I will not be Dick ICT. I will focus my efforts and energy on this problem. Instead, I worry about how to catch the next move of 100 or 500 pip pip. I know I'll do a lot more money from the scalp is 5 or 10 ticks on the market.
As currency traders to stop the game, not to do. They do not have the capital available to do this.
Forex Futures also limited in how you can express your business ideas and macro views. There are many liquid currency futures contracts. With spot forex can express the idea of the company and the macro point of the stronger currency and weaker than for what you believe If you believe that the AUD will be the strong yen and weak, then you can play in the AUD / JPY is not a problem. If you think the euro will be weaker and stronger CAD, then you can express that opinion in the EUR / CAD has no problem. In currency futures, not so easy.
When Soros broke the Bank of England, do not use futures. He used the cash currency market. He sold several billion pounds and became a value of DM. I'm sure the price between the various actors in the forex market is a small seed box. Prices may even have been off by 5 points or 10 points or more between different currency traders. He does not care. He was looking for someone to take the other side of your books commercial courts. He did not emphasize the difference in price of seed of certain riders. This was the last thing on your mind. He focused on global macro movement.
Just as we do not focus on one tenth of the difference pip pip or two or prices between the runners. Instead of focusing on catching the next big global macro movement.
Soros could never raised position of $ 10 billion short of forward currency contracts. It would be impossible. There was no money available for it. Instead, he focused on the inefficiency and liquidity in the spot foreign exchange market to express their idea of trade and macro-economic perspective and benefited greatly.
Foreign exchange markets over the place today are ineffective because they were in 1992, much more money to boot.
Let me break these arguments.
They argue that futures contracts are traded on a centralized exchange place against a centralized market. Then talk about how different forex brokers may offer different prices, because there is no centralized exchange regulated. Then talk about how Forex brokers retail prices can mask and expansion in the news. Some can even speak retail forex brokers "stop hunting."
It is true that spot forex is decentralized. It is true that the spot price of exchange may be different in different corridors. It is true that Forex brokers can dell retail prices. It is true that Forex brokers can extend the difference in the news.
But the truth is a lack of liquidity and widening spreads can easily occur in a futures contract as well. The widening spreads are not limited to the conduct of exchange.The widening spreads and is generally associated with the fact that the market is illiquid and buyers and sellers are hard to find. It is true that some forex brokers widen the gap in new detail above and beyond normal and keep them high for a prolonged period of time after a few press releases. I've seen it happen.
If this is the case, then you do not trade with that broker, or you can trade with a broker, organize everything around your strategy to avoid such situations.
Generally, people who defend the currency futures contracts are usually super fast sellers or traders who simply want to mark some of the market. If you are a businessman, then the currency futures may be better for you because you might be able to get better margins and more consistent prices. There are many arbitrage and market sellers of currencies.
In fact, the more money is not made or scalping price arbitrage between different platforms. The money and more money is made from the global macro trading.
The dealer may be trying to do 5 or 10 ticks in Eurofx futures contract. I do not care about these movements. I am afraid of catching the next 50 pips or 100 pips movement of spot market EUR / USD. I know I'll pay much more than trying to scalp a few ticks off of the futures contract. There is almost no space for the money if you catch Pip 100 movements for movement 5.
Who cares if the price is out for a tenth of a pip here, or half a pip between different forex brokers. If you are scalping for 5 or 10 pips, then you could take care of these things. But if you're looking for Pip 50 or 100 or 500 operations, so do not worry about the price discrepancy. That arbitrators and quantitative funds try to get that tenth of a pip pip or medium between the platforms.
When I PIP 100 profit on EUR / USD, I do not care if I have one tenth the price of half Pip or worse in the input and output. Of course, I enjoyed getting the best price possible, but I will not be Dick ICT. I will focus my efforts and energy on this problem. Instead, I worry about how to catch the next move of 100 or 500 pip pip. I know I'll do a lot more money from the scalp is 5 or 10 ticks on the market.
As currency traders to stop the game, not to do. They do not have the capital available to do this.
Forex Futures also limited in how you can express your business ideas and macro views. There are many liquid currency futures contracts. With spot forex can express the idea of the company and the macro point of the stronger currency and weaker than for what you believe If you believe that the AUD will be the strong yen and weak, then you can play in the AUD / JPY is not a problem. If you think the euro will be weaker and stronger CAD, then you can express that opinion in the EUR / CAD has no problem. In currency futures, not so easy.
When Soros broke the Bank of England, do not use futures. He used the cash currency market. He sold several billion pounds and became a value of DM. I'm sure the price between the various actors in the forex market is a small seed box. Prices may even have been off by 5 points or 10 points or more between different currency traders. He does not care. He was looking for someone to take the other side of your books commercial courts. He did not emphasize the difference in price of seed of certain riders. This was the last thing on your mind. He focused on global macro movement.
Just as we do not focus on one tenth of the difference pip pip or two or prices between the runners. Instead of focusing on catching the next big global macro movement.
Soros could never raised position of $ 10 billion short of forward currency contracts. It would be impossible. There was no money available for it. Instead, he focused on the inefficiency and liquidity in the spot foreign exchange market to express their idea of trade and macro-economic perspective and benefited greatly.
Foreign exchange markets over the place today are ineffective because they were in 1992, much more money to boot.
No comments:
Post a Comment