For the beginner in the field of currency exchange and the world of Forex, it is important to know the types of trading available, and the pros and cons of each type of trading available. The two main types of currency trading are future forex trading and currency futures trading.
Future forex trading and currency future trading have numerous differences between them. According to some sources, future forex trading is the more advantageous of the two types. This is why:
- First, future forex trading has substantially more liquidity compared to currency futures trading. Naturally, more liquidity equates to more power in the market. Also, in today’s forex set up, there is more freedom in terms of opportunities in using the advantages available in the forex market.
- Second, in forex trading, as opposed to currency futures trading, concepts like “day buys and sells” and “overnight buys and sells” are not applicable. This means that the changes in margins in forex trading are relatively more fixed and stable.
- Third, forex trading provides a relatively larger increase in the value of currencies as compared to currency futures trading. This is rather advantageous since naturally, a larger increase may lead to more profit.
- Fourth, forex trading is a universal thing. That is, the terms, symbols, and processes involved can be recognized and understood by anyone from anywhere in the world.
- Fifth, unlike currency futures trading, forex futures trading involves little to no computation in understanding the current trends. In the case of currency futures trading, a lot of computation is involved, wherein time, interest rates, and interest disparities are all taken into account. This may be a hassle for some who do not have the knowledge nor the time to deal with these computations.
All in all, the numerous advantages of future forex trading allow it to be the better choice to use in most situations.