This week’s article is based on the nuances of the currency markets. Over the years of contributing to this content, I have endeavored to bring as much attention to the various features of this huge arena and how they can play a part in any consistent trader’s tool bag. Over the weeks of trading, teaching and writing articles, I tend to get blocks of similar questions from my readers. I am sometimes asked about a topic from a number of traders which I feel can be addressed publicly in one of these articles, so as to benefit us all. This is such an occasion.
Looking back over my previous writings, I have mentioned the fact that Forex traders worldwide need to be aware that participating in the currency markets is not limited to Spot FX only. Yes this may be the most popular way to trade currency for the majority of market speculators, however there are other mediums through which we can get involved as well. Aside from the Spot FX environment, the second most popular way to participate in trading currency is via the CME (Chicago Mercantile Exchange) FX Futures, and over the past few weeks I have had a number of people asking me if they too should consider moving their FX trading over to the futures market. Before answering this question I always like to ask them why they think they need to start trading FX Futures in the first place and most don’t even have an idea. It is usually because of what they have heard of been told, as is often the case in the newer and less experienced trader’s journey.
Firstly, if you would class yourself in this category, then please take my first piece of advice: Do not even think about getting into futures trading unless you are already making progress and gains in Spot FX. Jumping from spot to futures as a way to become successful at trading overall is never the answer. Please don’t think that changing your asset class is suddenly going to correct all of the problems you have in trading because it won’t. In fact, it will probably make things even worse! There are a number of very unique benefits to trading FX futures without a doubt. I know this firsthand, as I trade them myself but I also know why I trade them and this is highlighted in my trading plan. There should be logic and objective reason behind everything we do in trading, and choosing which asset class to trade is no exception to the rule. So let’s talk about why a trader would or would not want to bring a little futures trading into their trading routine:
As we already know, trading currency makes the use of leverage, allowing us to… Continue Reading
