Trading Currency Futures Contracts

For those of you who trade currency futures contracts for speculation I have a suggestion. Don’t trade them.

It’s not that I have anything against trading currencies, quite the contrary. Trading currencies is the biggest financial game in the world. No market even comes close in the value of daily trading volume.

But in my opinion if you are going to trade currencies you are better off doing it on the foreign exchange market (Forex) rather than on a futures exchange that is open just a few hours a day.

Trading the forex market offers several advantages. One is that in the major currencies the liquidity is very high. Another is that the markets are open 24/5. There is a continuous flow of pricing as markets open in Asia, then Europe, then in the Americas.

With the advent of Internet forex trading there is another tremendous advantage. Even as a very small trader you have access to extremely sophisticated trading platforms. You have a choice of web based (browser) systems or systems that you download to your computer.

The web based systems have one advantage in that you can access your account from where ever you may be as long as you have a good Internet connection. However, for the most powerful systems you will want to download software.

Another powerful advantage to the forex trader who has his account at a good firm that has the most modern trading platform is that you can not have loss over runs in your account. The software will assure that you not go into an account margin debit situation.

In addition, some of the firms will let you trade with leverage up to 200 to 1. So even a $1,000 account will let you trade up to $200,000 in currency.  Of course, trading at such high leverage increases your risks. However, automatic stop loss features are a part of many of the trading platforms. You should use the stop loss feature to limit your loss on all of your trades.   

It is almost unbelievable how good the best of these trading platforms are. The Forex Trader software that you can download even on a free trail basis from Gain Capital is a brilliant piece of work. Fifteen years or so ago I paid Reuters thousands of Dollars a month for a dealing system and data feeds that in my opinion were not as easy to use and feature rich as the Forex Trader system.

Take a look and make your own decision. But for me the 24 hour a day high liquidity forex market is the best way to trade currencies.

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