Why forex is better than futures?
The futures markets can't compete with its relatively limited liquidity. The forex market is always liquid, meaning positions can be liquidated and stop orders executed with little or no slippage, with exception to extremely volatile market conditions.
While futures trading offers the allure of standardized contracts and the ability to hedge against price fluctuations, forex trading boasts of unparalleled liquidity and the thrill of 24/7 trading. Both avenues, however, come with their own set of opportunities, challenges, and intricacies.
Forex trading can have very low costs (brokerage and commissions). There are no commissions in a real sense–most forex brokers make profits from the spreads between forex currencies. One does not have to worry about including separate brokerage charges, eliminating overhead costs.
Forex: Pros: Lower volatility: Generally less volatile than crypto, meaning smaller price swings and potentially lower risk. More established market: Less prone to sudden changes and scams due to its longer history and regulations.
For traders with a high risk appetite who very skilled traders are able to take advantage of leverage. At the same time, 24 hour access to the currency markets and high liquidity make Forex a very attractive option for both beginners and advanced traders.
Costs and Fees: Forex trading often involves lower transaction costs, as there are no exchange fees, commissions, or clearing fees. Futures trading, on the other hand, includes commission fees, exchange fees, and clearing fees, which can impact overall profitability.
Complexity: The forex market is influenced by a wide range of factors, including economic indicators, geopolitical events, central bank policies, and investor sentiment. The interplay of these variables makes it challenging to accurately forecast market movements.
There are many benefits of trading forex, which include convenient market hours, high liquidity and the ability to trade on margin.
Why is Trading Forex Hard? The Forex market is said to be hard because it is the most liquid market in the world and billions of people and entities intervene in it. Governments, politics, the weather, public health, corporate expansion or bankruptcy, the prices of foodstuff, everything influences the Forex market.
Is Forex essentially gambling? Yes. With every trade placed, a trader is a attempting to predict moves to get profits. Statistically speaking the higher the risk reward ratio, the higher the chance of the trade turning into a losing trade.
Can forex make you a millionaire?
To come back to our question, can you become a millionaire from forex trading? The answer is that it is possible, but this doesn't happen to everyone and not overnight. Having realistic expectations is paramount when trading forex.
- Save up and start with at least $100 in your account.
- Use a broker that has low fees.
- Use leverage effectively.
- Consider using a robo-advisor to automate your Forex trades.
- Diversify your portfolio by investing in different currency pairs.
The answer is yes! Forex can make you a millionaire if you are a hedge fund trader with a large sum. But forex from rags to riches for the majority is usually a rocky and bumpy ride which often leaves some traders in their dreams.
This forex trading style is ideal for people who dislike looking at their charts frequently and who can only trade in their free time. The very lowest you can open an account with is $500 if you wish to initiate a trade with a risk of 50 pips since you can risk $5 per trade, which is 1% of $500.
There will be times where a currency is moving differently from normal. Perhaps price is spiking and you don't know why. This is a good time to stay out of the market. If you can't understand why price is behaving in a certain way, it is usually due to some unscheduled news that has been released or leaked.
In the debate Forex vs Stock trading for beginners, there is no one definitive answer. Forex trading typically involves short-term potential but also entails higher risk when compared to stock trading. Forex market requires daily attention, so the traders must devote more time in learning concepts like currency pairs.
Statistics show that most aspiring forex traders fail, and some even lose large amounts of money. Leverage is a double-edged sword, as it can lead to outsized profits but also substantial losses. Counterparty risks, platform malfunctions, and sudden bursts of volatility also pose challenges to would-be forex traders.
One of the most substantial benefits of trading futures vs. stocks is the tax advantages. All stock trading profits where the stock is held for less than 1 year are taxed at 100% short-term gains, whereas all futures trading profits are taxed using a 60/40 rule.
What futures are most profitable? Trading in futures markets such as the Micro E-Mini Russell 2000 (M2K), Micro E-Mini S&P 500 (MES), Micro E-Mini Dow (MYM), and Micro E-Micro FX contracts can be highly profitable due to their distinct market characteristics.
Warren Buffett, primarily known for his prowess in the stock market, has also ventured into forex trading, showcasing adaptability and strategic thinking. His story exemplifies the potential for individuals from traditional finance to excel in the dynamic forex landscape.
How realistic is forex trading?
With proper education and risk management strategies, forex trading can be a realistic and viable option for individuals looking to make money in the financial markets.
While the summer period (June-August) is speculated to show the least returns for many markets across Europe, August is said to be the worst month to trade. The reason for this is that most institutional investors in Europe and North America go on holiday.
On average, a forex trader can make anywhere between $500 to $2,000 per day. However, this figure can vary significantly depending on market conditions, trading strategy, and risk management techniques. Some traders may make more than $2,000 in a single day, while others may make less or even incur losses.
| Annual Salary | Monthly Pay | |
|---|---|---|
| Top Earners | $192,500 | $16,041 |
| 75th Percentile | $181,000 | $15,083 |
| Average | $101,533 | $8,461 |
| 25th Percentile | $57,500 | $4,791 |
Ray Dalio – The Richest Forex Trader in the World
Ray Dalio is widely recognized as the wealthiest forex trader in the world. With a net worth of billions, Dalio's success in the forex trading industry is a testament to his exceptional skills and strategies.
References
- https://dapowillis.medium.com/forex-millionaire-the-concepts-made-me-15-million-trading-babeea9e4410
- https://www.quora.com/What-is-more-profitable-for-beginners-forex-or-crypto-Why
- https://www.imf.org/external/pubs/ft/wp/2003/wp03200.pdf
- https://www.elsevier.es/en-revista-journal-innovation-knowledge-376-articulo-trading-behaviors-on-knowledge-price-S2444569X21000196
- https://www.investopedia.com/terms/o/openingprice.asp
- https://www.publitas.com/blog/discovery-marketing-in-action/
- https://www.audacitycapital.co.uk/trading-guides/forex-for-beginners/how-much-to-start-forex-trading/
- https://www.investopedia.com/articles/active-trading/070113/using-index-futures-predict-future.asp
- https://www.linkedin.com/pulse/how-much-do-successful-forex-traders-make-best-broker-forex-aqrxc
- https://www.cfainstitute.org/en/membership/professional-development/refresher-readings/basics-derivative-pricing-valuation
- https://www.cmegroup.com/education/courses/introduction-to-fx/understanding-the-fx-delivery-and-settlement-process.html
- https://y20india.in/highest-currencies-in-the-world/
- https://www.bis.org/publ/cgfs11mura_a.pdf
- https://www.binance.com/en/square/post/1424550
- https://sg.news.yahoo.com/5-travel-destinations-where-your-dollar-will-stretch-furthest-in-2024-220054716.html
- https://optimusfutures.com/blog/futures-trading-success-rates/
- http://www.zaner.com/3.0/education/content.asp?page=ondemand/50rwftlm.html
- https://www.investopedia.com/articles/active-trading/020216/five-advantages-futures-over-options.asp
- https://www.vectorvest.com/blog/market-timing/can-you-buy-and-sell-stock-on-the-same-day/
- https://www.wallstreetprep.com/knowledge/secondary-market/
- https://www.investopedia.com/terms/f/futures.asp
- https://www.investopedia.com/ask/answers/06/forwardsandfutures.asp
- https://www.bankrate.com/investing/options-vs-stocks/
- https://www.linkedin.com/pulse/futures-trading-strategies-quantifiedstrategies-yt6of
- https://www.forex4noobs.com/forex-education/when-not-to-trade/
- https://www.nationalhogfarmer.com/hog-prices/price-determination-and-discovery-still-at-issue-in-market
- https://www.investopedia.com/articles/forex/10/forex-risk-management.asp
- https://www.cmegroup.com/trading/fx/why-trade-fx-futures-and-options.html
- https://www.warriortrading.com/how-to-make-a-living-day-trading/
- https://poe.com/poeknowledge/1512928000358234
- https://rjofutures.rjobrien.com/learning-center/general-trading/deciphering-the-market-futures-trading-vs-forex-trading
- https://www.investopedia.com/ask/answers/031015/how-risky-are-futures.asp
- https://www.nasdaq.com/glossary/e/expected-spot-rate
- https://www.vaia.com/en-us/textbooks/economics/principles-of-macroeconomics-for-ap-courses-2-edition/chapter-15/problem-15-does-an-expectation-of-a-stronger-exchange-rate-i/
- https://saylordotorg.github.io/text_international-economics-theory-and-policy/s19-07-exchange-rate-effects-of-chang.html
- https://www.livestreamtrading.com/the-pros-and-cons-of-trading-futures-vs-stocks/
- https://www.quora.com/Do-derivatives-affect-the-underlying-assets-price
- https://www.cmegroup.com/education/courses/understanding-the-benefits-of-futures/the-benefits-of-day-trading-futures.html
- https://www.rbccm.com/assets/rbccm/docs/fx/currency-report-card.pdf
- https://tradethatswing.com/how-long-it-takes-to-make-money-day-trading-or-swing-trading-consistently/
- https://www.tribeandseek.com/blog/is-25-too-old-to-change-career
- https://fxopen.com/blog/en/7-common-ways-to-forecast-currency-exchange-rates/
- https://coindcx.com/blog/crypto-futures-trading/crypto-margin-trading-vs-futures/
- https://www.investopedia.com/terms/p/pricediscovery.asp
- https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1683587
- https://www.t4trade.com/en/what-is-the-hardest-month-to-trade-forex/
- https://www.schwab.com/futures/what-are-futures
- https://corporatefinanceinstitute.com/resources/economics/exchange-rate/
- https://www.quora.com/What-are-some-reasons-why-the-forex-market-is-considered-gambling-and-not-a-real-investment
- https://www.cmegroup.com/education/courses/using-fundamental-analysis-when-evaluating-trades/fundamentals-and-fx-futures.html
- https://www.investopedia.com/articles/optioninvestor/10/derivatives-101.asp
- https://ninjatrader.com/futures/why-trade-futures/futures-vs-stocks/
- https://pippenguin.com/forex/learn-forex/richest-forex-traders/
- https://www.forbesindia.com/article/explainers/top-10-cheapest-currencies-world/85939/1
- https://www.fia.org/fia/articles/faqs-negative-pricing-exchange-traded-futures-and-options
- https://www.khanacademy.org/economics-finance-domain/ap-macroeconomics/ap-open-economy-international-trade-and-finance/exchange-rates/a/lesson-summary-exchange-rates
- https://www.investopedia.com/articles/optioninvestor/09/be-a-better-futures-trader.asp
- https://www.nerdwallet.com/article/investing/started-futures-trading
- https://www.investopedia.com/articles/forex/080613/effects-currency-fluctuations-economy.asp
- https://www.mypivots.com/dictionary/definition/25/80-rule
- https://www.investopedia.com/terms/c/currency-appreciation.asp
- https://www.investopedia.com/articles/forex/050115/pros-cons-forex-trading-career.asp
- https://scholar.harvard.edu/files/frankel/files/wtpfrankel.cp28.p607-624.pdf
- https://www.linkedin.com/pulse/bid-ask-spread-quantifiedstrategies-31tcc
- https://www.tradingsetupsreview.com/best-futures-day-trading/
- https://www.quora.com/Why-is-the-forex-market-difficult-to-predict
- https://www.motilaloswal.com/blog-details/which-is-more-risky-futures-trading-or-options-trading/20719
- https://www.sofi.com/learn/content/how-much-is-a-dollar-worth/
- https://www.warriortrading.com/pattern-day-trader-rule/
- https://www.investopedia.com/how-to-trade-futures-5214571
- https://www.investopedia.com/best-futures-trading-platforms-7370002
- https://www.schwab.com/learn/story/trying-out-futures-options-here-are-key-differences-vs-equities
- https://www.expat.hsbc.com/international-banking/what-makes-exchange-rates-move/
- https://www.strike.money/technical-analysis/three-primary-trends
- https://www.bajajfinserv.in/primary-market
- https://www.ig.com/en/futures-trading/what-are-futures-how-do-you-trade-them
- https://www.ig.com/us/forex/benefits-of-forex-trading
- https://www.rba.gov.au/publications/bulletin/2018/dec/pdf/understanding-exchange-rates-and-why-they-are-important.pdf
- https://www.ironfx.com/en/has-anyone-become-a-millionaire-from-forex/
- https://www.dailyforex.com/forex-articles/2009/12/lesson-2---why-is-forex-trading-so-hard/3043
- https://www.bls.gov/opub/btn/volume-12/how-currency-appreciation-can-impact-prices-the-rise-of-the-us-dollar.htm
- https://www.bookmyforex.com/blog/highest-currency-in-the-world/
- https://www.fisdom.com/which-is-better-futures-or-options/
- https://www.kotaksecurities.com/share-market/how-to-earn-1000-rs-per-day-in-the-share-market/
- https://optimusfutures.com/blog/best-tradingview-indicators/
- https://www.linkedin.com/pulse/forex-futures-same-liliana-ruby
- https://www.investopedia.com/ask/answers/06/currencyfuturesandspotfx.asp
- https://www.linkedin.com/pulse/what-type-trading-should-beginner-start-prince-john-paul-rpige
- https://www.imf.org/external/pubs/ft/issues2/
- https://www.schwab.com/learn/story/basics-trading-futures-contracts
- https://www.ig.com/au/trading-strategies/what-is-price-discovery-and-how-does-it-work--190605
- https://www.5paisa.com/stock-market-guide/derivatives-trading/about-futures-contract
- https://www.kotaksecurities.com/currency/what-is-currency-appreciation-and-what-causes-it/
- https://www.warriortrading.com/a-beginners-guide-to-futures-trading/
- https://www.linkedin.com/pulse/forex-trading-realistic-tech-it-online-engyc
- https://www.fidelity.com/learning-center/trading-investing/trading/using-futures-as-indicator
- https://www.linkedin.com/pulse/what-most-profitable-form-trading-best-trader-cau2c
- https://admiralmarkets.com/education/articles/forex-basics/forex-vs-stocks-should-you-trade-forex-or-stocks
- https://www.schwab.com/futures/faqs
- https://www.linkedin.com/pulse/top-10-richest-forex-trader-world-2024-exness-in-india-2asoc
- https://www.investopedia.com/ask/answers/06/strongweakdollar.asp
- https://www.ziprecruiter.com/Salaries/Forex-Trader-Salary
- https://www.linkedin.com/pulse/forex-vs-stocks-which-better-option-beginners-exclusive-markets
- https://www.traditiondata.com/market-education/forward-rate-vs-spot-rate-whats-the-difference/
- https://www.indiainfoline.com/knowledge-center/derivatives/what-are-the-major-functions-of-derivatives-market-in-an-economy
- https://www.ziprecruiter.com/Salaries/Futures-Trader-Salary
- https://www.studysmarter.co.uk/explanations/macroeconomics/economics-of-money/exchange-rate-and-inflation/
- https://www.thebalancemoney.com/what-is-price-discovery-5214815
- https://www.schwab.com/learn/story/trader-taxes-form-8949-section-1256-contracts
- https://bullishbears.com/futures-trading-hours/
- https://www.investopedia.com/articles/optioninvestor/09/get-started-with-futures.asp
- https://www.keenbase-trading.com/how-to-turn-100-into-1000-in-forex/
- https://www.investopedia.com/articles/forex/073115/can-forex-trading-make-you-rich.asp
- https://rjofutures.rjobrien.com/learning-center/futures-trading/trading-futures-for-a-living
- https://www.linkedin.com/pulse/9-out-10-traders-lose-money-fos-nilesh-sharma
- https://www.angelone.in/knowledge-center/futures-and-options/futures-trading
- https://www.nasdaq.com/articles/how-much-money-needed-start-trading-futures-2016-02-19
- https://bookmap.com/blog/day-trading-futures-strategies-risks-and-rewards-explained/
