Whether to choose forex or futures trading can be a challenge, but it can also be a lucrative investment, depending on your goals. Both futures and forex trading can be profitable, depending on your expertise, experience, and location. Before you decide which to trade, you should consider how much time you have to invest and how much capital you can afford to lose. In the next section, we ll discuss how to choose between forex and futures trading.
Trading futures is an excellent way to diversify your investments. These contracts give you direct market exposure to underlying commodity assets, secondary market products, and upcoming events. In addition, futures allow you to take bearish positions and reversals without adding additional margin requirements. These options allow for the best of both worlds - trading in both types of markets offers many advantages. To start trading futures, simply open an account with a futures broker. A futures broker routes your trades to the exchange and processes them on the backend.
The margins required to trade futures on Forex fluctuate between 3% and 12% of the notional value of the contract. If you invest 10% of the notional value, you would need to deposit $10k. You can find out the exact margin requirement for each contract on the exchange. The higher the margin, the higher the risk. However, it is possible to maximize returns through smart and responsible trading. And don t forget to read the information on the margins before trading on the forex market.
Futures are based on the exchange rates of two different currencies. The euro and the dollar are a good example of a currency pair. The first currency listed is the controlling currency. In currency futures, a trader will be interested in the euro price. They ll purchase a contract worth a certain amount that goes up or down with the euro. Futures are limited to one size, but they must be traded in multiples of that size. For example, buying a Euro FX contract would be the same as purchasing $125,000 worth of euros.