Forex Vs Futures Trading: What Is Better?

If you have even a casual interest in finance, you will have come across both forex markets and futures trading before. If you’d like further details about how they interact and how they’re both defined, take a quick look at our page here that covers them both.

Forex Trading
4 min read


When entering a multi-trillion dollar marketplace such as forex, you must learn the different methods and techniques that professional traders use. When examining forex vs futures positives and negatives, it is important to distinguish that they are two very different markets. Firstly, we will establish what futures and forex are, then discuss the similarities and differences between the two. Once we have clearly explained futures and forex, we can delve into the specifics and arm you with the knowledge to move forward. 

What Is Forex?

Forex trading involves the buying and selling of foreign currencies on worldwide exchanges. Although there are dozens of world currencies and hundreds of possible pairs, only a handful are considered major enough to trade on forex markets. The epicentre of forex markets is the US Dollar. Forex vs futures trading both have their unique criteria. You can find several US Dollar pairs, such as the Euro (EUR), the Canadian Dollar (CAD), the New Zealand & Australian Dollars (NZD & AUD) and other currencies, such as the Great British Pound (GBP).

You can often find pairings amongst these currencies as they interlink on the forex market. As we discussed in our introduction, the forex market oversees trillions of dollars worth of activity over 24 hours. It differs from the stock market as it is open 24 hours a day. The reason for this is because of the multiple time zones involved. Peak trading time in New Zealand differs greatly from the peak times in London and New York. Considering these time zones is just one factor that makes up a successful forex trading strategy.

What Is Futures Trading?

Futures trading is a type of speculative trading whereby a trader agrees to purchase an asset at a date set in the future. It is defined as a derivative contract. Forex and stocks are considered one of the three main types of financial instruments, and the other two are debt and equity. Once the trader enters the agreement to purchase the asset at a future date, they are obligated to do so. This is stipulated in the nature of the contract they have agreed upon. 

Futures trading differs from options trading as options give a trader the right to buy. However, there’s no obligation to purchase, like with futures trading. If you wish to purchase an asset at a chosen price but don’t wish to use futures markets, you can usually set up automatic buy orders on many exchanges. Weighing up forex with options trading has its advantages too.

It’s not necessarily a case of forex vs futures, as one is a type of market and one of a type of trading instrument. Forex futures trading is a huge market, but it is just one aspect of forex trading. You can also spot trade forex, which means buying it at the live price. You can also learn more information if you’re trading forex futures as a beginner. If you’re looking for more chart-specific advice, you can find more information on trading triangle patterns, scalping, arbitrage, and day trading.

Trading Futures Vs Forex

As we discussed earlier in the article, lining up forex vs futures as some contest isn’t how you should approach either of these topics. Futures and forex trading both have their standalone benefits. Still, futures forex trading is a specific market area that can prove profitable if you are aware of how the market operates. 

Learning how the market operates is crucial before you enter any trade. This can involve several lessons. However, removing negative emotions from your trading psychology is vitally important. In addition, learning what drives the forex market is just as important before you begin your investment journey.

Any future forex trading, regardless of the type, hinges on your understanding of the market. Including chart analysis, market sentiment, and world news that drives the asset price. Whether it is forex and futures trading, stock options or leveraged trading, it doesn’t matter. If you don’t understand the market, you are playing an extremely risky game.

Future forex trading

You must have enough capital in your futures account as well. With currency futures vs forex, the margin is the figure you must have in your account to open this type of trade. Once you enter the agreement, you will execute it at that price in the future. To trade forex futures, a broker may require you to have at least $3,500 (currency equivalent) before opening up any futures contract agreement. The exchange will set a minimum margin. The broker fee is unique to the broker you use.

Forex Vs Futures – What Is Best For A Beginner?

As beginners operate on different skill levels, it isn’t our decision. The beauty of trading is that only you can make the decision yourself, and although it can be a lonely and difficult world to navigate if you start to make money and find your feet, it is an extremely rewarding process. Forex future trading can provide complications for a beginner trader. When dealing with contracts and future prices of assets, you’re best to find out how the market works before going in at the higher end of the trading spectrum. 

You need to have a solid knowledge of how the market works before entering future agreements. As we discussed earlier, most brokers will request that you have a starting amount of at least a few thousand dollars. You don’t want to be in a position where you have an account that requires this huge amount of capital for trades that you don’t completely understand.

Forex Vs Futures – Conclusion

Whether it is framed as forex vs futures or futures vs forex, the point remains the same. Futures trading is a specific type usually best suited to professionals or traders with more experience. We aren’t trying to make you feel deflated about your strategy or ability. Simply put, some strategies take more time to learn and master than others. 

As forex vs futures is a debate that continues amongst some traders, you can trade forex in many different ways. You can also use futures trading in other markets, such as commodities and cryptocurrency. Futures is a highly speculative and much riskier form of trading. Forex trading is risky enough anyway, even for professionals. Adding in a speculative method heightens the risk, but it can heighten the reward when executed correctly.

It is best to keep an open mind as a trader and never completely shut yourself off from any trading market or method. The goal is to make money from your investment or your trade, and all markets will offer this opportunity at some point. Identifying when these opportunities arise and how to take advantage of them is crucial.

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