Forex futures are contracts that allow traders to buy or sell a specific currency at a predetermined price on a specific date in the future. It gives traders the ability to fix the price of a currency pair they would like to trade and guarantees them a specific price even if the market moves against them.
This article shares valuable insight into what they are and advice on how to trade them. You can also find more educational articles by visiting Saxo Bank’s Singaporean website here https://www.home.saxo/en-sg/products/forex.
How do I trade forex futures?
To trade forex futures, you first need to open an account with a broker that offers these contracts. Then, you need to deposit funds into this account and select the currency pair you would like to trade. Once you have done that, you need to decide whether you think the currency’s price will go up or down and place your trade accordingly.
What are the benefits of trading forex futures?
There are many benefits to trading forex futures.
The ability to fix the price of a currency pair
First of all, it gives traders the ability to fix the price of a currency pair, which can be very helpful if you think the market is about to move against you.
It allows you to trade on a margin.
Additionally, it allows you to trade on margin, meaning that you can only deposit a small percentage of the total value of your trade upfront. It means that you can make a much larger profit (or loss) on your trade than if you were trading with cash.
It’s a great way to hedge your bets.
Another benefit of trading forex futures is that it can be used as a hedging tool. It means that you can use it to protect yourself from potential losses if the market starts to move against you.
You can trade them 24/7
Another advantage of forex futures is that you can trade them 24 hours a day, seven days a week. It gives you greater flexibility in trade times and allows you to take advantage of opportunities as they arise.
They’re less risky than spot forex.
Another benefit of trading forex futures is that they’re generally less risky than trading spot forex. It’s because you have a greater chance of making a profit on your trade, even if the market moves against you.
You can use them to take advantage of price movements.
Furthermore, you can also use them to take advantage of price movements in the market. For example, if you think a currency will increase in value, you can buy a futures contract and sell it at a higher price later on.
They’re a great way to learn about the Forex market.
Lastly, they’re also a great way to learn about the forex market and how it works. It’s because you can test out different trading strategies without risk any real money.
What are the risks of trading forex futures?
Of course, like any trading, there are also some risks associated with forex futures.
The potential for loss
First of all, there is always the potential for loss when trading. It’s because no one can predict the market’s future movements with 100% accuracy.
You could get margin called.
Additionally, you could also get a margin call if the market starts to move against you and you don’t have enough funds in your account to cover your losses.
You’re subject to slippage.
Another risk is that you’re subject to slippage, which is when the price you’re trying to buy or sell isn’t available, and you have to take the next best price. It can eat into your profits or increase your losses.
You need to be aware of contract rollover.
Finally, you also need to be aware of contract rollover. When your futures contract expires, you have to either close it out or roll it over into a new contract. If you don’t do either of these things, then you’ll be stuck with the current price of the currency pair, which could be much different from where it was when you originally placed your trade.