FX Futures vs. Cash Forex

Forex Regulation

Did you know that although many off-exchange foreign currency futures and options (cash forex) firms imply their customer’s funds are safe in “segregated” accounts, in fact customer funds could be at risk in the event of firm insolvency?




FX Futures vs. Cash Forex

Daniels Trading has a very strong focus on trader education and overall market awareness, especially in regard to currency trading. This emphasis is in keeping with our mission of providing “Excellence Through Execution.” Traders in this day and age are presented with an incredible number of choices of brokerage firms and forex trading vehicles. Ensuring that our customers make informed choices is our responsibility.
FX Futures Q & A

Visit our FX Futures Q & A page to learn about vital questions that all individual traders should ask their forex trading firm.


What is Forex?

The foreign exchange market is the largest and most liquid financial market in the world, representing more than $1.2 trillion worth of transactions each day. Also known as forex or FX, currency trading involves the simultaneous purchase of one currency while selling another currency. Currencies are traded in pairs, such as U.S. dollar/Japanese yen (USD/JPY) or Euro/U.S. dollar (EUR/USD), or via currency indexes, such as the CME$INDEX™.
Read more about the forex market.
Why Trade Forex?
The Forex Markets Are Open Virtually 24 Hours per Day

Individuals looking to profit from market movements can act any time of the day or night during the forex trading week to take advantage of changing market conditions. Chicago Mercantile Exchange® (CME) offers electronic access to its entire range of FX futures, virtually 24 hours per day during the currency trading week. The extended access throughout the day was made possible with the introduction of “side-by-side” electronic trading with floor trading, occurring in CME futures pits.
Benefits of Trading CME FX Futures and Options:

* Open, fair and anonymous currency trading
* Equal access to the same forex markets and prices for all traders
* All exchange fees are public and spreads are consistently tight
* Global access to CME electronic forex markets virtually 24 hours a day
* Access to in excess of $48 billion in liquidity each day
* Guarantee of counterparty credit and central clearing by CME Clearing



Market Integrity

Fair Markets, Open Access & Price Discovery:
CME is regulated by the U.S. Government via the Commodity Futures Trading Commission (CFTC). Integrity and openness are critical components of CME markets. Fair and transparent pricing, open access and the highest ethical standards are important criteria applied in managing CME markets.

Providing the highest integrity in CME markets is an important part of fulfilling a core CME Value, “Customers come first.”
Liquidity

More transparent than OTC forex trading spreads:
CME FX futures markets are supported by automated trading systems supplying continual pricing feeds from global forex market makers. These pricing feeds are real-time, dealable quotes, which allow CME to provide exceptional market liquidity and a dynamic trading venue for a large pool of forex fund managers, interbank spot forex traders, international asset managers, multinational corporations, speculators, day traders and retail investors.

If you trade currencies on the OTC market, you may not really know the spread costs, which are built into the forex rate that you are quoted. Each time a quote is requested from a forex dealer in the OTC market, prices are produced for the interested counterparty alone. As a private deal, quotes are often five pips wide and are shaded to favor the dealer’s position, leading to price slippage. Skewed spreads are costly to the customer and difficult to detect, as the OTC customer often does not have access to the full range of market prices.
Read more about forex liquidity.
Currency Trading History

In 1972, CME® transformed global finance with the launch of the first financial futures contracts via the newly organized International Monetary Market (IMM). Today, CME is the largest market for exchange-traded foreign exchange (FX) futures in the world.

If you currently trade forex in the over-the-counter (OTC) market or on another venue, CME offers many advantages over those markets. At CME, trading transactions take place within an open, fair and anonymous trading environment. Individual traders, banks and hedge funds all have equal access to the same forex markets and prices.

An exchange environment, with its open and transparent market pricing, offers forex traders the opportunity to be involved in the process of price discovery, and provides other key advantages over “private” deals in the OTC market. If you trade OTC forex, it’s time to look at CME FX futures. The innovative, online electronic accessibility, virtually 24 hours per day, combined with low trading costs and the backing of the CME Clearing House make CME a highly cost-effective, transparent and secure place for forex trading.