Forex Futures
Forex futures are financial derivatives. They are essentially contracts that specify when a party must buy or sell a currency and for how much. This guide to forex futures explains how they work, supporting brokers, plus popular trading strategies. We also compare forex futures vs forwards and options.
Best Forex Futures Brokers
- IC Markets - IC Markets maintains its commitment to providing exceptionally tight 0.0-pip forex spreads on major currency pairs such as EUR/USD. This makes it an excellent option if you are seeking superior execution, with an average of 35 milliseconds. Additionally, if you are a high-volume trader, you can benefit from rebates of up to $2.50 per forex lot.
- FOREX.com - FOREX.com continues to uphold its stature as a premier FX broker, offering over 80 currency pairs and boasting some of the most competitive fees in the industry. With EUR/USD spreads dipping as low as 0.0 and $5 commission per $100k, it stands out. Moreover, its SMART Signals help to identify price behaviors across numerous major currency markets.
- XM - XM offers ultra low spreads across a wide range of forex assets with no re-quotes or hidden charges. Over 50 currency pairs are available, which is above the market average and is in line with one of our top award-winners, AvaTrade.
- PrimeXBT - PrimeXBT offers 50 forex pairs, which is above the industry average and covers a good range of majors, minors and exotics. Traders can enjoy trading via margin with zero commissions. Additionally, the broker’s copy trading service allows you to explore various currency trading strategies.
- IG - IG offers an above-average suite of 80+ currency pairs on its proprietary web platform, mobile app or MetaTrader 4, with more advanced charts and forex analysis tools available on the ProRealTime software. Forex spreads are competitive based on tests, starting from 0.1 pips on majors like the EUR/USD.
Forex Futures Comparison
| Broker | Forex Assets | EUR/USD Spread | Forex App Rating | Minimum Deposit | Regulator | Visit |
|---|---|---|---|---|---|---|
|
75 | 0.02 | 4.8 / 5 |
$200 | ASIC, CySEC, FSA | Visit |
|
80+ | 1.2 | 4.9 / 5 |
$100 | NFA, CFTC, CIRO, FCA, CYSEC, ASIC, SFC, FSA, MAS, CIMA | Visit |
|
55+ | 1.6 | 4.7 / 5 |
$5 | ASIC, CySEC, DFSA, FSC, FSCA | Visit |
|
45+ | Variable | 3 / 5 |
$0 | - | Visit |
|
80+ | 0.8 | 4.9 / 5 |
$0 | FCA, ASIC, NFA, CFTC, DFSA, BaFin, MAS, FSCA | Visit |
|
70+ | 1.58 pips (Ave) | 2.5 / 5 |
$100 | FCA, CySEC, FSCA, SCB, FSC | Visit |
|
60+ | 0.6 | 5 / 5 |
$100 | FCA, ASIC, CySEC, DFSA, MAS, FSA, FSCA, FMA, EFSA | Visit |
|
67 | 0.70 pips (var) | 3.9 / 5 |
$100 | FCA, CySEC, ASIC, FSCA, FSC | Visit |
|
100+ | 0.08-0.20 bps x trade value | 4.3 / 5 |
$0 | FCA, SEC, FINRA, CFTC, CBI, CIRO, SFC, MAS, MNB | Visit |
|
50+ | 1.3 | 3.5 / 5 |
$0 | NFA, CFTC | Visit |
|
35 | Floating from 0.1 pips | 2.5 / 5 |
$250 | - | Visit |
|
55 | 0.9 | 4.2 / 5 |
$50 | FCA, ASIC, CySEC, FSA, FSRA, MFSA | Visit |
|
|
13 | 0.75 | 4.3 / 5 |
$100 | CFTC, NFA | Visit |
|
70+ | From 0.8 pips | - | $0 | - | Visit |
|
30+ | From 0 pip | - | $10 | ASIC, FSCA, JSC, FSA, CMA | Visit |
#1 - IC Markets
Why We Chose IC Markets
IC Markets maintains its commitment to providing exceptionally tight 0.0-pip forex spreads on major currency pairs such as EUR/USD. This makes it an excellent option if you are seeking superior execution, with an average of 35 milliseconds. Additionally, if you are a high-volume trader, you can benefit from rebates of up to $2.50 per forex lot.
"IC Markets offers superior pricing, exceptionally fast execution and seamless deposits. The introduction of advanced charting platforms, notably TradingView, and the Raw Trader Plus account, ensures it remains a top choice for intermediate to advanced day traders."
- DayTrading Review Team
- GBPUSD Spread: 0.23
- EURUSD Spread: 0.02
- EURGBP Spread: 0.27
- Total Assets: 75
- Leverage: 1:30 (ASIC & CySEC), 1:500 (FSA), 1:1000 (Global)
- Platforms: MT4, MT5, cTrader, TradingView, TradingCentral, DupliTrade
About IC Markets
IC Markets is a globally recognized forex and CFD broker known for its excellent pricing, comprehensive range of trading instruments, and premium trading technology. Founded in 2007 and headquartered in Australia, the brokerage is regulated by the ASIC, CySEC and FSA, and has attracted more than 180,000 clients from over 200 countries.
Pros
- As a tightly regulated and widely respected broker, IC Markets prioritizes client security and transparency, helping to ensure a reliable trading experience globally.
- With ultra-fast execution speeds averaging 35 milliseconds and deep liquidity, IC Markets provides an optimal trading environment for scalpers, hedgers, and algorithmic traders.
- You have access to over 2,250 CFDs across various markets, including forex, commodities, indices, stocks, bonds, and cryptocurrencies, allowing for diversified trading strategies.
Cons
- There are fees for certain withdrawal methods, including a $20 wire charge, which can eat into profits, especially for frequent withdrawals.
- The breadth and depth of tutorials, webinars and educational resources still need work, trailing alternatives like CMC Markets and reducing its suitability for beginners.
- Despite four industry-leading third-party platforms, there is no proprietary software or trading app built with new traders in mind.
#2 - FOREX.com
Why We Chose FOREX.com
FOREX.com continues to uphold its stature as a premier FX broker, offering over 80 currency pairs and boasting some of the most competitive fees in the industry. With EUR/USD spreads dipping as low as 0.0 and $5 commission per $100k, it stands out. Moreover, its SMART Signals help to identify price behaviors across numerous major currency markets.
"FOREX.com remains a best-in-class brokerage for active forex traders of all experience levels, with over 80 currency pairs, tight spreads from 0.0 pips and low commissions. The powerful charting platforms collectively offer over 100 technical indicators, as well as extensive research tools."
- DayTrading Review Team
- GBPUSD Spread: 1.3
- EURUSD Spread: 1.2
- EURGBP Spread: 1.4
- Total Assets: 80+
- Leverage: 1:200 (Retail), 1:500 (Pro)
- Platforms: MT4, MT5, TradingView, eSignal, AutoChartist, TradingCentral
About FOREX.com
Founded in 1999, FOREX.com is now part of StoneX, a financial services organization serving over one million customers worldwide. Regulated in the US, UK, EU, Australia and beyond, the broker offers thousands of markets, not just forex, and provides excellent pricing on cutting-edge platforms.
Pros
- FOREX.com offers industry-leading forex pricing starting from 0.0 pips, alongside competitive cashback rebates of up to 15% for serious day traders.
- There’s a wealth of educational resources including tutorials, webinars, and a stacked YouTube channel to help you get educated in the financial markets.
- The in-house Web Trader continues to shine as one of the best-designed platforms for aspiring day traders with a slick design and over 80 technical indicators for market analysis.
Cons
- Demo accounts are frustratingly time-limited to 90 days, which doesn’t give you enough time to test day trading strategies effectively.
- Despite increasing its range of instruments, FOREX.com's product portfolio is still limited to forex and CFDs, so there are no options to invest in real stocks, real ETFs or real cryptocurrencies.
- FOREX.com's MT4 platform offers approximately 600 instruments, significantly fewer than the over 5,500 available on its non-MetaTrader platforms.
#3 - XM
Why We Chose XM
XM offers ultra low spreads across a wide range of forex assets with no re-quotes or hidden charges. Over 50 currency pairs are available, which is above the market average and is in line with one of our top award-winners, AvaTrade.
"XM is one of the best forex and CFD brokers we have tested. The flexible account types will suit a variety of short-term trading styles while the $5 minimum deposit and smooth sign-up process make it easy to start trading."
- DayTrading Review Team
- GBPUSD Spread: 1.9
- EURUSD Spread: 1.6
- EURGBP Spread: 1.8
- Total Assets: 55+
- Platforms: MT4, MT5
About XM
XM is a globally recognized forex and CFD broker with 10+ million clients in 190+ countries. Since 2009, this trusted broker has been known for its low fees on 1000+ instruments. XM is regulated by multiple financial bodies, including the ASIC and CySEC.
Pros
- Accessible trading accounts with a $5 minimum deposit and fast account opening
- Transparent and low fees with spreads from 0.0 pips that will help protect day trading profit margins
- 1000+ instruments are available, including recently added thematic indices, providing exposure to emerging industries
Cons
- There's $5 inactivity fee after only 3 months, though this won't affect active traders
- PayPal deposits are not supported
- There is weak regulatory oversight through the global entity
#4 - PrimeXBT
Why We Chose PrimeXBT
PrimeXBT offers 50 forex pairs, which is above the industry average and covers a good range of majors, minors and exotics. Traders can enjoy trading via margin with zero commissions. Additionally, the broker’s copy trading service allows you to explore various currency trading strategies.
"PrimeXBT is good for beginners looking to trade crypto derivatives among traditional assets like forex and indices. There's also a proprietary copy trading solution for novices looking to learn from more experienced investors. With that said, the lack of regulation means traders will receive limited safeguards."
- DayTrading Review Team
- GBPUSD Spread: Variable
- EURUSD Spread: Variable
- EURGBP Spread: Variable
- Total Assets: 45+
- Leverage: 1:1000
- Platforms: Own
About PrimeXBT
PrimeXBT is a multi-asset platform offering highly leveraged trading in forex, indices, commodities and cryptocurrencies. The company launched in 2018 and now has over 1 million users from more than 150 countries. With no minimum deposit, copy trading features and low commissions, the broker remains a popular option among crypto trading novices.
Pros
- PrimeXBT offers low maker and taker fees coming in at 0.01% and 0.02%, respectively, for crypto futures contracts
- The broker offers 24/7 customer support via live chat, as well as an extensive help centre
- There’s a range of additional trading opportunities on offer, including demo contests and a copy trading solution
Cons
- The total selection of 110+ assets is far fewer than top competitors, including OKX with 400+
- It’s a shame that there are no popular third-party platforms on offer such as MT4
- The lack of reputable regulatory oversight is a security concern, though this is common in the crypto trading industry
#5 - IG
Why We Chose IG
IG offers an above-average suite of 80+ currency pairs on its proprietary web platform, mobile app or MetaTrader 4, with more advanced charts and forex analysis tools available on the ProRealTime software. Forex spreads are competitive based on tests, starting from 0.1 pips on majors like the EUR/USD.
"IG continues to provide a comprehensive package with an intuitive web platform and best-in-class education for beginners, plus advanced charting tools, real-time data, and fast execution speeds for experienced day traders."
- DayTrading Review Team
- GBPUSD Spread: 0.9
- EURUSD Spread: 0.8
- EURGBP Spread: 0.9
- Total Assets: 80+
- Leverage: 1:30 (Retail), 1:250 (Pro)
- Platforms: Web, ProRealTime, L2 Dealer, MT4, AutoChartist, TradingCentral
About IG
Founded in 1974, IG is part of IG Group Holdings Plc, a publicly traded (LSE: IGG) brokerage. The brand offers spread betting, CFD and forex trading across an almost unrivalled selection of 17,000+ markets, with a range of user-friendly platforms and investing apps. For 50 years, IG has maintained its position as an industry leader, excelling in all key areas for traders.
Pros
- The ProRealTime advanced charting platform is free as long as certain modest monthly trading activity requirements are met
- The IG app offers a superb mobile trading experience with a clean design that helped it secure Runner Up at our Best Trading App award
- The proprietary web-based platform continues to caters to traders of all levels, with advanced charting tools and real-time market data useful for day trading
Cons
- IG applies an inactivity fee of $12 per month after 2 years, deterring casual investors
- Stock and CFD spreads still trail the cheapest brokers like CMC Markets based on tests
- IG has discontinued its swap-free account, reducing its appeal to Islamic traders
What Are Forex Futures?
Futures are a straightforward derivative contract. A derivative is when a financial instrument derives its value from the price fluctuations of another. For example, the value of a derivative linked to a foreign exchange pair, say USD/GBP, is simply a function of price movements between those currencies.
Importantly, forex futures often have their own symbols. For instance, on CME’s Group website EUR/USD has the symbol “6E”.
Spot Forex vs Futures
Many traders ask what the difference is between trading currencies using spot forex or futures. Here are the most significant considerations:
- Price – Spot forex is trading the exchange rates as they stand in the present. Futures are based on what they will be in the future (or what participants are willing to pay)
- Timeframes – Spot implies the “swap” of currencies when the trade is made. Futures delay this until the contract’s specified time
- Scale – Retail investors can trade spot forex, using leverage, for relatively small amounts. Futures generally require a much larger capital outlay and attract larger institutions (who might be hedging) and speculators trading larger sums
Forex Futures vs Forwards
The main difference between forwards and futures contracts is that the latter are standardized. This means forex futures come in set sizes and do not allow customization. Also, clearing houses settle them according to standard procedures. Forex futures are the most popular with retail investors.
Trading With Forex Futures
Retail and institutional investors use forex futures for hedging and speculation.
Hedging With Futures
Investors who hedge through forex futures aim to reduce exposure to currency exchange-rate fluctuations. Institutional investors tend to benefit the most from this strategy, though retail traders can also take advantage of it to a lesser degree. While forex futures-based hedging always makes mathematical sense, its effects may be insignificant on a smaller scale.
Let us consider the following example: A US company expects to receive EUR 1 million for its services rendered in Europe.
The payment will be made in 5 months. The current EUR/USD exchange rate is 1.12. That means the EUR 1 million translates to USD 1,120,000. Any drop in the exchange rate would mean significant losses for the US company. If the rate were to drop to 1.10, it would generate a $20,000 loss.
The spot forex market does not offer the company a practical way to protect the transaction.
It can, however, sell eight EUR 125,000 forex futures, which would all result in a profit if the exchange rate were to drop. This profit would then offset the losses resulting from the transaction itself.
This example also clarifies the practice’s limitations for retail traders.
Speculation
Many traders use the forex market for speculation. They buy a specific currency, such EUR, and when the relative value goes up, they sell it for profit. The downside of this technique is that it becomes impossible to generate a profit if the price drops. This means that if you were looking to profit from the anticipated drop in value of the Russian Ruble in the Ukraine conflict, for example, you may struggle.
Futures address this issue. Traders who predict a currency’s value will decline may sell futures rather than purchase them.
In contrast to the forex market, futures are subject to exchange regulations. Due to the wide variety of contract sizes offered, they are suitable for retail investors. On the other hand, institutional investors may benefit from their liquidity, which makes them an excellent choice for those looking to take large positions.
Contract Specifications
As outlined above, forex futures contracts are standardized. They have a set size, date of expiry, settlement rules, and many characteristics that differentiate them from other contracts.
One essential feature is the tick, which is unique to each contract. It symbolizes the minimum price fluctuation. The best way to understand the tick is through an example. On the CAD/USD pair, the tick size is $0.0001 for every CAD. With contracts standardized to CAD 100,000, this translates to $10 moves up or down.
Retail traders find regular FX futures contracts to be time-consuming and inconvenient. Fortunately, there are mini contracts available too. E-minis or e-micros, are 1/10th of the size of a regular contract.
What Is Trading Margin In Forex Futures?
The clearing houses that settle the contracts often require an initial margin from FX traders. This margin acts as a guarantee for the investor that their account can afford to support the trades.
The maintenance margin is tracked, and when it drops below a set amount, it triggers a margin call. At this point, investors need to deposit more to raise their margin level back above the preset mark. If they don’t, the exchange closes their trades.
Exchanges, such as the Chicago Mercantile Exchange (CME), list exact maintenance requirements for all supported contracts on their websites.
Where Can Investors Trade Forex Futures?
The CME is the worldwide leader in forex futures trading. The exchange has been experimenting with cryptocurrency and fiat options, in addition to ‘traditional forex futures. Other exchanges with high trading volumes include the Intercontinental Exchange and Eurex.
Investors can trade forex futures live through an open cry-out system. However, this option has already been phased out by many exchanges. The most straightforward way is through electronic means, i.e. the internet.
Forex futures represent just another way to trade currencies. Other methods used by investors to trade forex include:
Market Analysis Tools
Both technical and fundamental analysis are used when trading forex futures, similar to stocks. Technical analysis studies the price movement of the forex market using real-time or historical charts. The investor examines important market data such as price and volume to predict future trends.
The most significant difference between forex futures and stocks analysis comes from the use of fundament research. Forex traders must understand macroeconomic fundamentals and forecasting methods. In contrast, stock market investors derive their fundamental analysis from a company’s financial statements, health, competitors, and wider market sentiment.
Global events affect forex futures. Inflation, deflation, interest rates, political unrest, sanctions, and commodities prices are a few of the most influential factors. Usually, a change in any of them will impact the value of a currency.
For example, the Japanese yen is particularly sensitive to energy cost, which is a commodity. This is due to Japan being one of the biggest energy producers in the world.
Final Thoughts On Trading Forex Futures
Investors frequently use forex futures to hedge or speculate on foreign exchange rates. Socio-economic factors usually impact the price of currencies, and you must take them into consideration when creating trading strategies. You also need to be aware of the margin size as it can magnify profits and losses. See our list of the best forex futures brokers to start trading today.
FAQ
What Is The Difference Between Forex And Index Futures?
Both forex and indices, like the S&P 500, have futures. However, they are different asset classes. Forex is used for currency trading, while indices represent a cluster of stocks. One of the pros of index futures is their exposure to a wide range of investments. They are diversified from the start.
Forex Vs. Futures Day Trading, Which Is Better?
Forex involves trading currency pairs, while futures day trading applies to many financial assets, including stocks, options, forex, bonds, and indices. They have a contract that specifies the future time and price of the sale. You should choose the option which best suits your trading style.
Forex Futures – How Do They Work?
FX futures are contracts for currencies that indicate the cost of a future exchange. Top forex day trading platforms and brokers, such as FOREX.com, generate spot rates. In turn, these rates are utilized as a basis for the futures’ price quotes.
What Are The Forex Futures Trading Hours?
The main forex market is open in three sessions. Here are the GMT periods. The Asian session is between 11 PM and 8 AM, the European session is open from 10 PM to 5 AM, and the North American window is held from 12 PM to 8 PM. If you are from a different time zone, such as India, Australia, or the USA, you must convert this to your local time.
What Are Forex News APK Solutions?
APK or Android Application Packages are the files a developer uses to group an Android app. It is best to avoid websites offering APK versions of forex trading apps and stick with reputable sources as they may contain viruses. Mobile phones are particularly vulnerable to malware.
FAQ
What Is A Currency Futures Contract?
A currency futures contract is an agreement between two parties to exchange currency on a preset date in the future, at an agreed exchange rate.
The contract enables both parties to mitigate risk and establish an exchange rate today, for a time in the future.
This contract can subsequently be brought and sold for speculation, but ultimately, on the day of expiry, the currencies will be exchanged at the agreed rate.
Are Futures Settled Daily?
Futures are marked to market daily, and changes are settled accordingly until the expiry date of the contract.
Can Futures Be Sold Before Expiry
Yes. A futures contract can be sold prior to expiry. The contract can also be nullified if a contract of the opposing direction and value is opened – thus ‘closing’ the original.
Why Do Futures Expire?
The day on which goods or currency are exchanged is known as the expiration date. The transaction must eventually occur, or else there will be no underlying deal from which the derivative may ‘derive’ a price.
Where Can I Trade Forex Futures?
These brokers all offer futures trading ;