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
#1 - NinjaTrader
NinjaTrader supports the trading of popular currencies including the EUR/USD. The trading software also offers unique features tailored to forex trading, including specific order and market windows.
"We recommend NinjaTrader for high-volume futures traders looking for low fees and premium analysis tools."
- DayTrading Review Team
- GBPUSD Spread: 1.6
- EURUSD Spread: 1.3
- EURGBP Spread: 1.6
- Total Assets: 50+
- Leverage: 1:50
- Platforms: eSignal
Stocks Trading
Stocks can be traded by connecting the NinjaTrader platform to supporting brokers. You can then take positions on large public companies and household names via advanced trading software.
Crypto Trading
Trade micro Bitcoin futures with low fees and leading charting tools. Get exposure to Bitcoin through CME Group's centralized exchange with robust risk management tools.
About NinjaTrader
NinjaTrader is a US-headquartered and regulated brokerage that specializes in futures trading. There are three pricing plans to suit different needs and budgets, as well as ultra-low margins on popular contracts. The brand's award-winning charting software and trading platform also offers a high-degree of customization and superb technical analysis features.
Pros
- Free platform access and trade simulation capabilities
- Widely respected and heavily authorized by the NFA and CFTC
- Low fees with $50 day trading margins & commissions from $.09 per micro contract
Cons
- Withdrawal fee on some funding methods
- Non forex and futures trading requires signing up with partner brokers
- Premium platform tools come with an extra charge
#2 - IG Group
IG offers currency trading on its award-winning web platform and mobile app. Comprehensive charts and forex analysis tools are also available through ProRealTime.
"IG offers a superb all-round package. Beginners will appreciate the user-friendly web platform and secure trading environment while established investors will rate the 17,000+ markets and top-tier market research."
- 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: MT4, AutoChartist, TradingCentral
CFD Trading
IG offers an impressive suite of 17,000+ CFD instruments. Negative balance protection ensures accounts cannot drop below zero while custom price alerts and the IG Academy enhance the trading experience.
Stocks Trading
IG offers 13,000+ shares, with more listed firms than most competitors. Fees are low with no commission on US stocks. Extended hours trading is also available alongside ultra-fast execution speeds of 0.014 seconds.
Crypto Trading
11 popular cryptos are available, plus two crypto crosses. A crypto index is also offered, following the value of the top 10 digital currencies by market cap. All cryptos are available via CFDs.
About IG Group
IG is an award-winning broker that has an excellent reputation globally. The brand-US offers spread betting, CFD and forex trading across a comprehensive suite of markets. IG is also multi-regulated, provides a great trading app and has 50 years experience.
Pros
- Opening an account takes less than 5 minutes
- IG offers great educational materials including an extensive library of training and support on how to day trade successfully
- 24/5 customer support is available
Cons
- Inactivity charge
- No copy trading platform
#3 - Videforex
Trade 35 major, minor and exotic forex pairs through CFDs with floating spreads from 0.1 pips. Alternatively, binary options allow you to speculate on rising and falling prices with a fixed stake and payout.
"Newer traders will find a lot to enjoy about trading binary options on Videforex's easy-to-use proprietary platform, as well as the broker's copy trading solution. Payouts are also higher than most alternatives climbing to 98%."
- DayTrading Review Team
- GBPUSD Spread: Floating from 0.1 pips
- EURUSD Spread: Floating from 0.1 pips
- EURGBP Spread: Floating from 0.1 pips
- Total Assets: 35
- Leverage: 1:500
- Platforms: TradingView
CFD Trading
Videforex CFDs are available on forex, indices, cryptocurrencies and commodities with up to 1:500 leverage and tight spreads from near zero. CFDs incur a commission fee of 1%–2.5% and up to 5% for leveraged trades.
Stocks Trading
Trade binary options and CFDs on global stocks from US, European, Russian and Asian exchanges, as well as 37 indices covering a wide range of global markets. The access to stocks trumps many binary options brokers.
Crypto Trading
Traders can speculate on crypto prices in pairs with USD and CNY through binary options and CFDs. The range of digital currencies is fairly narrow vs alternatives but major tokens like Bitcoin are available.
About Videforex
Videforex offers access to stock, index, crypto, forex and commodities markets via binary options and CFDs. The proprietary platform, mobile app and integrated copy trading are user-friendly and will suit new and casual traders, and the market analysis tools and trading contests provide good ways to improve your trading skills.
Pros
- Videforex regularly runs trading contests, offering great practice and cash prizes
- The firm facilitates day trading and binary options for global customers
- Videforex offers transfers via a wide range of payment types, from credit cards to cryptocurrencies
Cons
- No MetaTrader 4 integration
- US clients aren’t accepted due to legal restrictions
- The broker isn’t overseen by a trusted regulatory agency
#4 - Axofa
Axofa offers 50+ forex pairs with raw spreads and low commissions. On the downside, the broker is not particularly transparent when it comes to their account conditions and fees.
"Axofa could be a good option for clients looking for social trading features alongside the MT5 platform, and are willing to trade with an offshore brand."
- DayTrading Review Team
- GBPUSD Spread: From 1.6 pips
- EURUSD Spread: From 1.6 pips
- EURGBP Spread: From 1.6 pips
- Total Assets: 10+
- Leverage: 1:1000
- Platforms: MT5
CFD Trading
CFDs are available on popular asset classes with a competitive $1 minimum deposit. The broker offers very high, unrestricted leverage of 1:1000, which will amplify both profits and losses.
Stocks Trading
A decent selection of 100+ popular international stocks are available. Traders can also test out their strategies in the free MT5 demo account, though the conditions are more limited vs other brokers.
About Axofa
Axofa is a forex and CFD broker registered in St Vincent and the Grenadines. The broker offers three account types with access to forex, commodities and indices. With ECN processing, low minimum deposits and no commissions, Axofa could be an attractive option, although the broker does not hold a reputable license.
Pros
- Negative balance protection
- Low starting deposit of $1 for beginners
- MT5 integration
Cons
- Limited verifiable information about the broker’s owners and background
- Inconsistencies between international subsidiaries and website information
- Unregulated broker
#5 - RaceOption
Trade 25+ major and minor currency pairs with access to over 30 technical indicators in the broker's proprietary terminal. You can also follow and replicate other forex trades using the integrated copy trader.
"RaceOption will appeal to traders new to binary options looking for copy trading, contests and 24/7 customer support. Experienced traders will also appreciate the account-based perks and bonuses."
- DayTrading Review Team
- GBPUSD Spread: Floating
- EURUSD Spread: Floating
- EURGBP Spread: Floating
- Total Assets: 25+
- Leverage: 1:500
- Platforms: TradingView
CFD Trading
Access a modest range of CFD instruments across key markets, including indices and commodities. Clients can trade directly from charts with high leverage up to 1:500 and customisable time intervals.
Stocks Trading
Go long or short on over 50 major global shares and map out your strategies using the intuitive charting tools. Those with $1,000+ starting capital can also enjoy their first 3 trades risk-free.
Crypto Trading
Trade popular crypto CFDs with leverage up to 1:30 and utilize convenient crypto funding in Bitcoin, Ethereum or other altcoins. You can also enjoy fully flexible, 24/7 crypto trading at home or on the go. Cryptos are paired with USD and CNY.
About RaceOption
RaceOption is a binary options broker operating from the Marshall Islands. With over 1,500 clients, the broker aims to offer fast funding, low fees and a secure trading environment. Traders can access over 100 binary options and CFDs, plus copy trading and weekly prizes.
Pros
- First 3 trades are risk-free in the Silver and Gold accounts, with only $1,000 required to be eligible
- High payouts on popular underlying assets up to 95%
- Flexible weekend trading available plus 24/7 multilingual customer support
Cons
- No free demo account
- Limited educational resources
- Unregulated broker with lower safety score
#6 - Scope Markets
Scope Markets offers MT5 trading for a range of major, minor and exotic currency pairs with high leverage and a low starting deposit. Multilingual 24/5 support is also available to support forex traders.
"Scope Markets will appeal to traders seeking highly leveraged CFDs and spot investment products on the powerful MetaTrader 5 platform. The Scope Markets Group stands out for its range of trading tools and educational materials."
- DayTrading Review Team
- GBPUSD Spread: 1.0
- EURUSD Spread: 1.0
- EURGBP Spread: 1.0
- Total Assets: 44
- Leverage: 1:2000 (location dependent)
- Platforms: MT4, MT5
CFD Trading
Scope Markets clients can trade CFDs on a good selection of asset classes including forex, precious metals, energies, indices and global shares. The award-winning broker also offers a decent suite of educational materials and a YouTube channel to support aspiring traders.
Stocks Trading
Scope Markets offers stock trading on popular markets, alongside cash and futures indices. Clients can speculate on major stocks from US, EU, Australia, and more with competitive fees and reliable trading software.
Crypto Trading
Go long or short on popular cryptos like Bitcoin, Ethereum and Ripple with leveraged CFDs and competitive spreads. Depending on the jurisdiction, different regulations apply. CFDs on cryptocurrencies are not offered in all jurisdictions.
About Scope Markets
Scope Markets offers day trading and investing in multiple spot and CFD instruments. The group of brokers is regulated in several locations, including Belize, Kenya and South Africa. Users get competitive trading conditions, a range of payment methods, strong support and can get started in a few straightforward steps.
Pros
- Modern Scope Trader web platform with 50+ analysis tools and intuitive design
- Low commissions and fees
- Multi-regulated group
Cons
- Regulatory scrutiny varies between countries
- Limited trading instruments
#7 - Just2Trade
Traders can access a decent range of 60+ major, minor and exotic forex pairs through standard and ECN accounts with tight spreads from 0.5 and 0.0, respectively. Execution speeds are also faster than most competitors at 50ms, which will appeal to active forex day traders.
"Traders seeking a multi-asset broker with an exceptional range of 35,000+ assets, market-leading software and low trading fees should consider Just2Trade. The Try2BFunded program will also appeal to users seeking funded trading accounts."
- DayTrading Review Team
- GBPUSD Spread: 0.0
- EURUSD Spread: 0.0
- EURGBP Spread: 0.0
- Total Assets: 50+
- Leverage: 1:20
- Platforms: MT4, MT5, TradingCentral
CFD Trading
With CFDs on 20+ Polish and 30+ US stocks, as well as energies and seven global stock indices covering US, UK, European, Australian and Japanese markets, Just2Trade offers a superb selection of global assets.
Stocks Trading
As well as Just2Trade's 50+ stock CFDs, traders can access a huge variety of thousands of stocks traded on US and international exchanges. The chance to build an investment portfolio and benefit from dividends sets Just2Trade apart from most CFD brokers.
Crypto Trading
Traders can speculate on a modest selection of the largest cryptos by market cap including Bitcoin. On the downside, crypto trading is only available to clients from Asia which is more restrictive than many alternatives.
About Just2Trade
Just2Trade is a reliable multi-regulated broker registered with FINRA, NFA and CySEC. The company has 155,000 clients from 130 countries and stands out for its huge suite of instruments and additional features, including a social network, robo advisors and a funded trader programme.
Pros
- Regulated and trustworthy with authorization from FINRA, NFA & CySEC
- Competitive fee schedule and high-quality trade executions
- STP/ECN broker with fast execution speeds
Cons
- Few standard educational resources compared to other brokers
- Cryptocurrency is only available in Asia
- Research tools such as stock screeners require third-party applications
#8 - Nadex
Speculate on 11 popular currency pairs via Knock Out contracts, call spreads and binary options. Nadex offers a wider range of timeframes than most binary options brokers, with contracts spanning from intraday to weekly.
"Users looking to trade short-term binary options with a US-regulated broker will find a good platform in Nadex."
- DayTrading Review Team
- GBPUSD Spread: 0.25 pips Var
- EURUSD Spread: 0.25 pips Var
- EURGBP Spread: 0.25 pips Var
- Total Assets: 11
- Platforms: Own
Stocks Trading
Speculate on a handful of global indices via binary options contracts, including the S&P 500 and FTSE 100. There are low commissions and traders can see fixed payouts and risk levels before opening a trade.
Crypto Trading
Nadex offers a limited list of cryptos with just Bitcoin and Ethereum. Traders can go long or short though with straightforward binary options contracts that mean you don't need to own the underlying token.
About Nadex
Nadex is a renowned exchange and binary options provider, based in the US. The company is fully regulated by the CFTC and offers options, call spreads and Knock Out contracts. Nadex also has just a $1 entry or exit fee and a user-friendly platform and proprietary app.
Pros
- Proprietary mobile app with good range of indicators and charting tools
- A range of timeframes that will suit both short and longer term strategies
- Extensive educational resources for those new to binary options trading
Cons
- Narrow selection of cryptocurrencies to trade
- Products and tools are more advanced than some alternatives
- No MT4 or MT5 platform integration
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. 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 ;
