welcome my friend to this video on spot forex vs futures currencies spots
forex trading spot forex markets and a comparison between the two some pluses
and minuses each have their own advantages and disadvantages we'll walk
through those with you today and you can make your decision as to what's best for
you but I find that there are some of these things that a lot of people don't
think about or maybe know about and you need to before you make a decision so
let's go through some of those first of all let me give a side note you can also
trade currencies with exchange-traded funds and exchange-traded notes the
problem that I find with a lot of them is that the price action is a bit
different and they have a lot of gaps in between the bars those are not technical
gaps it's just the way that the markets trade so not real crazy about
exchange-traded funds and notes even the really high volume one surprisingly that
I've seen for currencies so I look at the spot Forex on the left and then
we've got the futures on the right we'll look at the Euro today since that is
such a high-volume market and I also put the MACD down there in the bottom just
so you can compare how the indicators would look as well as price action now
as you can see I'm gonna just I've got my global crosshairs on here so we'll
just scroll over by a bar by bar real quick and you can see oh by the way yeah
this is a daily chart will look at some internet stuff too but as you can see
pretty much the same right now not exactly but very much the same from bar
to bar to bar to bar bar to bar bar not too much difference there indicator
looking pretty much the same we'll scroll forward here aways again go
forward here so you can see in advance and so I like for example this bar right
here you don't get a spike top reversal bar what we call there but it's you know
green and one red on the other not a big difference the overall price action is
pretty much the same with very minor differences now that
it's not always true but it is true most of the time so let's go down to a
five-minute bar now we're looking at the 5-minute on-the-spot Forks on the left
and the futures on the right and as you can see they are a bit different in here
they are a bit different so there are times when they will be different and
the act of treating times are pretty close to the same so you can treat
either one of these 24 hours a day so what are some of the big differences all
right well first of all even though they have generally the same price movement
but they will be have a little different both create 24/7 that's number two now
so those are similarities but one of the big differences is number three where
the futures are treated on a central exchange and the spot Forks is not and
that does make a difference in other words people will tell you oh well the
spot Forks has all this amazing volume incredible volume that is true but you
don't have access to all that volume because you are not treating all
throughout all of the exchanges around the world and through all the banks so
therefore you have the volume or the liquidity that's made available to you
by your broker so make sure you understand that and that should be part
of your consideration and choosing a forex broker as well a spot forex broker
number two is that in general although this has improved the spot forex
regulatory standards in broker standards have not been nearly as good as that as
for the futures market now fortunately we've seen a lot of changes in that so
that's been good but even here as of late we've seen a few problems with that
so keep that in mind as well the leverage is better with the spot forex
market than it is with the futures market in general although that can vary
so one of the things that that means well that's a double-edged sword right
the leverage can be a good thing can be a bad thing basically the more leverage
you have the more money you can potentially make we
with a smaller account but on the flip side of that of course the more money
you can lose with a smaller size account as well and that's a problem so you've
got to really take that into consideration especially for beginning
traders however I will say that one of the advantages of the spot forex market
especially for beginners is that you are able to trade mini Lots or micro Lots
and what that allows you to do is to trade with a smaller trading account so
and it's a good way after you've been learning trading and you've been paper
trading simulate trading demo trading whatever you've been doing after you've
got it down good you think your methods working you've proven it to yourself in
practice and you're ready to start trading with real money well if you
create the futures market then you have to commit more money than you would in
the spot forex market with a micro lot or a mini lot so kind of cool that you
can trade the spot forex market with less money to help you ease in to the
psychology of having to trade with real money and I think that's one of the
advantages there one of the things that a lot of people don't tell you is that
at least here in the United States is that there may be tax benefits to
treating the futures market over against equities that would include
exchange-traded funds or the spot forex market so I am NOT a tax professional
I'm not giving you the tax advice on that I'm just saying that that's a
possibility and to talk to your CPA or a tax professional about that because that
can potentially make a big difference at the end of the year as to how much money
you actually end up putting in your pocket so if you found value in this
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