Given the power and scope of the Forex market, in the process of its investment and speculation, traders found various variations for their work. The most popular today are forex spot, futures, options and exchange traded funds (or ETFs). Below, we briefly characterize each of these types of trade.
A feature of the spot market is that on it currency pairs are traded immediately, at the current market prices. This trading floor is quite simple, highly liquid and with tight spreads, and operations on the wholesale market can be conducted around the clock. You can open a trading account here for only $25, and in addition, most brokers often provide free graphics, news and analytical information.
Futures call contracts for the purchase or sale of a certain asset at a specific price, with the delivery of goods in the future (therefore they are called futures, from the English “futures”). Futures on the foreign exchange market “came” for the first time from the Chicago Mercantile Exchange (CME) back in 1972, but are now well standardized and traded through centralized exchange. The futures market attracts traders with its transparent terms of trade – information about prices and transactions is freely available. Together with this, this trading platform is under the control of state regulators.
An option is a contract (for purchase or sale) that gives the right or the opportunity to the owner of this financial instrument to buy or sell the asset at the set price at the expiration date of the option. Along with futures, options are quoted on exchanges, including the Chicago Options Exchange, the International Securities Exchange, and the Philadelphia Stock Exchange. However, the option market has some significant drawbacks, which affects its low authority among traders: trading hours here are limited for certain options, and liquidity is not as great as in futures or the spot market.
Stock exchanges or ETFs have recently appeared on the Forex market, so they have not yet managed to gain such popularity as the previous participants in international trade. The advantage of ETF is the ability to contain
A set of shares in combination with some currencies – this allows traders to diversify their assets. Exchange funds are created by financial institutions that can also sell their “offsprings” as shares through a stock exchange. Among the shortcomings of ETFs, you can highlight limited hours of work and availability of trade commissions.