Currency futures are futures markets where the underlying commodity is a currency exchange rate, such as the Euro to US Dollar exchange rate, or the British Pound to US Dollar exchange rate. Currency futures are essentially the same as all other futures markets (index and commodity futures markets), and are traded in exactly the same way.

Futures based upon currencies are similar to the actual currency markets (often known as Forex), but there are some significant differences. For example, currency futures are traded via exchanges, such as the CME (Chicago Mercantile Exchange), but the currency markets are traded via currency brokers, and are therefore, not as controlled as the currency futures. Some day traders prefer the currency markets, and some day traders prefer the currency futures. I recommend the currency futures as they do not suffer from some of the problems that currency markets suffer from, such as currency brokers trading against their clients, and non-centralized pricing.

Differences of Futures and Forex markets.

- The Forex market is the OTC interbank market, where participants, in most cases, are the large banks, funds and various financial institutions with large capitalization. - The market of futures contracts, a centralized "transparent" market, with a perfect clearing system transactions, where all customer transactions are carried out on a real exchange. For example, if a market participant buys a futures contract on some instrument, and at the same rate is reduced, then it makes a loss, which means that another client who sold him the futures, will receive the same income. The important point is that neither the exchange nor the broker providing the services will not be able to earn a losing client, since under such a system, it is impossible in principle. - Another difference from the forex futures market is the lack of a fixed spread, instead, to use the difference between the futures bid and the ask price, which is formed by the participants based on the number of orders. Futures with high liquidity, this difference is usually small, and is less than 1 pip. Broker commissions are generated for each client individually, their value depends directly on the number of transactions - with a small amount of their commission, usually equivalent spread for the currency pair on forex, with a large number of transactions - are substantially lower. - In Forex you cannot see the real volume of transactions which, in turn, is driven by price, because forex - it is, as noted above, the OTC market, and, therefore, does not have a universal platform, which is integrated and traders gave information on the volume of transactions. The futures market - it is a physical trading floor: Chicago Mercantile Exchange CME (Chicago Mercantile Exchange), with a hard bidding rules and information on the volume in real time, which can be directly monitored.

Futures and determining the futures contract.

-Currencies are the money of different countries, and currency trading is the buying and selling of these currencies. There are almost as many different currencies as countries, but the most popular currencies for trading are the US Dollar, the Euro, the British Pound (Sterling), and the Japanese Yen. The currency markets are some of the most popular day trading markets, and they therefore have some of the highest volume (number of contracts) and liquidity. This high volume and liquidity makes the currency markets attractive to all types of traders, including individual day traders, trading companies, financial and non financial companies, banks, and governments.

There are several different ways of trading currencies, and even non traders are familiar with one form of currency trading. When people go on holiday to a different country, they often need to exchange their local currency for the currency of the destination country. For example, a tourist from the US would need to exchange their US Dollars for Mexican Pesos if they went to Mexico on holiday. This exchange would be processed via a currency broker (such as a bank), and the transaction would become part of the currency markets. This type of currency trading is not suitable for professional traders, so two other forms of currency trading are used by day traders.

Forex trading is one of the most popular ways of trading the currency markets. Forex markets trade the actual exchange rate between two currencies. For example, the most popular Forex market is the Euro to US Dollar exchange rate (EUR to USD), which trades the value of 1 Euro in US Dollars. There are Forex markets for most of the major currencies, including the following :


·        EUR -> USD - The Euro to US Dollar exchange rate

·         GBP -> USD - The British Pound (Sterling) to US Dollar exchange rate

·         EUR -> GBP - The Euro to British Pound exchange rate

·         CAD -> USD - The Canadian Dollar to US Dollar exchange rate

·         AUD -> USD - The Australian Dollar to US Dollar exchange rate

·         EUR -> CHF - The Euro to Swiss Franc exchange rate

As the Forex markets are global markets, they trade 24 hours per day from Monday morning in New Zealand (Sunday night in the US) until Friday night in Asia (also Friday night in the US). Forex markets are different from most day trading markets and they are not provided by an exchange. Forex markets are decentralized markets, where all trades are directly between two traders (or a trader and a Forex broker). This means that there could be several different exchange rates for the same currencies, depending upon factors such as the location of the traders, and the brokers being used.

Forex markets trade the currencies directly (rather than trading contracts), and the minimum amount that can be traded is known as a lot. The size of a lot is dependant upon the Forex broker being used, but is commonly at least $25,000. This amount is usually margined, so individual traders do not need to have anywhere near the lot size in their trading account, and will borrow most of the lot size from their Forex broker instead.

What is a futures contract?

To the uninitiated, the term contract can be a little off-putting but it is mainly used because, like a contract, a futures investment has an expiration date. You don't have to hold the contract until it expires. You can cancel it anytime you like. In fact, many short-term traders only hold their contracts for a few hours - or even minutes!

The expiration dates vary between commodities, and you have to choose which contract fits your market objective.

For example, today is June 30th and you think Gold will rise in price until mid-August. The Gold contracts available are February, April, June, August, October and December. As it is the end of June and this contract has already expired, you would probably choose the August or October Gold contract.

The nearer (to expiration) contracts are usually more liquid, i.e. there are more traders trading them. Therefore, prices are more true and less likely to jump from one extreme to the other. But if you thought the price of gold would rise until September, you would choose a further-out contract (October in this case) - a September contract doesn't exist.

Neither is their limit on the number of contracts you can trade (within reason - there must be enough buyers or sellers to trade with you.) Many larger traders/investment companies/banks, etc. may trade thousands of contracts at a time!

All futures contracts are standardised in that they all hold a specified amount and quality of a commodity. For example, a Pork Bellies futures contract (PB) holds 40,000lbs of pork bellies of a certain size; a Gold futures contract (GC) holds 100 troy ounces of 24 carat gold; and a Crude Oil futures contract holds 1000 barrels of crude oil of a certain quality.

The names of the currency futures used in different terminals:

Euro - 6E, corresponding pair EUR/USD 

Pound - 6B corresponding pair GBP/USD 

JPY - 6J, corresponding pair USD/JPY 

Canadian Dollar - 6C, the corresponding pair USD/CAD 

Australian Dollar - 6A, corresponding pair AUD/USD 

Franc - 6S corresponding to the pair USD/CHF 

Example, marking the December futures contract: 6EZ1 Euro, 6BZ1 Pound, etc.      

Doing a brief conclusion, it should be noted that the futures is different from the currency pair name ticker, trading platform and the date of completion of the contract. In this case, the undoubted advantage is the ability to analyze real volume coming directly from the "floor" of the exchange. In all other similar charts of currency futures chart of the currency pair, as the futures is a derivative of the base currency. 


the EUR/USD chart M15 


Euro futures 6EZ1 schedule M15