Trading Forex with Futures

Trading currency futures or major Forex pairs makes no difference at all. The spread is 1 pip usually, so why bother with futures? Well, currency futures are traded on a regulated exchange, while Forex is not. Some see no difference, I do. Still the major reason I like futures compared to Forex is just a plain old habit: I'm used to trading futures.

Still I need to revert to Forex, when I want to deviate from the major Forex pairs, do I?

Let's start with the basics. This are the major FX pairs:

EUR/USD Fx (Euro)	trades as EUR futures	(6E on Globex)	(1 Tick = 12.50$)
GBP/USD Fx (cable)	trades as GBP futures	(6B on Globex)	(1 Tick = 6.25$)
USD/JPY Fx	trades inverted as JPY futures	(6J on Globex)	(1 Tick = 12.50$)
AUD/USD Fx	trades as AUD futures	(6A on Globex)	(1 Tick = 10.00$)
USD/CAD Fx (loonie)	trade inverted as CAD futures	(6C on Globex)	(1 Tick = 10.00$)
USD/CHF Fx	trades inverted as CHF futures	(6S on Globex)	(1 Tick = 12.50$)

In Forex some Majors are quoted as Currency against the US Dollar, others are quoted as US dollar against the other currency.

In Futures trading all currencies are quoted against the USD. Also compared to Forex the Tickvalue is fixed.

There are cross-currencies in futures as well, but with the exception of the EUR/JPY (RY H9 on Globex) they have no volume at all and should be avoided for trading, as the spread is just too wide to trade them.

Still looking at charts of GBP/JPY or EUR/JPY you might be tempted to trade them. You try and realize, it's just not working. You have been spoiled by futures trading and are just too used to your trading platform.

But there is a way around:

Most major cross-currencies can be traded using a major pair, which means you can trade them using futures as well

Cross-Currency	Major FX	Major FX	Future	Future	Value	Tick
long EUR/JPY	long EUR/USD	long USD/JPY	long 6E	short 6J	250,000$	12,50$
long GBP/JPY	long GBP/USD	long USD/JPY	2 long 6B	short 6J	250,000$	12.50$
long CHF/JPY	short USD/CHF	long USD/JPY	long 6S	short 6J	250,000$	12.50$
long EUR/GBP	long EUR/USD	short GBP/USD	long 6E	2 short 6B	250,000$	12.50$
long AUD/CAD	long AUD/USD	long USD/CAD	long 6A	short 6C	200,000$	10.00$

Other can not be traded using futures, unless you trade a certain size, as the tick value on the futures is not identical

Cross-Currency	Major FX	Major FX	Future	Future	Value	Tick
long AUD/JPY	long AUD/USD	long USD/JPY	6 long 6A	5 short 6J	1,250,000$	62.50$
long CAD/JPY	short USD/CAD	long USD/JPY	6 long 6C	5 short 6J	1,250,000$	62.50$
long EUR/AUD	long EUR/USD	short AUD/USD	5 long 6E	6 short 6A	1,250,000$	62.50$
long EUR/CAD	long EUR/USD	long USD/CAD	5 long 6E	6 short 6C	1,250,000$	62.50$

For Shorts the positions have to be reversed.

Cross-Currency	Major FX	Major FX	Future	Future	Value	Tick
short EUR/JPY	short EUR/USD	short USD/JPY	short 6E	long 6J	250,000$	12,50$
short GBP/JPY	short GBP/USD	short USD/JPY	2 short 6B	long 6J	250,000$	12.50$
short CHF/JPY	long USD/CHF	short USD/JPY	short 6S	long 6J	250,000$	12.50$
short EUR/GBP	short EUR/USD	long GBP/USD	short 6E	2 long 6B	250,000$	12.50$
short AUD/CAD	short AUD/USD	short USD/CAD	short 6A	long 6C	200,000$	10.00$

Other can not be traded using futures, unless you trade a certain size, as the tick value on the futures is not identical

Cross-Currency	Major FX	Major FX	Future	Future	Value	Tick
short AUD/JPY	short AUD/USD	short USD/JPY	6 short 6A	5 long 6J	1,250,000$	62.50$
short CAD/JPY	long USD/CAD	short USD/JPY	6 short 6C	5 long 6J	1,250,000$	62.50$
short EUR/AUD	short EUR/USD	long AUD/USD	5 short 6E	6 long 6A	1,250,000$	62.50$
short EUR/CAD	short EUR/USD	short USD/CAD	5 short 6E	6 long 6C	1,250,000$	62.50$

New-York Magazine

The Day of a Day-trader:

Take the time to read this: Stock-Surfing the Tsunami

New market: OMXS30

Last year, actually it was in December I was tempted to join a different broker, who was offering me 500$ margin on the ES. I test drove his platform, making huge demo profits in the ES by taking extraordinary risks of course.

Trading 10 or 20 or even 40 cars, when you come from 2 to maximum 4 cars makes a huge difference. I did decide not to go that route knowing in real trading I would most likely blow my account in a matter of days by being just once stubborn. I have been stubborn at times and will be stubborn again. I know myself.

None the less, I know I need to increase my trading size if I want to make a living from trading. And that means I need to get used to the swings involved.

That's when I found the Swedish OMXS30 market futures. They move very similar to the ES, they trade in 0.25 increments and the range is comparable. But the tickvalue is different: Each tick in the OMXS30 is worth 25 SEK, the exchange rate being around 0.11 USD, which means the tickvalue of the OMXS30 futures is 2.75 US$. That's quite a difference to 12.50 US$ for the ES and that makes it an ideal vehicle to trade size without losing your shirt.

The contract has good volume and I currently trade it in increments of 4 cars, with a maximum size of 20 cars. Profits and Losses are shown on my platform in the currency the contract trades which means I see the profits jumping in the 100ths, but in US$, that's approximately just 1/10ths. Real cool to get used to bigger numbers.

Marketdata subscription for the Stockholm Derivatives Exchange on IB is 1 Euro, margin is 950/760 USD. The market trades from 9:00 CET to 17:30 CET which is 2am EST to 11:30am EST.