This article looks at the trading that can be completed on the forex futures market.
There are a number of different markets that you can trade forex on. These markets include the spot market, the futures market and the options market. There are many people who look at using one of these markets as well as the spot market where most retail trading is done. If you are looking at the futures market you should consider all the traders that you will encounter. When you know about the other traders you will be more prepared for the market and what you are going to be doing.
The Hedgers on the Forex Futures Market
The futures market has a lot of hedgers who trade. Hedgers will use futures contracts to cover the risks that they take with other trading. Not all of the hedgers are going to be covering the risks of spot market transactions. There are many traders who look at using the forex future market to hedge their stock trading and other equity trading.
The hedgers on the market will not only be traders. There are many companies that use forex futures to protect themselves from fluctuations in foreign exchange rates. You need to consider this when you look at trading on this market.
The speculators are the traders who actually form the backbone of the futures market that we know today. These people are traders who are looking to make a profit from the strong directional movements of the forex market. The higher volume and frequency of the trading that is done by speculators is what makes the market liquid.
If you are looking to use the futures market then you need to be aware of the fact that this is the most dangerous way of trading on the market. The underlying costs of the transactions can remove the profits that you are going to be making. You will also need to understand the different strategies that you need to use when you speculate on the forex futures market.
The arbitrageurs are trades who are looking for anomalies in the prices that you get on the futures market. These traders are going to look at making a risk free return by taking advantage of these anomalies in the market. These traders will also increase the liquidity of the market as they trade in large volumes.
If you want to do this then you need to understand what you are going to be looking for and what you need to do in order to take advantage of what you find. You will also need large amounts of capital when you trade because of the costs that come with high volume futures trading.
The last type of trader that you find on the futures market is the spreader. These traders are not your normal traders as they require specialised knowledge to take advantage of the trades that they can place on the futures market. These traders are generally professionals who take advantage of the price and rate of change on the market.
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