There are two very distinct forms of trading international currency – foreign exchange (forex) and futures. Both offer profit potential but require different strategies to make them successful.
Forex trading is when you trade currency pairs with no expiry date on them. Futures are similar, except the value of the contract is determined by prices that fluctuate during that time. The contracts have a definite expiry date, and trading them means you’re obligated to buy or sell at that specified price.
Traders looking for more volatility should consider using the forex market and suitable forex platform, while those seeking a more stable market might want to go with futures.
The Difference Between Forex and Futures Trading
However, the difference between forex and futures trading goes further than just the time limit on these contracts. Futures have expiration dates which means you have a time limit to trade, after which you must sell or buy the contract. Forex doesn’t work like this and is significantly more flexible.
All you need to know about forex trading is market trends compared with other trading methods such as futures. However, if you want to succeed in either of these, you must understand how each works.
Foreign Exchange Trading in Singapore
Forex is a highly flexible marketplace with some significant advantages for traders who know what they’re doing – namely, the sheer size of the marketplace means that there’s always turnover which can lead to exciting opportunities.
People investing in forex will assume a degree of risk as the value of ‘base’ currencies fluctuates over time but can also enjoy the prospect of potentially significant returns on some trades.
Traders looking for foreign exchange trading Singapore experts might be intrigued to learn that, like all markets, there is always an element of risk involved.
However, it’s possible to get started quickly, and once initial training has been completed, it’s possible to get trading with relatively little stress. There are also plenty of learning resources available online which can help traders get started even if they don’t necessarily have a degree in finance or economics.
Futures Trading in Singapore
Like forex, futures contracts can offer low-risk opportunities for people with experience in investing – however, the same cannot necessarily be said for beginners. This is because futures contracts are often traded ‘on margin’, which means that traders will effectively speculate with the broker’s funds.
This can create enormous potential for profit and massive potential for loss when trading on margin, and it’s not uncommon to lose more than 100% of your investment if you’re unlucky.
In addition to increasing risk, trading futures contracts also require a significant starting capital to ensure that traders can meet margin requirements comfortably. Even though margins are kept low in relation to the value of the underlying contract, the need for a deposit may discourage new traders from using this market.
There is no shortage of people who like trading in futures in Singapore, and indeed this marketplace has a long history as a source of opportunities for investors. However, it’s essential to learn as much as possible before getting started.
Futures trading in Singapore is a riskier market than forex trading which means that it will be more suitable for experienced traders than beginners.
However, it can still offer opportunities for those who know what they’re doing and has the added advantage of allowing traders to potentially profit from upward movements in asset prices (although this depends on the type of contract chosen). With careful training and comprehensive research, futures trading in Singapore might prove rewarding for people interested in this field.
Forex and futures traders should beware of fake regulation some brokers attempt to assert as this doesn’t mean they’re properly regulated. Trade only through reputable brokerages, like Saxo Bank, and trade on a demo account before investing your money.