What are the differences and connections between futures and foreign exchange? The relationship between futures and foreign exchange


Foreign exchange and futures are products that many domestic investors often invest in. Futures are a standardized contract, and foreign exchange refers to the exchange transactions between different countries' currencies. Both are financial derivatives, but they have some differences and connections.

Foreign exchange and futures are products that many domestic investors often invest in, and many investors do not know how to choose between foreign exchange and futures. So let's learn about the differences and connections between futures and foreign exchange together?

between futures and foreign exchange together

The difference between futures and foreign exchange

1. Different liquidity of funds

The daily trading volume of the foreign exchange market is as high as 1.4 trillion US dollars, making it undoubtedly the world's largest and most liquid financial market, while the daily trading volume of the futures market is only 30 billion US dollars. So, the liquidity of funds is one of the major differences.

2. Different transaction times

Foreign exchange trading begins in Sydney, Australia, at 5 pm on Sunday (6 am Beijing time), followed by 7 am Eastern time in Tokyo, Japan, 2 am Eastern time in London, UK, and 8 am New York. It can be said that the foreign exchange market is a 24-hour uninterrupted service market. The trading hours of the futures market are very limited, with futures trading hours in Chicago from 8:20 am to 14:00 am Eastern Time.

Compared to the foreign exchange futures market in the United States, such as the Chicago Mercantile Exchange or the Philadelphia Stock Exchange, there are certain operating hours restrictions. In the case of the Chicago Mercantile Exchange, the operating hours are from 8:20 a.m. to 2 p.m. Eastern Time. Therefore, if any important news from London or Tokyo is not announced during the operating hours, the opening of the next day will become very chaotic.

3. The quality and speed of transactions differ

Each transaction in the futures market has a different trading date, price, or contract content. Every futures trader has the following experience: a futures transaction often takes half an hour to complete, and the final transaction price must vary significantly. Although there is now electronic trading assistance and a guarantee of restricted transactions, the transaction of market orders is still quite unstable. Foreign exchange traders provide stable quotes and real-time transactions, allowing investors to trade using real-time market quotes, even in situations where transactions cannot be made during the busiest market conditions.

In the futures market, the uncertainty of transaction price is because all orders need to be matched through a centralized exchange, which limits the number of traders, fund flow, and total transaction amount at the same price. And every quotation from foreign exchange traders is executed, which means that as long as investors are willing, transactions can be made! There will be no situation where there is a price but no transaction occurs!

4. Different transaction commissions

When buying and selling in the futures market, in addition to the price difference, investors must also bear additional commission or handling fees. All financial products have buying and selling prices, and the difference between buying and selling prices is defined as the price difference, or the cost of transaction. Until today, unreasonable price differentials in the futures market still exist due to a lack of transparency. Now, investors can use the real-time buying and selling prices displayed on online trading platforms to determine the depth of the market and the true transaction costs. The price difference in foreign exchange trading is much lower than that in futures trading, especially in post market trading, as futures investors are prone to low liquidity and suffer significant losses.


1. Trading risk: Both futures and foreign exchange trading have certain trading risks, and investors need to conduct risk assessment and management.

2. Price fluctuations: The prices of futures and foreign exchange transactions are influenced by factors such as market supply and demand, and price fluctuations are relatively severe.

3. Hedging: Both futures and foreign exchange trading can be used for risk management through hedging, which is an effective tool for investors.

【 EBC Platform Risk Reminder and Disclaimer 】: There are risks in the market, and investment needs to be cautious. This article does not constitute investment advice.

What does a long position?

What does a long position?

A long position involves holding a bullish stance, anticipating market or asset price increases. Strategies like alignment, divergence, and hedging are employed, with attention to reversal patterns such as head-and-shoulder bottoms.

What is the status of the volume-price relationship?

What is the status of the volume-price relationship?

The volume-price relationship is a key stock market indicator, revealing the correlation between trading volume and stock prices. Analyzing these changes helps investors understand market activity and potential trend reversals.

What is delisting?

What is delisting?

Delisting removes a stock from public trading. It's either voluntary or mandatory, due to violations, financial issues, mergers, etc.