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I've been dabbling into the idea of swing trading currencies.
But since I'm a futures guy I am not going to open up a spot account with a forex broker (I love my NinjaTrader too much)
Anyways, I've noticed something.
The price between the spot EUR/USD is not equal to the FX Eurodollar!
Atm spot price is ~1.1040, and the futures price is 1.1072 !!!
That's a 30 tick difference!
Can someone explain to me why the Futures Price here is not DIRECTLY correlated to the spot price?
Makes trading the Euro all the more confusing (I like to use tradingview in addition to my charts)
Can you help answer these questions from other members on NexusFi?
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals, U308 and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,131 since Dec 2013
Thanks Given: 4,501
Thanks Received: 10,372
Spot FX represents the currency rate for immediate delivery (2 days?) while E6H0 has a last trading day of 16th March and delivery is 18th March.
The difference in the two prices is due to the effect of interest rates for those 50 days. ECB rate is currently -0.5% and US Fed Funds is 1.55%. Lets assume you do a spot transaction today at so you have $1.104 but owe €1.000. In 50 days time your $1.104 will have grown to $1.10625 (1.104 * 1.015^(50/365)) while you will now only owe €0.99931 (1 * 0.995^(50/365)) meaning the rate in 50 days time is 1.10625/0.99932 = $1.107. Viola!
Broker: Broker: Trade Future 4 Less. Data Feed/Order routing: CQG
Trading: DAX; ES; Bund Futures
Posts: 77 since Oct 2018
Thanks Given: 50
Thanks Received: 58
Regarding the difference in price @SMCJB nail the explanation in price very precise - it is due the interest rate.
Regarding trading the future or the Spot-FX the movement will be the same (give or take a few ticks/pips.
If you want to trade FX-Spot i would suggest you to use LMAX, Baxter or Currenex (ex. Reuters) - The latter will however require a large account, where LMAX and Baxter let you start with quite modest account size and you can trade Currenex via Baxter. - With these companies you are trading on the Interbank market or an exchange-like market, where the companies mentioned does not take the other side of you trade - The other side of you trade is taken by another trader(s).
When you want to trade futures you can only trade approx. 5 of the biggest US related FX-crosses but on the Spot-FX you can trade the majors and all the crosses between them in total 28 pairs, and many more if yuo want. - I personally stick with the 28 deriving from the majors.
I do appriciate that CME also have some of the other cross FX-pairs, but they have very low liquidity.
I do not know if NT have interface with some of the above mentioned companies but Sierra Chart for sure have.
