1. What’s Being Traded
Futures: Contracts to buy or sell a specific asset (commodities like oil, gold, wheat, or financial instruments like stock indexes) at a future date and a fixed price. Forex: The exchange of currencies (like EUR/USD or GBP/JPY) where one currency is bought while the other is sold.
2. Market Size and Liquidity
Forex: Largest and most liquid market in the world (~$7 trillion daily volume).
Futures: Smaller volume than forex, though still very liquid for major contracts (e.g., S&P 500 futures).
3. Trading Hours
Forex: Open 24 hours, 5 days a week. Futures: Also trades nearly 24 hours, but individual contract hours may vary depending on the exchange.
4. Leverage
Forex: Offers high leverage, sometimes 50:1 or even 100:1 for retail traders.
Futures: Also uses leverage, but it’s regulated by the exchange and typically lower than forex.
5. Regulation
Futures: Highly regulated and traded on centralized exchanges (like CME).
Forex: Often traded over-the-counter (OTC) through brokers; less centralized, and regulation varies widely by country.
6. Contract Structure
Futures: Standardized contracts with expiration dates and fixed sizes.
Forex: No expiration dates; trades continue until you manually close the position.
7. Purpose
Futures: Often used for hedging (e.g., farmers, airlines) or speculation. Forex: Mostly used fo speculation, but also international business and central bank interventions.
🔹 Example
Futures Trade: Buying a crude oil futures contract at $75/barrel to take delivery (or settle i cash) next month. Forex Trade: Buying EUR/USD expecting the Euro to rise against th Dollar.