The two can share some similarities but also have many differences. Let’s look at both and see which might be right for you.

First, we’ll begin with forex.

Forex stands for Foreign Exchange; it’s where traders buy and sell currencies from different countries worldwide without actually having to go through an exchange or middleman. All that is required is an internet connection (and your computer), and you can trade 24 hours a day, five days a week.

However, the whole idea of trading currency pairs makes this seem more like stock trading than futures trading because you are still dealing with an underlying asset (in this case, another currency) rather than a simple contract to buy or sell something at a set price in the future.

So how is it different from stock trading?

The world of forex is constantly moving and taking on new challenges, which means there are many opportunities to be found among traders, no matter what level of experience they have.

It makes it very popular among beginners looking for an easy way to get involved with trading without having to worry about spending too much time researching various markets already being traded around the globe. The internet may not be the best place for advice, but at least it’s a start! It’s why so many beginner traders turn to forex because of all the available information.

Now let’s go over futures trading:

It also has various forms and types like forex, but their difference lies in how they’re traded and what they’re traded on. While forex allows you to trade currencies from different countries worldwide, futures trading revolves around contracts that will give buyers or sellers access to commodities or securities at a set price sometime down the line. While people who trade forex may look at the changes in the market all day long, futures traders focus on the price movement of specific contracts over a fixed period.

Now that we’ve outlined the basics of what sets these two apart from each other, let’s look at why someone might want to choose one over the other.

Opting for forex

A common reason for opting for forex is how easy it can be to get started with minimal capital. Unlike futures trading, where you usually need at least a few thousand dollars to get started, forex allows smaller traders to get in on the action without spending too much money or risking too much. It’s because when cash changes hands, it’s done through an electronic bank transfer and not a physical exchange of bills between two different people. Not only that, but you can trade from your computer at your convenience.

Opting for futures

Futures trading may sound very similar to what we’ve discussed already about forex trading, but the key difference is that it focuses on contracts instead of actual currency. These contracts are essentially small pieces of paper (or digital bits) that can be traded and bought anywhere in the world, which is what makes them so accessible to traders who want exposure to various types of commodities or securities with a small amount of money.

What’s nice about this investing, though, is how you can sell your contract at any time before it reaches its settlement date; if the price goes up, you make money; if it drops, your loss will offset some of your gains.

Another benefit of futures contracts is that they allow for scalping or profiting off small price changes in a short period rather than watching charts all day long looking for significant swings like in forex trading.

Bottom line

In the end, futures trading and forex trading are two very different types of investing that require a different strategy to get off on the right foot. When deciding between the two of these strategies, it’s essential to consider how much capital you have at your disposal and your goals as an investor to know which path will lead you closer to achieving them.

For more information on forex trading, please refer to Saxo Trader.