Forex Futures

Futures trading is an agreement between two parties, a buyer and a seller, to exchange the underlying market for a fixed price at a future date. The buyer is obligated to buy the underlying market and the seller has to sell at or before the expiry of the agreement.

Futures are often used to hedge against expected exchange rate changes. For example, a trader might buy a certain number of EUR/USD forward contracts to lock in an exchange rate. That person will then be obligated to buy those USD when the contract expires – hopefully when the USD’s value has risen, but even if it has dropped.

We offer three ways to trade forex:

• Futures (forwards): trade a specific currency pair at a set future date. Your choice of currency pair would depend on which currency you believe will strengthen against the other by the set date
• Spot trading: purchase or sell forex ‘on the spot’. This means the exchange takes place at the same moment the trade is settled. Spot prices reflect the underlying market and have no fixed expiry
• Options: gain the right, but not the obligation, to buy and sell FX on a specific date in the future (called the expiry) at a specific price (called the strike price)

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