hello everyone,
I’m new here and to futures trading in general, I hope someone can give me his opinion if it is easy or difficult to get filled when I trade back month contracts of some FX futures, for example, at the time of this writing the euro fx March contract has over 11000 in open interest and 540 in volume, taking into consideration I want to trade just 1 or 2 contracts at a time and using market orders.
thank you in advance.
Hi @habber, and a warm welcome to the Optimus community!
We’re thrilled to have you on board and are more than happy to assist as you embark on your journey in futures trading. Remember, there’s no such thing as too many questions here, especially when you’re just starting out. We do encourage opening a new thread for each unique query, to keep discussions organized and helpful for everyone.
Now, regarding your question about trading back month contracts in FX futures – it’s a great inquiry. From what you’ve mentioned, it sounds like you’re referring to the Euro FX March 2024 contract.
It’s excellent to see that you’re considering the liquidity of the market. Liquidity is indeed crucial, especially in futures trading. Generally speaking, front-month contracts (those closest to their expiration date) tend to be more liquid compared to back month contracts. This higher liquidity typically makes it easier to get filled, especially when trading in small quantities like one or two contracts, and particularly when using market orders.
However, every market and contract can have its unique characteristics, and the liquidity can vary. For the specific contract you’re interested in (Euro FX March 2024), a volume of 540 and an open interest of over 11,000 indicates a reasonable level of activity but not for day trading. Try looking at December Euro FX Futures (6E).
It’s always a good idea to keep an eye on both the volume and open interest, as these can give you insights into the market’s liquidity and potential ease of executing trades.
If you have any more questions or need further details, don’t hesitate to reach out. We’re here to help!
Best,
Matt Z
Optimus Futures
thank you Matt 4 your reply, I hope you can clarify this for me; I tested trading the back months as mentioned above on a demo account and noticed that there are always at least 8 standing bids and offers at market orders, so if I trade just 1 or 2 contracts I will always find someone on the other side to match my order in such case, right? please correct me if I miss something. thank you in advance.
While it’s true that in trading, certainties are rare, including the guarantee of a match, you can definitely improve your chances of getting your orders filled. This is more likely when you opt for the nearest months in contracts known for their liquidity. Trading in these segments typically sees more activity, which can work in your favor, especially for someone new to futures trading.
On a side note, I’m curious about your interest in back month contracts. Is there a specific reason you’re leaning towards these? Understanding your strategy or goals might help us provide more tailored advice or insights.
Best,
Matt Z
Optimus Futures
thanks again for your reply, you guessed it right, i have my reasons to get interested in those back months, I want to trade euro fx calendar spreads, by leging in instead of entering as a spread because I read once on the CME group website that it isn’t guaranteed or rather it is more likely to get a price different than that I want especially when I want to exit, and fx spreads are less liquid then outright futures, I tested the spread by leging in on a demo account and it looks somewhat good but as you know, things can be different in a live account, that’s why I emphasize on back months because I know the front months are liquid, so I wonder if I trade only 1 to 2 contracts on back months( in combination with the equivalent contract in the front month) I won’t find difficulty to get filled with this minimum number of contracts if there are always enough standing market orders. I really appreciate your help
I’d like to share my perspective on trading spreads, particularly in financials like the 6E and in physical commodities. Please note, this is just my opinion based on my experiences and observations.
When it comes to spreads in financials, such as the 6E, I’ve found that the potential gains often don’t seem to justify the risks involved. This is mainly due to the lack of liquidity and the fact that these financials often move in tandem, offering limited opportunities for significant profit.
I also want to address a common misconception about spreads. Despite popular belief in retail trading circles, spreads hold similar risks to outright futures trading. They are not inherently less risky. That being said, I’ve observed spreads in markets like ES vs NQ vs YM, and in physical commodities like corn and wheat. These, in my opinion, can sometimes present more logical trading opportunities. However, it’s crucial to remember that they still carry risks comparable to outright futures.
For those considering trading spreads as an alternative to outrights, I strongly recommend delving into how futures are priced. Understanding the pricing mechanisms can offer valuable insights into the risk/reward dynamics and might make you reconsider your approach, especially when you factor in the aspects of contract correlation and liquidity.
Always remember, trading involves risk and it’s important to make informed decisions.
Best,
Matt Z
Optimus Futures
thank you ,I appreciate your help
1 Like
Glad to help.
Best,
Matt Z
Optimus Futures