Correlation of Forex and Currency futures

[russellcarey]

Hi guys,

Just wondering if anyone has done research or knows of the correlation between Forex and CME currency futures.

Does the futures contract leed the spot forex contract?

Cheers
Russell

 

[MrGecko]

Spot leads futures, very closely correlated.

If you want to trade the futures, be sure to know how they are priced.

 

[russellcarey]

Spot leads futures, very closely correlated.

If you want to trade the futures, be sure to know how they are priced.

Cool, thanks for that. I was kinda hoping it was the other way around as volume is tracked and recorded in the futures. Shame!

Thanks heaps for that!

 

[MrGecko]

You're welcome.

Don't fall for "tick" volume either, its a fraud (been covered here numerous times). I take it you are looking to trade currencies??

 

[russellcarey]

You're welcome.

Don't fall for "tick" volume either, its a fraud (been covered here numerous times). I take it you are looking to trade currencies??

Yeah, I like a number of different markets, currencies being one of them.
Its the most frustrating thing ever - this volume thing - MB Trading actually show market depth and volume in the spot forex market.. Not like eSignals tick volume. Its real volume, but you cant chart it. MB have 3rd party charts but they don't use MBs data feed nor do they show volume of any kind. Not even tick.

I've checked out a few options including Ninja Trader who have MB Trading as a broker plug in. Basically MBs data is used to fill the charts but Ninja wont interface with the volume yet.... something to do with the DOM ... recently they added Forex to the DOM trader... things might be looking up.

In the mean time I thought we might have a leeding indicator with the CME contract... not to be. I've kinda found they chop and change playing follow me a fair bit.

Playing with a few ideas ...

Cheers
Russell

 

[Phoenix669]

spot leads futures, and futures are discounted so to speak because the interest owed over the remaining time is calculated into the price.

During near expiration months, you can profit from the strong trend of the convergence of the two, this is called future-spot convergence.

 

[russellcarey]

Thanks for that, thats interesting, I've never thought of that before, I'll check into it a little more.

 

[MrGecko]

FWIW a similar thing happens in bond futures; it's known as "basis" trading. Planey of resource on the web I'd have thought.