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Currency futures

Exchange-traded, centrally cleared contracts on exchange rates, quoted as dollars per unit of the foreign currency rather than in spot FX convention.

The CME listed the first financial futures in 1972 on seven currencies, and the complex still exists alongside the vastly larger over-the-counter FX market. The advantages are central clearing, a visible order book and no counterparty credit exposure; the disadvantages are fixed contract sizes and a quarterly expiry cycle.

Quoting convention is the main trap. Spot convention quotes USD/JPY as yen per dollar, but the yen future is quoted in dollars per yen, so the futures chart is the inverse of the spot chart. euro-fx-futures and most others quote dollars per unit, which matches EUR/USD spot.

Example: a 125,000-euro contract at 1.0850 has a notional of $135,625 and a minimum tick of 0.00005, worth $6.25. A 50-pip move is $625 per contract.

Related: euro-fx-futures, yen-futures, base-currency, quote-currency, dxy

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