Spot Forex VS CME Forex E-micro Futures | Articles-Business-Management

In late March this year CME launched a new product, Forex E-micro Futures, in an effort to make their FX products affordable to retail traders, and I assume to challenge the dominance of the spot Forex market.

Sized at one tenth the size of the standard CME forex futures, the E-micro contracts are now much more affordable, as you'll see from the table below

Product	Ticker Symbol	Contract Size	Minimum Tick Size
E-micro GBP/USD	M6B	6,250 British Pounds	0.0001 USD/GBP = US$0.625
E-micro EUR/USD	M6E	12,500 Euros	0.0001 USD/EUR = US$1.25
E-micro AUD/USD	M6A	10,000 Australian Dollars	0.0001 USD/AUD = US$1.00
E-micro USD/CAD	M6C	10,000 US Dollars	0.0001 CAD/USD = 1.00 CAD
E-micro USD/CHF	M6S	10,000 US Dollars	0.0001 CHF/USD = 1.00 CHF
E-micro USD/JPY	M6J	10,000 US Dollars	0.01 JPY/USD = 100 Yen

Please don't let the term 'micro' in E-micro forex futures lead you to believe they're comparable in size with the new spot forex micro accounts (1K lot size). E-micro forex futures are closer in size to the spot forex mini contracts (10K lot size). A bit of standardization of terms might have been nice, but then perhaps that's too much to ask.

One obvious negative is that the futures commissions could be a bit steep if you're only a one or two contract trader, but depending on your broker, this should start to even out somewhere around the four to five contract size. Beyond that, the futures will possibly be cheaper. Do the maths to compare the two before signing up with any broker, comparing the typical spreads as well as the costs of commissions.

Personally, I think competition is great. I really hope these products are well supported as the CME is able to offer clear advantages in terms of transparency and security.

However, are they worth trading yet? Well, I'm not a licenced financial advisor, so I can't say what is worth trading and what's not just in case it might influence your decision making. :-)

Instead, I'll just show some charts from when I made a comparison this week, and let you make your own decision.

GBP/USD spot forex, 5 min chart, Tue Apr 21 2009, 08:00 GMT:

gbpusd spot forex chart