What is the difference between the cash and futures market? Back to list

Member SinceMar 07, 2022

Posts 263

Agaricy96

Nov 09, 2022 a 15:06
Cash markets can operate on a regulated exchange or over-the-counter (OTC) (over-the-counter). OTC markets frequently operate around the clock and provide greater flexibility. In the meantime, futures trading takes place on regulated exchanges.

Another significant distinction is the settlement date. Cash trades are typically settled 2-3 days after the transaction date, whereas futures contracts have a pre-determined delivery date in the future, which could be in one, two, or three months.

The main difference when trading CFDs is the cost of holding the position overnight. Futures CFDs do not incur overnight swap charges, but they are subject to rollover charges when the underlying asset expires. There are no contract rollovers with cash CFDs, but an overnight swap fee is charged.

Short-term traders will generally prefer cash over futures due to lower spreads, whereas long-term traders may prefer futures CFDs instead because they are less sensitive to spreads but do not want to pay daily swap charges.

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