Forex futures are contracts that allow traders to buy or sell a specific currency at a predetermined price and date in the future. These contracts are traded on exchanges such as the Chicago Mercantile Exchange (CME) and the Intercontinental Exchange (ICE). Forex futures are used by traders to hedge against currency risk and speculate on changes in currency prices.
One important aspect of trading forex futures is understanding the symbols used to identify each contract. Each forex futures contract has a unique symbol that represents the currency pair, contract size, and expiration date. In this article, we will explain how to look up symbols of forex futures.
Step 1: Identify the currency pair
The first step in looking up the symbol of a forex futures contract is to identify the currency pair. Forex futures contracts are traded in pairs, just like spot forex. The currency pair represents the two currencies being traded in the contract.
For example, the most actively traded forex futures contract is the Eurodollar futures contract, which represents the exchange rate between the US dollar and the euro. Other popular currency pairs traded as forex futures include the Japanese yen and the British pound.
Step 2: Determine the contract size
The next step is to determine the contract size. Forex futures contracts are standardized, meaning that they have a fixed contract size that is traded on the exchange. The contract size represents the amount of the base currency that is being traded in the contract.
For example, the Eurodollar futures contract has a contract size of $1,000,000. This means that each contract represents a notional value of $1,000,000 in euro/USD exchange rate.
Step 3: Identify the expiration date
The third step is to identify the expiration date of the forex futures contract. Forex futures contracts have a specified expiration date, which is the date at which the contract will be settled.
For example, the Eurodollar futures contract has a quarterly expiration cycle, with contracts expiring in March, June, September, and December.
Step 4: Look up the symbol
Once you have identified the currency pair, contract size, and expiration date, you can look up the symbol of the forex futures contract. The symbol is a series of letters and numbers that represents the contract on the exchange.
For example, the symbol for the Eurodollar futures contract is ED. The symbol for the Japanese yen futures contract is JPY, and the symbol for the British pound futures contract is GBP.
In addition to the currency pair, contract size, and expiration date, the symbol may also include additional information such as the exchange where the contract is traded and the month and year of expiration.
Conclusion
Looking up symbols of forex futures is an essential part of trading these contracts. By understanding the currency pair, contract size, and expiration date, traders can identify the symbol of the contract and place trades on the exchange. It is important to note that forex futures contracts are different from spot forex and require a different approach to trading. Traders should do their due diligence and research the market before trading forex futures.
