But they do, in droves, in growing droves. Most of them may be clueless, but all of them? There must be some perceived advantage to the spot market over the futures. Anyone?
I'd wager that nine of ten of those in the "droves" you mention would not pass suitability muster for futures trading. Others may simply (and wrongly) believe that because the dealers' platforms are accessible, test-driveable, and tricked out with add-ons, they must be better than, or at least as good as, futures trading.
Indeed there are. Not to come across as unhelpful, but, actually, the pros and cons of currency futures vs. spot have been discussed at great, almost excessive, length on ET recently. Just peruse the two currency forums for details. The optimal choice depends on your specific circumstances and needs, and for many should not be a hard choice to make.
Chood, this is really interesting. I appreciate your patience with my newbie questions here. Are you saying that there is NO real advantage to spot over the futures (unless you haven't qualified for a futures account). In other words, trading currency futures offers tighter spreads, lower transaction costs than the spot market, with comparable liquidity? Also, as far as the 24 hour market you mention, I assume you mean Globex? What brokerage do you use to trade currency futures? Thanks
P.S. I added that the add-ons (news, tools, etc.) the dealers offer on their platforms also are lures. Transactions costs are hugely lower with futures, by a factor as much as ten in my experience. Next, consider what "liquidity" means. With a dealer, you have NO liquidity. The dealer is your single source for entry and exit, with your menu of choices at all times dictated by the quotes the dealer makes for you (or refuses to make). That explains platforms frozen or blanked at news, or limit orders dishonored, and spikes run to stops. Obviously, those results come not from access to some titanic river of globalized forex transactions, or even from a modest confluence of multiple streams of buyers and sellers.
From reading these endless posts, IMHO, the folks who cant "qualify" for a futures a/c, shouldnt be trading leveraged products with small brokers.
Recall that whenever Jesse Livermore had one of his many blowouts in the stock market, he'd crawl back to a bucket shop. It was the only place he could *consistently* make money.