Andre (Apr 29, 2004 4:36:02 PM)
Ok, today we're pleased to welcome Muhammad Rasoul from Global Forex Trading to the Elite Trader Chat Room.

Andre (Apr 29, 2004 4:36:09 PM)
Since Global Forex Trading’s founding in 1997, Muhammad Rasoul has worked within the company in almost every capacity and currently serves as its COO. Prior to the introduction of the Stocks and Commodities Modernization Act of 2000, Rasoul assisted regulatory officials in designing and implementing forex trading standards and practices.

Andre (Apr 29, 2004 4:36:32 PM)
Muhammad played an integral role in the release of GFT’s DealBook® FX 2, a forex trading software platform used by clients and businesses in more than 100 countries worldwide. DealBook® FX delivers real-time, tradable currency prices, offers trading directly from the charts and includes automated risk-management features, such as trailing stops as well as building your own forex indicators.

Andre (Apr 29, 2004 4:36:42 PM)
In this chat, We will benefit from the varied experience of Global Forex’s Muhammad Rasoul. We'll discuss the advantages of the forex market over other markets, as well the details of how retail forex differs from the Interbank market itself.

Andre (Apr 29, 2004 4:36:49 PM)
Muhammad, welcome. Thanks for joining us today.

Muhammad Rasoul (Apr 29, 2004 4:37:03 PM)
Hello Everyone.

Muhammad Rasoul (Apr 29, 2004 4:37:14 PM)
First off, I would like to thank everyone for attending.

Muhammad Rasoul (Apr 29, 2004 4:37:35 PM)
Today I am going to go over some of the benefits of trading the Foreign exchange spot market in relation to the Futures and Securities markets.

Muhammad Rasoul (Apr 29, 2004 4:38:31 PM)
Many people that trade the Futures and Securities markets are interested in trading Spot Foreign exchange markets.

Muhammad Rasoul (Apr 29, 2004 4:38:39 PM)
Sometimes called "Forex"

Muhammad Rasoul (Apr 29, 2004 4:39:06 PM)
There are many advantages to the Forex market versus these markets, the first that I would like to start with is Futures.

Muhammad Rasoul (Apr 29, 2004 4:39:32 PM)
As many of you may or may not know you can trade currencies using futures contracts.

Muhammad Rasoul (Apr 29, 2004 4:40:04 PM)
In Fact, when I starting trading currencies it was with Futures, EFP transactions, and of course the Spot FX market.

Muhammad Rasoul (Apr 29, 2004 4:40:56 PM)
The currency futures markets are exchange traded, and they are a "derivative" of the Spot FX, ("Forex") market.

Muhammad Rasoul (Apr 29, 2004 4:41:48 PM)
The price of the currency futures market is based on the Spot price of the currency. The natural progression historically for most institutional traders, CTA's, etc was to end up in the Forex market.

Muhammad Rasoul (Apr 29, 2004 4:42:32 PM)
The liquidity of the Forex market versus the Futures market drove most "professional" traders into the Forex market.

Muhammad Rasoul (Apr 29, 2004 4:44:01 PM)
Institutional traders, traders for hedge funds, CTA's, CPO's, etc. make their living off of making money for other people, and of course when they do they make money, so in addition to the liquidity of the Spot Forex market versus futures, another major factor that impacted the migration to Spot FX was costs

Muhammad Rasoul (Apr 29, 2004 4:45:43 PM)
In efforts to increase returns for the fund or end customer and in turn for the trader Spot FX, Forex, was preferred. With the eleviation of commission charges, brokerage fees, exchange fees, and regulatory fees, the trader actually could increase the returns of the fund.

Muhammad Rasoul (Apr 29, 2004 4:46:43 PM)
With Spot FX, there are no Commissions to be paid to floor brokers, exchanges to pay for facilities, and as of yet no regulatory fees to be paid to regulators.

Muhammad Rasoul (Apr 29, 2004 4:47:21 PM)
The institutions, CTA's, Hedge Funds, could adjust their models from futures contracts, and move into the more liquid Spot FX market.

Muhammad Rasoul (Apr 29, 2004 4:48:11 PM)
Today more and more traders, regardless of size are finding that the OTC (over the counter) Spot Forex market is a much better solution for the trading of currencies.

Muhammad Rasoul (Apr 29, 2004 4:49:32 PM)
From my standpoint as a trader the commissions where definately a big factor in moving the business of our firm from Futures, and EFP transactions to virtually 100% Spot Forex transactions. In addition some other items that we looked at in making the decision quite a while ago now, is:

Muhammad Rasoul (Apr 29, 2004 4:50:56 PM)
1. 24-Hour Access. Spot FX is much more liquid over a 24 hour period than futures contracts. Futures are very thin in the overnight markets and tough to trade.

Muhammad Rasoul (Apr 29, 2004 4:51:45 PM)
2. Better Leverage. For some traders leverage is a major factor and in Spot FX you can deal/trade on as much as 200 to 1 leverage. You will not find this same option with any futures contract.

Muhammad Rasoul (Apr 29, 2004 4:55:17 PM)
3. Electronic Trading. This may sound somewhat odd as most people know there are electronic futures markets, however for many traders currencies are still being trading in the "pit" environment via open outcry. Especially for any size trades. For our company moving to a 100% electronic environment has helped us a great deal to bring great customer service to the end client. Before we traded most of the markets over the phone, and on exchange there were many many human related issues on a day to day basis that made trading for the end user very difficult. Clients in some cases could wait as long as an hour for a fill price on an order, or to find out if there order was canceled. OTC Forex changes all of that for the end user, and even today with the electronic futures market, the OTC Spot FX Forex market is, from a technology standpoint more advanced than futures.

Muhammad Rasoul (Apr 29, 2004 4:57:14 PM)
Side by Side. Spot FX and Futures cannot be compared, and in my opinion exchange traded currency future volume will continue to drop as long as it remains the inefficent political beauracracy that it has been from it's inception.

Muhammad Rasoul (Apr 29, 2004 4:57:25 PM)
The Securities markets.

Muhammad Rasoul (Apr 29, 2004 4:58:57 PM)
While outside of the currency options traded on the Philidelphia stock exchange there are no directly related securities that compete with Spot FX, there are fundamental differences between the logistical aspects of the two markets that make Forex a good option for current securities traders.

Muhammad Rasoul (Apr 29, 2004 4:59:56 PM)
Historically, the majority of the general public has viewed the securities markets as an investment vehicle. In the last ten years securities have taken on a more speculative nature. This was perhaps due to the downfall of the overall stock market as many security issues experienced extreme volatility because of the irrational exuberance displayed in the marketplace. The implied return associated with an investment was no longer true. (If indeed it ever was.) Many traders engaged in the daytrader rush of the late 90's only to realize that, from a leverage standpoint, it took quite a bit of capital to day trade, and the return while potentially higher than long-term investing was not exponential. After the onset of the daytrader rush, many traders moved into the futures stock index markets where they found they could leverage their capital greater and not have their capital tied up when it could be earning interest or making money somewhere else. Like the futures markets, spot currency trading is an excellent

Muhammad Rasoul (Apr 29, 2004 5:00:44 PM)
vehicle for pattern daytraders who desire to leverage their current capital to trade. Spot currency or forex trading provides more options, greater volatility and stronger trends than currently available in stock futures indexes. Former securities daytraders have an excellent home in spot foreign exchange.

Muhammad Rasoul (Apr 29, 2004 5:01:07 PM)
How many times have you heard that "fund A" was selling "X" or buying "Z"? Rumor had it that the funds were taking profits because of the end of the financial year or because today is "triple witching day", all as an explanation of why this stock is up or the market in general is down or positive on the session. No matter what your broker says the stock market is very susceptible to large fund buying and selling, and it is not uncommon for a fund to run a particular issue for a few days. In spot currency trading, the liquidity of the market makes the likelihood of any one fund or bank to control a particular currency very slim. Banks, hedge funds, FCM's, governments, retail currency conversion houses and large net-worth individuals are just some of the participates in the spot currency markets where the liquidity is unprecedented.

Muhammad Rasoul (Apr 29, 2004 5:02:00 PM)
Have you watched TV lately? Heard about a certain Telecomm stock and an analyst of a prestigious brokerage firm accused of keeping its recommendations, such as "buy" when the stock was rapidly declining? It is the nature of these relationships. No matter what the government does to step in and discourage this type of activity, we have not heard the last of it. IPO's are big business for both the companies going public and the brokerage houses. Relationships are mutually beneficial and analysts work for the brokerage houses that need the companies as clients. That catch-22 will never disappear. Foreign exchange, as the prime market, generates billions in revenue for the world's banks and is a necessity of the global markets. Analysts in foreign exchange don't drive the deal flow, they analyze the market.

Muhammad Rasoul (Apr 29, 2004 5:04:12 PM)
For a short term trader, I think that there is just not a better trading vehicle than Spot FX, No commissions or fees, great leverage, a great volitile market that is liquid and available around the clock. Regardless of what you trade you have to be conservative, Spot FX is no different. Pound for Pound though, you get the most bang for your buck in FX.

Andre (Apr 29, 2004 5:04:31 PM)
Muhammad, that's a great introduction of Forex.

Andre (Apr 29, 2004 5:05:19 PM)
Folks, we can take questions now, we've got a few, but will certainly be able to get to more than what we currently have.

Andre (Apr 29, 2004 5:05:24 PM)
Let me start...

Andre (Apr 29, 2004 5:05:51 PM)
You said there are no regulatory fees yet. Is that coming down the pike soon? This is one of the things I hear discussed most often regarding Forex, can you comment further on the "unregulated" aspect of Forex?

Muhammad Rasoul (Apr 29, 2004 5:09:26 PM)
I think that you will find many things changing in the regulatory environment. For example last December a few things went into affect in regards to margin. Some of those will be modified coming up shortly so that if you are trading with a properly capitialized FCM they will be able to offer you more aggresive margin than another less capitialized firm. This helps to protect the client in the end, while still allowing the clients to choose their own destiny so to speak. In regards to fees right now the FCM has the burden of paying for the clients access. My opinion is that in the future this will change as the NFA I believe will have to dedicate more and more resources to this market in replace of the resources spent in currency futures. Of course I say this because I believe that more and more business will move to the Spot FX markets from the exchange traded futures markets. :)))

Mike Brown (Apr 29, 2004 5:10:40 PM)
So you're saying its dropping now?

Andre (Apr 29, 2004 5:11:28 PM)
I'm assuming he means Futures.

Muhammad Rasoul (Apr 29, 2004 5:11:46 PM)
Yes. If you look at the last issue of FX Week. The CME is trying to cut cost to bring back the institutional business.

Muhammad Rasoul (Apr 29, 2004 5:11:56 PM)
The retail investor has been moving for quite some time.

zagreb (Apr 29, 2004 5:12:40 PM)
I heard some opinions that Spot FX market today (EURUSD pair especially) becomes rather volatile, and my 7-years experience confirms that. Do you think same technical anayisis (trend following etc.) rules apply as before? And, what you think is best new timeframe to trade today, with new circumstances in mind (daytrading, swing, or some longer term w. increased stops)? Thank you in advance.

Andre (Apr 29, 2004 5:14:00 PM)
We had another question along the time frame line as well:

PuffyGums (Apr 29, 2004 5:14:04 PM)
What time frames can FX traders operate in? I heard that scalping is out, but intraday postiional trading is OK.

Muhammad Rasoul (Apr 29, 2004 5:15:46 PM)
In my opinion you have to keep in mind that each market has particular "conventions" or attributes. The attributes are dynamic and as a trading you have to constantly be aware of the fact that for example your trend following models that once worked, or currently worked, may not continue to work. You have to continuously re-tool or tweak your models and systems to keep them in pace with the marketplace. In regards to timeframes.....

Muhammad Rasoul (Apr 29, 2004 5:17:31 PM)
I believe that you cannot state for example this is a good time frame to trade. Period. The factors that you have to look at is yourself. What mentally are you suited for. Develop models around those timeframes. For example myself I cannot trade intraday very well. I am toooooo emotional for that, plus in my position right now I cannot keep on the markets like I could when I was making markets in USD/CHF. :) So I have to stick to a swing trading approach, which has worked fine for me.

Andre (Apr 29, 2004 5:18:49 PM)
Let's talk about trading pairs. Yes, FX is 24/7 or 24/5.5... but...

dragoncom (Apr 29, 2004 5:18:55 PM)
What are the trading hours of the Eur /Us FX?

Muhammad Rasoul (Apr 29, 2004 5:18:55 PM)
I am a multiple time frame guy, even on the swing trading side of things. I don't like trading only one dimension. So it is a must to trade multiple views and then to drill down on what time frame you can handle emotionally. Again design your models around what fits you. In regards to scalping

Andre (Apr 29, 2004 5:19:14 PM)
Opps, finish that thought..

Muhammad Rasoul (Apr 29, 2004 5:20:31 PM)
Scalping is not out....There are many different operations out there that have a description of what scalping is. And some people call scalping something that historically it never was. A scalper is someone that is taking advantage of very short term price movements. Small range breakouts, small range trading, etc.

Muhammad Rasoul (Apr 29, 2004 5:20:46 PM)
Today many people are called "scalpers" for other reasons.

Muhammad Rasoul (Apr 29, 2004 5:20:50 PM)
Those are:

Muhammad Rasoul (Apr 29, 2004 5:21:02 PM)
1. They try to take advantage of "bad" pricing.

Muhammad Rasoul (Apr 29, 2004 5:21:20 PM)
2. They look to hit the dealer on old rates.

Muhammad Rasoul (Apr 29, 2004 5:21:52 PM)
3. They look to slide in and place stops or limit order on top of the market before the "technology" of the system can address them properly.

Muhammad Rasoul (Apr 29, 2004 5:22:36 PM)
In my opinion. Scalpers are fine, Dealers need to "deal" with these types it is part of the business. But the other ones, I don't think they are scalpers I think they are cheaters. :)))

Muhammad Rasoul (Apr 29, 2004 5:23:02 PM)
Scalping though is fine, but I will tell you.. It is hard. YOu have to be right most of the time, and it is hard to do that.

Andre (Apr 29, 2004 5:23:25 PM)
Great.

Andre (Apr 29, 2004 5:23:43 PM)
Can we talk about pairs now?

Muhammad Rasoul (Apr 29, 2004 5:23:45 PM)
sure

Muhammad Rasoul (Apr 29, 2004 5:24:16 PM)
What are the trading hours of the EUR/USD? Is that the next quesion?

Andre (Apr 29, 2004 5:24:21 PM)
Yep.

Andre (Apr 29, 2004 5:24:30 PM)
Let's assume he's stateside.

Muhammad Rasoul (Apr 29, 2004 5:26:10 PM)
ok. The best times to trade EUR/USD is going to be between 2am EST and 11am EST. That is going to be the most liquid. Now let me elaborate.

Muhammad Rasoul (Apr 29, 2004 5:27:55 PM)
It will depend on what you are trying to do. Meaning, what style of trading are you trying to accomplish. If you are a short term/swing/mid/long term it all depends. For example if I am a mid term or swing trader I may want to crep into the market before those times in order to postion my self before the market starts banging, but I would say during that window for the standard speculator you are going to get the best movement, with follow through.

Muhammad Rasoul (Apr 29, 2004 5:28:16 PM)
Depending on where you are trading you may also have spread width issues and liquidity problems outside of those hours.

Muhammad Rasoul (Apr 29, 2004 5:28:37 PM)
Here is a link on our site for more information about times and volume: http://www.gftforex.com/forex/24houraccess.asp

gypsysue (Apr 29, 2004 5:28:51 PM)
Which currency pair(s) would provide the most stable trends to trade for someone living in Eastern time zone? Also, I would like to limit the leverage, since I don't want to lose big-- although like most people, I wouldn't mind winning big.

Muhammad Rasoul (Apr 29, 2004 5:29:04 PM)
:)

Andre (Apr 29, 2004 5:29:58 PM)
I think you'll find the answer at the link, Gypsy.

Muhammad Rasoul (Apr 29, 2004 5:30:06 PM)
Stick with the most popular markets. I would suggest: USD/JPY, EUR/USD, GBP/USD, USD/CAD, AUD/USD, NZD/USD.

Andre (Apr 29, 2004 5:30:14 PM)
Folks, we're going to get to a few more questions.

Muhammad Rasoul (Apr 29, 2004 5:30:29 PM)
Margin is a double edge sword. You have to take the good with the bad. :)

JadeTrader (Apr 29, 2004 5:30:42 PM)
what steps should i do if i want to switch from future to spot currency trading? re: pip diff, spot price vs. dealer price... thx

Muhammad Rasoul (Apr 29, 2004 5:34:15 PM)
What I would suggest Jade is that you spend some time getting reaquainted so to speak with the markets. You are going to have to become familiar with the "way" the market is quoted, spreads, the logistical elements. Take your time, open a demo account, TRADE the demo account. YOu have got to start thinking spot, instead of futures. It is not a hard thing to do, but you need to spend some time demoing. Take a look at a broker that has charting that plot their dealable prices that way you can analyze what you are going to trade off of. That will minimize the spot price vs. dealer price issue.

Andre (Apr 29, 2004 5:35:07 PM)
Let's get to a few basic questions.

Flashboy (Apr 29, 2004 5:35:25 PM)
A very basic question.. but where can I find Spot FX charts?? I have not been able to find any.. only quotes..

Muhammad Rasoul (Apr 29, 2004 5:36:42 PM)
If you would like to take a look at Spot FX charts you can download a free trial of our software, it has quite a bit of historical data in it. 10 years. http://www.gftforex.com/freetrial/

Muhammad Rasoul (Apr 29, 2004 5:36:46 PM)
That is the link

Guest (Apr 29, 2004 5:37:04 PM)
What's a good source for getting completely familiarized with the FX arena (assuming you already know how to trade); e.g, web sites, books, brochures?

JadeTrader (Apr 29, 2004 5:37:21 PM)
Re cost, IB charge $6/RT per contract, while most narrow forex is 3pip RT=6pip=$60 already. Also with future, the price is what I see what I get while forex sopt price can be vary depend on the dealer?

GFT Matt (Apr 29, 2004 5:37:40 PM)
There is a misconception with many traders that there is not a spread in Equities or Futures. This is not true, as most traders only see the “last traded” price via a ticker on MSNBC, CNBC, Bloomberg for example. That price does not tell the trader if it was taken from the Bid or Offer which may be perceived by the trader as one single price. Again, in Futures, Equities, or Forex there is a spread. Forex, however does not have added fee’s, charges, etc on top of that. In fact there isn’t even a fee for our charting and execution system either as you will likely find elsewhere.

Muhammad Rasoul (Apr 29, 2004 5:38:57 PM)
Matt has a good point. In FX you see the spread, and there are no fees. In equities and Futures, you don't usually see the spread, plus you pay the fees.

dragoncom (Apr 29, 2004 5:39:08 PM)
Someone somewhere must be making a cut on the FX trades, who will that be Muhammad. Can you tell me the trading hours of the Euro/USD Forex?

Muhammad Rasoul (Apr 29, 2004 5:41:12 PM)
We make money as a market maker, meaning I manage the risk of the clients positions I recieve, I go out in the market and cover my risk in general at a better price than what I owe the client. On average. That does not mean that each trade I get I quick run out and cover it. For a market maker it is about "net" exposure, and overall if you are good at what you do, just like in trading, you make money.

richtrader (Apr 29, 2004 5:42:59 PM)
it is not completely clear from your website what happens after the 30 day trial. I see in GFT Matt's post that there are no fees for the software, so basically you send money, open an account, start trading, and that's it? No other fees or strings attached?

GFT Matt (Apr 29, 2004 5:44:39 PM)
The 30 day trial is for the client to get a good understanding of our software and the market. With the trial you will then have an opportunity to speak with a Forex Specialist who can help you further in whatever need you may have.

hase (Apr 29, 2004 5:44:48 PM)
May i purchase to the account using my online wallet "NETeller"?

GFT Matt (Apr 29, 2004 5:45:05 PM)
As for the fee's... you are basically correct. There is NO FEE of any kind for active traders.

GFT Matt (Apr 29, 2004 5:45:37 PM)
We accept only wire transfers or personal checks at this time.

Andre (Apr 29, 2004 5:45:53 PM)
Folks, we've got one last question, and I think a good one to end with.

hase (Apr 29, 2004 5:46:02 PM)
Where is this forexmarket actually located. I know there are lot of brokers but it seems to be virtually and an interbanktradingmarket??

GFT Matt (Apr 29, 2004 5:47:33 PM)
The Forex market isnt a place. It's a network of marketmakers such as Banks, Institions, etc

Muhammad Rasoul (Apr 29, 2004 5:48:17 PM)
The interbank market is set up to serve large institutions, not the average individual

Andre (Apr 29, 2004 5:48:54 PM)
Folks, there comes a time when we simply have to let our guests go. And that time has come. Muhammad... thanks so much for joining us today.

Andre (Apr 29, 2004 5:49:12 PM)
This chat has been sponsored by GFT. GFT is one of the world’s most prominent leaders in online foreign exchange providing forex traders with the highest level of service, software and accountability in the industry. Global Forex Trading, Division of Global Futures and Forex, Ltd., is a registered Futures Commission Merchant with the Commodity Futures Trading Commission and a Member of Australian Securities & Investments Commission (ASIC).

Muhammad Rasoul (Apr 29, 2004 5:49:17 PM)
It was my pleasure. Thank you everyone.

Andre (Apr 29, 2004 5:49:25 PM)
Matt, you've got some words for us, don't you?

GFT Matt (Apr 29, 2004 5:49:42 PM)
Thank you everybody for your great questions and comments. This market truly is the best vehicle for any active trader to trade and we welcome anyone to contact us directly to go over our industry leading software, DealBook FX or any other questions you may have.

GFT Matt (Apr 29, 2004 5:50:01 PM)
You can call us directly at 800.465.4373 or see us at www.gftforex.com

GFT Matt (Apr 29, 2004 5:50:09 PM)
Thank you all again and Enjoy!

Andre (Apr 29, 2004 5:50:22 PM)
Thanks guys!

Andre (Apr 29, 2004 5:50:25 PM)
Learn more about GFT at http://www.gftforex.com/index.asp?aid=74

Andre (Apr 29, 2004 5:50:51 PM)
And while this chat session may have ended, the discussion doesn't have to. For additional questions and comments, please see the following thread on our message board: http://www.elitetrader.com/vb/showthread.php?threadid=31981

Andre (Apr 29, 2004 5:51:22 PM)
Remember too, folks... that GFT will be at the Chicago Traders Expo in June.

Andre (Apr 29, 2004 5:51:29 PM)
Elite Trader will be there as well...

Andre (Apr 29, 2004 5:52:01 PM)
If you go, look for the After Hours event on Friday and Saturday.

gypsysue (Apr 29, 2004 5:52:19 PM)
thank you for the informative chat

richtrader (Apr 29, 2004 5:52:47 PM)
thanks... that definitely has piqued my interest.

zagreb (Apr 29, 2004 5:53:00 PM)
very interesting and helpfull. Thanks

hase (Apr 29, 2004 5:53:03 PM)
thx