One thing I wanted to ask you is - what is the margin requirement on that $100,000 trade? What's the leverage like there? Does Oanda give 50:1?
Well I am always modifying my trading, looking for the optimum way. I began with swing trading then moved to scalping (by which I mean any trade less than an hour long) and now I'm moving back to swing. With forex swing trading, to me, means using more fundamental indicators whereas scalping is mostly technical. I think risk is not necessarily less with either- it depends on risk/reward and percentage win rate.
Thanks for the questions Nik, 1)Well I can't say I planned for the first entry to move 120 pips against me. But I was ready for such a move. It is always hard- wait too long and the trade may go without you- get in too early and you risk more. I was looking at the fundamentals -especially news I get here in Japan. Also the technicals looked right so I took a punt - that is my way. 2)Breathe more is probably the right term. If I was trading a million dollar account being down $1000 or so is nothing but I know from past experience that once I get to about negative $500 on a trade I feel ill. The size of the futures contracts are just too large to allow much leeway on my size account. I am either right from the very beginning or I have to get out. With forex I don't have to time things to the tick the way I do with futures. Remember the liquidity on forex is phenomenal - and forex brokers allow small traders access to that. Also there are more than a few size traders using forex brokers.
Hi roberk Thanks for the info. Actually, I phrased my question badly; I wouldn't think you had planned for a position to go against you. What I meant was 'did you plan to add to the position if the first move was against you'. As you said, you were ready for such a move. Best of luck with your forex trading Nik
I want to thank those of you who have responded so honestly with your thoughts on how a dealer can "trade against" their clients. I have also read the references from those of you who were kind enough to reply. TraderNik, you actually hit the nail on the head when you indicated the poster (me) is likely to have opened an account with one of the firms I mention in the post. You are correct. The firm is GFT. I have not started trading, but the account is opened. Ok, now that "I get it" (the problems with some firms), I would like to better understand how firms like Oanda and Interactive Brokers are different. How are trades with these firms different? Who is the "other side" of the trade? IB? The direct interbank market? Again, thanks for your feedback. It is great to get the opinions from what sounds like very experienced traders. Golflyer
By the way, is Oanda considered a "Bucket Shop?" I now know IB is NOT a bucket shop....good to know. Thanks, Golflyer
IB doesn't trade against the client: they provide multiple pools of liquidity via ECNs. www.interactivebrokers.com/en/trading/forex.php?ib_entity=uk
The more you lose, trading with a bucketshop, the more the bucketshop makes. This gives bucketshops an incentive to help make you lose. Interactive Brokers is different. Every time you execute a trade, IB matches your order against an identically priced and sized order from some market-maker, bank, or IB customer. This way, IB makes absolutely no profit based on your losses. IB instead profits because you pay commissions to IB. This gives IB an incentive opposite to that of the bucketshops. It is in IB's best interest to help make sure they do everything they can to help you win. Because if you win, you will keep trading and keep paying commissions. One of the many advantages of the IB setup is that you can actually trust IB with your stop orders, trailing stops, and other advanced order types, without worrying about whether IB will run your stops the way a bucketshop can.
Hi Golflyer Sorry I can't help you with specifics. Sounds like you have enough information now to know that you have to be careful. As long as your decisions are informed by that, you should be okay. One thing I will say is that I seriously doubt that your small orders are going into the interbank market. I even doubt that brokers pool orders and send those into the interbank market. Someone may correct me on this.