Do I want to trade Forex?

Discussion in 'Forex' started by IronFist, Jan 3, 2007.

  1. notouch

    notouch

    True, but for a clueless newbie (e.g. the OP) I think it's best to point him in the direction of stock index futures where at least he'll have some chance.

    Unless you have a specific reason to trade forex, it's best not to. The OP has probably seen some FXCM advert on Bloomberg and is thinking "I'll give this forex lark a go". Great way to lose money.
     
    #11     Jan 4, 2007
  2. Maybe it's just me, but I find sif movement alot more difficult to figure out than the dollar. The globex contract does make for bigger dollar moves than es or nq, so in that sense it's a riskier place to start.
     
    #12     Jan 4, 2007
  3. RedDuke

    RedDuke

    IronFist,

    Just search some of mine posts in forex section on why retail forex is a virtual market. But if you want to stick with it, you only have 2 choices where you will be ripped off the least, it is Oanda and Interactive Brokers.

    If you want to trade currencies, I would strongly suggest CME futures. If currencies are not you main goal, there are some great and liquid index futures where you can start, such as Russel 2000, Dow, S&P, Nasdaq and DAX.

    As far as leverage goes, which is quite large on e-minis, you just need to trade reasonable # of contract based on you account size, but that the next step. The first one is to get the edge and then practice and practice. You can open an account at Velocity Futures and use their demo (which is very close to real) for as long as you need.

    Regards,
    redduke
     
    #13     Jan 4, 2007
  4. JB3

    JB3

    Trading forex is just the same as trading any other instrument. The differences are that forex is not traded on a central exchange, so what 1 broker quotes may not be the same as another broker. Wild, isn't it?

    And trading isn't exactly cost free, it is commission free, but you pay them back in spread. Each currency pair has a spread. For instance, Euro/USD pair might have a spread of 3 pips and each pip is worth $10 on a standard lot. So in essence you are paying $30 to the broker as a fee since you are always buying the ask and selling the bid. So if you trade 5 standard lots on the Pound/USD pair (that has a 5 pip spread), you are paying 5 standard lot x 5 pip spread x $10 per pip = $250 in fees.

    It's not always as cheap as it looks. Forex is great because they give you crazy leverage, like 400:1, 200:1, 100:1, depending on your account size. You can blow out an account in seconds if you don't know what you are doing. And Forexi is going 24 hours per day for 5-6 days. The brokers usually close on Friday night, Saturday and part of Sunday.

    And some forex brokers are known to trade against the traders because it is so unregulated on multiple exchanges, and I use exchanges lightly. It is basically matching banks or liquidity providers with your orders, and each broker have different sources of these liquidity providers. The more liquidity, the better. But some are just small operations, and many call these bucketshops.
     
    #14     Jan 4, 2007
  5. RedDuke

    RedDuke

    This is where you are wrong. Retail forex trades do not meet with liquidity providers they are just stored in your brokers platform. It is virtual world.

    To trade real forex you need to be on intra bank level and that requires huge resources.
     
    #15     Jan 4, 2007
  6. I was mostly drawn to it because I could trade after work since it's open all the time. But most of the Forex sites I have seen seemed pretty scammy.

    How do stock index futures compare with stocks?
     
    #16     Jan 4, 2007
  7. If you want to trade after work, you might find better trading vehicles in the Asian stock index futures (Hang Seng, Nikkei, even Sydney).

    If you still opt for FX, trade the futures on Globex, not the spot market. The futures are more transparent, regulated, offer the same or tighter spreads, and the 'true' IRD is factored into the futures price (you pay a spread to your broker when earning/paying the interest rate differential on spot trades, this is only applicable if you plan to position/swing trade, no affect on daytrading).
     
    #17     Jan 4, 2007
  8. Figured at least one retail spot shill to voice a contrary opinion, none so far.

    It's awfully quiet in the fx threads today.
     
    #18     Jan 5, 2007
  9. mokwit

    mokwit

    They must have drowned in all that global interbank liquidity they think they are frolicking in.
     
    #19     Jan 5, 2007
  10. Chood

    Chood

    The retailers' shill budgets are dried up. The waters are fished out, no more minnows to bucket (or too few to chase).

    Unless I miss my guess, the bucketeers even are cutting their "lipstick on the pig" budgets. I see where Kathy Lien and an "analyst" colleague have set up their own signals service. Has FXCM cut her loose? (Maybe just her pay.)


     
    #20     Jan 5, 2007