Timboy Sykes and the truth about FX http://www.timothysykes.com/2013/08...ly/?utm_source=twitterfeed&utm_medium=twitter Forex trading is a fucken joke â 5 out of 6 traders BLOW their entire account up in the first 6 months. Itâs a disgusting, dirty business in which the brokers/bookies make it seem easy but in reality where the average trader has almost no chance whatsoever to succeed and sadly if these greedy degenerates just theyâd be saved. But most people canât be saved, theyâre too lazy and stubborn so let them burnâ¦degenerates with no futures, this guest blog post is for you: Trading foreign currency directly is tough, meaning not as easy as stocks. Forex trading is a heavily involved activity due to the 24-hour nature of the business. It also involves managing margin, fees, and plenty of other things. It also requires a fairly substantial monetary investment to be really effective, though the draw of massive margin from overseas brokerages make some people think they do not need a large investment. The reality is that you shouldnât be using the amount of margin you may be offered. There is a way to jump into currencies through the stock market. There are plenty of ETFs for the main currency pairings in both the long and the short direction, which allows you to go long on a short ETF for people who use IRAs to trade. The ETFs also come in the âultraâ variety, which means leverage is used. Currencies are About Movement Currencies are all about movement since they trade in pairs. A currency can be flat, but if its paired currency changes the pair moves. Some currencies fall into long term trends, though sometimes government act to counteract the prevailing trend like Japan. However some currencies are stable within a range. There is however a lot of money that can be made even with the slightest fluctuations so the movement inside the established range still presents opportunities, but this is more for direct Forex trading. With ETFs you would be looking for slightly larger movements, but that means a week and above in order to let the macroeconomics play out. The other thing about currencies is that if you have the option to go long or short, directly or via ETFs, then there is no point in worrying about a general decline in stocks. A lot of people keep plenty of money in IRAs, which force them to go long. That makes them sensitive to recessions, and it is a prevailing concern for people who are long the market. On the other hand if they stay in cash or bonds then you can have very low returns. Currencies are all about relativism and there for can still bring in returns during a recession. With IRAs you just need to go long the short ETFs. Since currencies trade in pairs both currencies can be doing well but one is stronger than the other one. It is much like the new binary options where you just pick which will do better. Currently there is a lot of concern that the market has hit a top, but this is not assured. You cannot just short SPY, for example, and expect to sleep soundly at night. The fear is based on the fact that the market has gone up so much, but the forces that drove that rise are still in place. Money is still flowing and the economy is actually improving now. The fear stems from too much of a good thing. The things that drive currencies tend to be far more concrete and sentiment matters less since massive banks, nations, and corporations are players in the currency market. They are not there as traders to make a return, but for the purpose of doing business or minimizing risk. With currency you need to analyze the concrete long-term information and the short-term technicals. Educate Yourself Currencies are not easy. There is not really a reason to focus on currencies as a replacement for normal stock trading. It is helpful to keep an eye on currencies as a gauge of the economy, as well as to take the occasional trade when there are no other good options. Currencies are complicated and require a large amount of research. Technical analysis, of the currency pair not the ETF, can also be used for short-term movies. However, fees might be a problem since you are using ETFs, which are likely to move slowly. You will be looking at interest rates and central bank policies, because these have a major impact on how a currency moves relative to others. High interest rates tend to draw capital to that currency, because if it is going to sit and gather dust it might as well be at the higher interest rate. Other important factors are manufacturing data for certain currencies and myriad of other indicators. These are less important individually, versus an extremely important one such as inflation or the interest rate. There is plenty more to look at, so it will take some work. However, the universe of currencies is far smaller than stocks so it should not be that much more work. It is just new to a lot of stock traders. Technical analysis tends to work the same way, and is very effective. The things that effect currencies the most tend to be governmental or central bank policies, and these are usually indicated far in in advance. Also, economic data works on a longer timescale so it follows well established trends and is also telegraphed most of the time. This makes technical analysis more robust in currencies, because there are less surprises. Conclusion There are many ETFs that deal in currencies from all over the world, and some indexed ETFs for general exposure to a currency itself instead of a pair. It will take some time to get a sense of all the currencies and how they behave. Each one has its own character, such as the Australian Dollarâs tendency to move with the price of gold. The effort will be well worth it as there is always a currency trade out there somewhere, which forms a fairly constant source for trades.
the major difference for me between trading a stock/portfolio of stocks is the PP and ROMI of trading an fx pair: PP - Profit Potential, ROMI - Return On Margin Invested this site displays charts of the daily range of 4 fx pairs: http://www.forex4noobs.com/forex-tools/average-daily-ranges/ note the daily range changes from year to year but the minimum is over 50 so let's say the margin to trade one mini lot fx pair is $500.00 we don't know in advance what the PP is - although some traders employ various PT techniques to calculate a PT - Price Target, and so do have an idea what a particular trade's PP may be so let's say that on Monday the Buy yields 50 pips - $50.00 profit, the ROMI would be 10% - $500 / $50 x 100 and say trades thru the remainder of the week yielded $50 $70 , $30 , $120 for a total of $320.00 , the ROMI would be 64% , now try finding that ROMI trading a stock from any of the thousands available to trade BUT, the bottom line is, if a trader does Not have a consistently profitable trading method or system, and is Not consistently disciplined trading their method/system then it doesn't matter what they trade, they will still lose demo trade until your trading method/system and you are consistently profitable
Differences between FX trading and stock trading: 1. FX trading open 24 hours for 5 1/2 days. Stocks only open from 9:30-4 ET M-F. This allows for FX trading in the evenings, late at night, early in the morning, as well as during the day. Nonetheless, there are busy times in FX ( 3-6 AM ET, 8-11 AM ET, 6-9 PM ET ), and dead times ( 1-5 PM ET except on Fed reserve days ). 2. FX uses more leverage (50X) than stocks (2-4X). This has 2 effects - less capital required to trade FX than stocks, and easier for undisciplined traders to overleverage and blow their capital in FX. 3. It is easier to do proper position sizing with FX than stocks. If you want to control your risk to 0.5% per position, or 1% per trade, or whatever - the FX market allows you to dial up or down your position much more easily due to the availability of microlot accounts ( $1000 = $0.10/pip ), mini-lot accounts ( $10000 = $1/pip ), or standard lot accounts ( $100000 = $10/pip ). 4. FX has more continuous trading, avoiding the problems of overnight gaps in stocks. There are news events affecting FX which can cause spikes and rapid movements, but this can be anticipated using http://www.forexfactory.com to let you know when important reports are being released. 5. Stop losses are more necessary in FX, due to the leverage and the 24 hour nature of the market. 6. FX trading is done through banks, whereas stock trading is done through exchanges. This means that there is no resting "book" for FX orders and you will have to pay Ask to buy and Sell at bid. The spread is worse in FX than in stocks for this reason. 7. Holding a position in FX results in daily rollover effects due to the differences in interest rates between countries/currencies. This will result in daily adjustments ( positive or negative ) to your account due to the interest rate differential when holding positions more than 1 trading day ( across 5 PM ET ).
This from the penny stock gutter of the market man? What an insanely bias statement. Yet the man has done very well! And if a person can do well in the illiquid sh!t he deals in, a person has no excuse not to do well in a market as fluid and liquid as fx if they put the time in. Sure we can say "5 out of 6 traders BLOW their entire account up in the first 6 months" in fx, I challenge one person to put forth the argument that the number of those who blow out/never make it at all in penny stocks is not INCREDIBLY HIGHER than it could EVER be in the FX market... As for high leverage in relation to over trading the two have nothing to do with eachother, FX is an amazing market for the new trader and the established. Even on the most part time basis 1 trade per month 100 lots 100 points = $100,000 The most important thing is to know What you are listening to as well as who, even those with sound information can still have biases or just personal dislike due to expereince, and send you off in the wrong direction even though they were trying to help, it really is easy to spot these people in action. The most important who to listen to has to be you...so get learning and enjoy the ride, your success is depedent upon you and you only at the end of it all.
FX is a complete joke and scam business for retail traders. If you are "good" with trading now, keep doing it until you have mastered the craft. mastered is defined as finding the trading zen where you can literally print 100,000 a day into your account, or much more!!! I wake up and realize I want a new car. 100k in one hour, done. repeat.
Unless you're living in the same magical bubble that Hershey lives in, everything said after the first line pretty much confirms that you don't have the experience to make such a remark in the first place. -- That's not picking on you, that's just an observation. Of course, you're welcome to show us the $100k paychecks you consistently write yourself for an hour's work, and I'll eat some foot.
that looks like an account of 100k...which isnt much. I think the other guy was referring to netting 100k per day...major difference.