I have just started trading a real account after spending quite some time using several different demos. While it is true that the cost of the spreads is significantly more than paying a commission with a one pip spread on futures, I have found (so far) that this is not really a factor in my particular trading style. While I am definitely a "newbie" to Forex, and probably not qualified to say ANYTHING with certainty, it seems that the moves are, while not predictable, quite dramatic. The platform (I am using GFT after trying demos of virtually all of them)permits me to place parent/contingent orders. So if I want to buy a breakout or sell a "breakdown" (to open), I can enter an order and let it sit for as long as it takes to get hit (if ever). I find it is entirely about being patient. With parent/contingent orders, you are guaranteed fills at both your stop and limit prices. This works for me. For example, yesterday I had an order to buy (be long to open) the dollar/yen pair at 108. I had placed the order when the pair was almost 100 pips lower. I had a limit order to sell half my positon at 108.40. And a stop (OCO) on my entire position at 107.90. When the news came out about a terrorist scare in Japan, the pair jumped past my limit order price (as well as my stop of course). But because they guarantee stops, I was filled at 108, and out of half my position at 108.40. I was able to place a trailing stop on the remainder of my position. I rode it up to over 109. For me, the ability to "automate" these trades, with guarantees on stops and limits seems to make the added cost worthwhile. As I said, I am very new to this, and really can't say for sure how it will work in the long run. But there does seem (so far) to be value in the mechanics of this kind of Forex trading. If you can be disciplined to NOT trade until your stops open positions for you. There is often NOTHING to do. There is also, in my case, where I am trying to lock in a profit on half a position, the matter of paying close enough attention to place trailing stops on the rest of the position and canceling my original remaining stop. It does require constant monitoring. Anyway, for what it's worth, that is my take on Forex. I find it interesting, and far different from the equities and options trading I have done for the past almost 20 years. So far, so good. The hours are a bit strange. Seems like most of the action occurs very early eastern US time (while the Asian and London markets are still open). So I find myself trading (or placing trade orders) at unreasonably early hours of the morning. But on the other hand, it is nice to be finished for the day at 9 or 10 am. Especially in Florida this time of year. The only other point I would make regarding BobCathy's original post is that I cannot imagine making 100 trades a month. It is all about being very selective. If a trade is triggered, fine. The majority of the orders I place don't get filled. They are GTC, but if the chart pattern no longer makes the trade look like it will get filled, there is no sense in not canceling. One trade a day can be quite enough. My win percentage is very high. So far, it seems it would have been even higher if my stops were not as tight. But I am still just trying to feel my way through, and not prepared for large losses. Peace, RS
Error, Someone said that to me on another thread too. Consider if you are a small trader doing say 10 returns on the euro globex a day. Commission on this is total $35 -$50 depending on your futures broker. But if you do this same moderate size on forex you would pay about $200 more. That is a $1000 a week. In fact it is probably a bit less becuase the guaranteed stops on forex save you sometimes. So let's be very generous and halve it: $500 a week. If you are an active trader doing 50 roundturns a day - as many do- then we are talking about thousands a week that you would be giving away. So it seems it is not a viable professional platform (yet). I accept it is useful as a learning tool or for hobby traders.
Well since I do 10-12 returns somedays (not for awhile I admit) I would assume there are a whole lot bigger players somewhere.
I disagree. The reason is that I think selectivity is more important. If you can make one good trade a day, that should be enough (depending on the size of the trade of course). When I was trading equities heavily I traded around 200,000+ shares a day. But my winning percentage was not much more than 50%....and my losers were not much smaller than my winners on average. I made money on volume. With forex, I can see it being possible to make a decent living (not a "hobby") with very few trades. I think (HOPE) that I can manage a far greater percentage of winning trades than with equities. And the winners should be significantly larger than the losers. But again, I realize this may just be wishful thinking....based on temporary "beginners luck"... When I was a market maker on the floor of the CBOE, it was ALL about volume too. Either a lot of trades (for most of us), or huge size trades (which is more what I did....not my money, so I could do that). I could put on enormous back spreads and just wait them out. (Of course that is impossible off the floor). Bottom line is that no matter what kind of trading you do, the number of trades or the size of the trades determine your end result in number of dollars. It can be done either way. I prefer fewer trades with larger size. I was far too stressed out when I used to make 50 to 100 trades a day in equities. But because I worked prop, I had to do it that way. I was limited to 8000 share max positions. 12k in lower priced stocks, but I virtually never traded them (normally I traded no more than 3 or 4k lots anyway). So I did a lot of trades. I traded more of a shotgun style than a sniper style. I would just be in everything at once. Big swings both up and down. And at that time, that made sense in that no one position could hurt me too badly. I would have rather then have traded four or five trades a day of 50k shares at a crack. But i couldn't. It was about haircut and the firms risk management parameters (like I said, no one position could hurt any of us badly with this kind of spreading out of buying power by carrying a lot of positions at the same time). So you do what works. When I was on the CBOE, I could trade reportable limits. So there was no need to trade a lot. I didn't, and I didn't see any need to. Different strokes. Peace, RS
Yes I see your point. But you can still do that one trade with 10 cars. Unless you are so good you can make 40plus pips a day with that trade I think the commission/spread is going to be a factor in your bottom line.
Yes, I see where you are coming from. But keep in mind that when you can use trailing stops, and that stops are guaranteed (other than over the weekends), there is no reason to close out positions that are in your favor until they close themselves out by hitting your stops. There is little reason to have a "target" when you have a 24 hour market and reliable stops. And no gaps. And forex seems (so far to me) to be quite a bit more trending than equities once a move begins. So the "jiggles" are less likely to stop you out if you can effectively use those trailing stops. Again, I can't stress enough that my experience is short. I could have this completely wrong. All of what I have experienced between both trading on demo accounts and now a live account is only represented by a time period of about 3 months. Had I started buying just Dell computer or Qualcom stock (for example) every morning at the open, and selling them every day just prior to the close from (say) November of 1998 until (say) Jan of 2000, I would have believed that I had a foolproof way of trading my way to sure success. I am quite aware that what has worked can certainly be due to "beginner's luck", or just fortunate timing for that particular strategy in that particular vehicle (Forex). Only time will tell. But 40 pip moves are certainly very far from uncommon. And with no gaps, and effective stops, this seems to combine to make my perception (which again, may be completely off the mark) at least seemingly possible. And interesting enough for ME to pursue. I am my own guinea pig I guess. I have been trading far far too long to do two things: One is to try and tell anyone that something will always work. The other is to let me convince myself of that very same thing. What is working now seems fine. I know at least as well as the majority of traders how quickly things can change. If I did not have that concern, I would certainly be using looser stops than I have, and I would be trading far bigger positions. But the one thing I would NOT do would be to try and look for more trades than I am currently seeing. So under no circumstances can I imagine doing more than just a few trades per day with Forex. This is NOT a market that I believe can be scalped. Because clearly then the spreads would eat you alive. I agree with your contention that it would be a foolhardy waste of money even attempting to make the kinds of amounts of trades you had referred to in your earlier post. Trading just the major pairs....how could you even possibly hope to find 50 - 100 set ups in a day? Most of he "jiggles" aren't enough to "beat the spread" even if you are right more times than not. If I see three set ups a day and get hit on 5 - 10 a week, I think that is a more realistic possibility. And should be enough if the size is sufficient. Check back with me in another 3 months. I will then be able to better judge from a broader sampling of trades. In a year, maybe I will know enough to make assumptions. For now, I am strictly observing (through active participation) and making only guesses. Or at most, semi-informed opinions. And you know what they say about opinions. So for the Nth time, I hope anyone reading what I have posted about my observations over this past three months in trading Forex gets the message loud and clear that it is NOT to be construed as anything more than what I have tried so hard to express.....these are only observations and opinions...NOT ADVICE! If you want advice from me about trading, I will stand by the posts I wrote here long ago. Do a search for the "Gems" series compiled by Tripack when I was posting as RS7. That was my contribution in the way of "advice"....and never did I say how to trade or what to trade. Only how to keep trading in perspective as a job and not a game. In ten million words or less, and God knows how many posts, I said essentially just one thing: Trading is about discipline and patience. I will always stand by those words. (I am sure there was some other stuff too....I hope there was....the reviews were good...I just ran out of material). We each and every one of us really have only our own observations to share. My intent was to share the observations that could not possibly be detrimental to any trader. And having been (in general) one of the more experienced traders on ET at the time, I bent over backward to be sure that NOTHING I ever said could be misunderstood or misused by new traders (who I believed were the core citizens of ET) in any possible detrimental way. That was then. I felt qualified to actually give advice about discipline, patience, and concepts like accountability. Now with Forex, I feel anything BUT qualified to give advice. Only to share my observations. And to point out (once again) that they are only based on a very short period of time. Be careful out there!!!! peace, RS
In the case of using Forex for the "mini contract".....it probably works out for you at $2-$5 a trade. It is a good way to get your feet wet. I am a scalper mostly. So commissions make a huge difference to me. I place Stop Orders all the time for safety. Even with a tiny account, this is a good practice to get into from the start. ES, NQ and YM are just about impossible to trade lately because of the lack of clear trends. Got tired of working all day to break even at the end.
I am a newbie here.. Don't have to pay software fee for globex trader? Velocity features charges around $500/month for software.