I've never traded Forex but I want to start. I'm just curious about whether it is considered much harder than stock trading? Without the usual markers such as Volume to help judge sentiment I can imagine that knocks out VWAP and other indicators. I've looked at the RSI on some Forex charts and they seem to be very choppy and there's loads of false signals (that's even when you look at the RSI in two different timeframes). How do you all approach this? Is Forex considered much harder to trade than stocks? Thanks
You need to ask yourself this question: Am I making money trading? If not, why not? If you can't make money trading stocks, why would you think you can make money in fx? Can you make money in sim? If not, forget about trading altogether until you can.
This is a good question. First, you can definitely use volumes and VWAP, and IMO, it's even more effective than when you use it on the index/equity markets sometimes. [example] Depending on your familiarity and experience with CME, and your ability to chart futures spreads, you can get volumes and VWAP studies for all the majors. For example, the forex quote on GBP/EUR can be analyzed using the futures spread long GBP and short EUR in a 1:1 ratio. You can chart the cash value of the spread by subtracting the notional value of the euro contract from sterling. Schwab/thinkScript (above) can do this. I don't use RSI, but I have found Dorsey's other invention, the RVI, to be useful.
It's my experience that generally, Forex is considered harder to trade than stocks. But personally, having traded both, I am of the exact opposite opinion. My approach is to trade in the direction of the trend as price is coming out of pullbacks. Here is an image I recently posted in another thread illustrating the indicator I just coded this morning to alert me when a given pair is exhibiting the structure I seek for a possible trade... Moreover, I'd approach this in a manner compatible with the principles illustrated by Peter Reznicek, AJ Monte and Gareth Soloway on the free videos they post to YouTube, even though the first two guys are primarily concerned with options trading and Soloway focuses on stocks, indices and commodities. (Normally, none of them spend any time at all looking at currency pairs.)
Forex trading can be considered easier than trading stocks for several reasons: - 24/5 Trading: The forex market operates around the clock during the week, allowing traders to participate whenever it suits them, unlike stock markets with limited trading hours. - Forex trading accommodates various strategies, from scalping to swing trading, giving traders more options to find what suits them best. - High Leverage: Forex brokers typically offer high leverage, enabling traders to control larger positions with less capital, making it more accessible for new traders. - Macroeconomic Focus: Forex trading often focus on economic indicators and geopolitical events affecting currency pairs, which can simplify analysis compared to the multitude of factors influencing individual stocks. Understanding how global economies affect currency values can sometimes be more intuitive than dissecting company earnings reports and market sentiment for stocks. - Fewer Stocks to Analyze: In forex, traders mainly deal with currency pairs, which simplifies the decision-making process compared to analyzing multiple companies across different sectors. - High Liquidity: The forex market is one of the most liquid markets in the world, which can lead to tighter spreads and more straightforward execution of trades. - Clear Sessions: The market operates in clear sessions (Tokyo, London, New York), helping traders plan their strategies around specific times. - Standardized Tools: Many forex brokers provide easy-to-use risk management tools, such as stop-loss and take-profit orders, which can simplify managing trades. While forex trading can offer these advantages, it's important to remember that it also comes with its own risks and may not be suitable for everyone.