Getting started in Forex

I've been doing stocks and am currently learning futures preparing for a move to full time trader. I am American living in France, so I only trade US markets. But the time difference means the US markets open at 15h30 and close at 22h.

For this reason, I'm considering trading currencies. This should allow me to trade a normal 9-5 schedule and be available for my family in the evenings.

My first question is are there currency futures that I can trade with my futures account (IB)? I figure this would be the easiest way to get into it. If not, should I set up a Forex account at IB? Or is there a better broker? So far my research has been focused solely on stocks and futures so I don't know about brokers for forex.

I plan to use NinjaTrader for futures & stocks. I see that I can use it for free with a broker called GAIN Capital. Problem is I don't know how to compare commissions and fees for Forex.

Also if there is a good book available I'd be very interested in reading it.

Finally, if anyone else has experiences switching from futures to forex I'd be interested in how it worked for you.

Thanks

 

You're on the right track.

IB has plenty of FX futures, and futures are THE way to go. The second best choice is an ECN (like IB, again).

IMO you should do better doing swing trading or position trading in FX.
Because big players dominate the market, Forex tends to be much more erratic intraday than stocks, making daytrading much more difficult.

Keep overall leverage at less than 10:1, preferably 5:1, whether you trade futures or spot.

Keep realistic expectations on forex, 30-50% yearly profits would be great, and 100% is outstanding.
Don't fall into the get-rich-quick, 5,000%-yearly-profits, 100:1-leverage, daytrading-scam.

 

If your learning and making a switch from stocks to forex be very careful dude. Forex is a different animal and only the very experienced can make the switch succesfully.

Finding the right broker is the least of your problems.

 

Don't be fooled by the ECN-style, non-dealing desk sales gimmick, it's designed to fool the gullible novice into thinking they are trading direct with the banks

Intraday trading is fine, there are some outstanding returns to be made. People who say daytrading isn't profitable obviously haven't developed the skills necessary to exploit intraday volatility.

Leverage is neither here nor there, risk is what matters.

 

You're in a good location for trading forex as you can catch both the European and US sessions without having to get up in the middle of the night.

I've traded futures and currently trade spot fx. The cautionary advice above is right on I think, but I feel there are alot of advantages to the fx market - particularly the volatility.

It's also good that you've got the option to trade fx futures along side the cash.

Two books I'd recommend - Kathy Lien's Day Trading the Currency Market: Technical and Fundamental Strategies To Profit from Market Swings and Currency Trading For Dummies -

 

Thanks for the book suggestions. They get good reviews at amazon so I'm going to check them out.

One thing I'm not sure about is on forex do people trade the real currencies or do they trade currency futures? I thought it was the former but I'm not sure. I'm concerned about the futures volume being mainly traded during the market hours in the US. I was thinking of starting with an e-mini euro dollar.

 

The CME Euro FX futures contract will naturally be be highly active during European hours - as will it's spot equivalent, the EUR/USD -

You are lucky in that you can trade the European open and also catch the US open in the afternoon your time - the European/US overlap session is one of the best times to trade IMO.

 

At the moment I'm lucky in that the lunchtime deadzone in the US occurs during our dinnertime here in France.

I think I will be luckier if I manage to be success at changing from US equities to Euro futures and stop trading before dinner. My wife would like that.

Thanks for the pointer on the futures contract to trade. Would you recommend the e-mini version or the full version? I've been researching the mini DOW and e-mini S&P, I imagine that the e-mini euro fx would be good for starting out?

Thanks for the info.

 

I added both euro fx 6EH8 (and today 6EM8) and euro e-mini (E7) to my IB watch list and I look at the charts. The volume seems to be a lot less than the ES & YM. Is this the case? If so, wouldn't that make the spreads bigger and less advantageous for trading?

Also, what are the best trading hours? It looks to me that after 18 European time there is no activity, but this shouldn't be the case because there would be US traders.

Maybe I don't have this set up right. It's easy for YM & ES but for the Euro it's very confusing.