great new FX book!

Discussion in 'Forex' started by marketsurfer, Dec 7, 2005.

  1. late apex,

    I always use Firefox, never IE.

    I was unable to see the multimedia posting, because I didn't have the necessary Apple Quicktime plugin for Firefox. I tend to avoid plugins, like Macromedia, for security reasons. I think this is why I have no problem reading the text in this thread, but you do have a problem. You have a problem because your Firefox plugins are not working right.

    Remove your Apple Quicktime plugin, or maybe better yet, if that doesn't work, then nuke your Firefox and do a clean re-install, and avoid the Quicktime plugin.
    #31     Dec 17, 2005
  2. I agree with this one!!
    #32     Dec 18, 2005
  3. Chood


    Ms. Lien strikes me as a past-poster par excellence, meaning she is skillful at touting her prowess at capturing large fx moves after the moves occur, but without first having attended to the detail of calling the move ahead of time. That disqualifies her in my book as someone to take seriously.

    Her article about the Yen on FXCM's website last Thursday, December 15th, is headlined, “Last Week’s Signal Forecasted Latest 400 pip Drop.” Here's an excerpt:

    ". . . The flip occurred around the 120.50 level and even though we saw some intra-week flips, the flips were simply indicative of the ranging conditions near the top. The latest flip from negative to positive occurred at 5am EST on Wednesday, at which time USDJPY was trading at 118.20. Since then it has remained net long, perfectly forecasting the 200 pip drop afterwards. For those who only receive our weekly updates, the intraweek noise proved to be nothing BUT noise and traders following the original signal would have captured a sweet 400 pips. Meanwhile open positions fell 35% to a 2.5 month low as both bulls and bears square up. Short positions were cut by 47% to a four month low while long positions fell 25%."
    #33     Dec 18, 2005
  4. I read ch. 1, the table of contents, and the index, on the Wiley site.

    My opinion:
    This book is garbage. It is addressed to unsophisticated, naive newbie traders, who don't know any better and are therefore defenseless against the onslaught of deception coming from bucketshops. It will help bucketshops to separate fools from their money.
    #34     Dec 18, 2005
  5. traderob


    I just read the chapter. It does have a bit of a promotional feel to it.
    In the section comparing stock trading with forex trading it says:
    """Lower Transaction Costs The existence of much lower transaction
    costs also makes the FX market particularly attractive. In the equities
    market, traders must pay a spread (i.e., the difference between the buy
    and sell price) and/or a commission. With online equity brokers, commissions
    can run upwards of $20 per trade. With positions of $100,000,
    average round-trip commissions could be as high as $120. The over-
    counter structure of the FX market eliminates exchange and clearing
    fees, which in turn lowers transaction costs. Costs are further reduced
    by the efficiencies created by a purely electronic marketplace that allows
    clients to deal directly with the market maker, eliminating both
    ticket costs and middlemen. Low transaction costs make online FX trading the best market to
    trade for short-term traders. For an active equity trader who typically
    places 30 trades a day, at a $20 commission per trade you would have to
    pay up to $600 in daily transaction costs. This is a significant amount of
    money that would definitely take a large cut out of profits or deepen
    losses. In the FX market, because it is decentralized with no exchange
    or clearinghouse (everything is taken care of by the market
    maker), these fees are not applicable.""

    This section could be considered ingenuous considering that the spread on forex brokers usually adds up to more than that trading say futures.

    "Dealing directly with the market maker" - but the market maker is your own broker!- leading to possible conflicts of interest.

    This is not to say I think forex trading is worse than trading stocks or futures- I don't. But the author seems to have an unrealistically rosy outlook on forex.
    I am ordering the book though as I like to know what the competition is thinking.
    #35     Dec 19, 2005
  6. The text quoted by roberk gives some examples as to how this book misleads newbies who don't know any better.

    If we are to minimize transaction costs, as the book recommends, then we need to trade in a competitive market. This means we need to have more than one potential counterparty or market-maker, and we need a broker to find us the best price on each and every order. Brokers play a valuable and necessary role, because they have the expertise and the technology and the relationships to find us that best price.

    This awful book totally denies that brokers play any useful role, and teaches newbies to see them as nothing more than middlemen getting in the way. This awful book teaches newbies to deal with just one single market-maker, thereby eliminating competition between counterparties, a crucial ingredient to the minimization of transaction costs. This is not education. This is brainwashing, which encourages newbies to just sign up with a bucketshop, and to allow the bucketshop to play a rigged game of setting prices without competition from other potential counterparties.

    The comparison this book makes, between transaction costs for equity trading, and those for FX trading, are false and misleading. She exaggerates the cost of equities commissions. She depicts bucketshop FX trading as purely electronic and equities trading as non-electronic, when in reality, the opposite is far closer to the truth; and Nasdaq trading really is purely electronic. She also compares $100,000 equity positions to $100,000 FX positions, when in reality, you would need a much larger position to achieve your desired level of risk, thereby increasing transaction costs, for FX than for equities, because FX doesn't fluctuate as much as equities. She also completely ignores the hidden costs resulting from all the games that FX bucketshops play, like freezing, requoting, manual quoting, spread-widening, shading, individualized pricing, stop-running, anti-picking rules, not paying interest, charging excessive interest, mishandling of customer funds by putting them into bad investments, broker bankruptcy risks without deposit insurance, etc., etc., etc.

    This book ignores the alternative of trading FX thru a non-bucketshop broker, like Interactive Brokers. This book just assumes that the only alternative, for trading FX, is a bucketshop. If the argument could be made, that bucketshops are better than the alternatives like IB, then this book fails to make that argument.

    The table of contents and index are totally devoid of any mention of the need to protect against broker bankruptcy and fraud risks. The book ignores these issues, despite warnings from CFTC that:

    The table of contents and index don't even mention the issues of protecting against broker bankruptcy, which one can do by trading through IB, since it has SIPC and Lloyds' insurance protection, while the bucketshops have little or no protection.

    I think that this whole bucketshop promotion thing is just diabolical and repulsive.

    P.S. If you want to read a book that really has some value, and which will teach you a thing or two about the history of bucketshops, read the classic "Reminisciences of a Stock Operator".
    #36     Dec 19, 2005
  7. traderob


    What has happened over the three years that I have been trading forex is that the spreads have come down. There was even a few rosy months when stops were guaranteed- now revoked by all the big forex dealers. I have funded accounts with 4 forex brokers including IB and they all have some advantages and disadvantages.
    #37     Dec 19, 2005
  8. Is being a bucketshop merely a "disadvantage"?

    I would also suggest that you can't measure or predict trading costs by looking at bucketshop spreads, because bucketshops use so many covert techniques to impose hidden costs, in addition to the spread.
    #38     Dec 19, 2005
  9. traderob


    One of the obvious advantages they give is trading with small size. If the average newbie with a tiny $10,000 account tries futures he will be destroyed within 6 months. At least the mini-accounts of forex brokers allow the newbie lots of chances to experience real trading.
    Now the fact that most lose even with small size is related more to the trader than the broker IMO.
    #39     Dec 19, 2005
  10. Yes, I agree futures are totally inappropriate for the newbie. FX bucketshops are no solution to this problem. Newbies can trade equity odd lots, and avoid the bucketshop ripoff machine. I think that the availability of odd-lot equity trading should eliminate any possible reasonable advantage of trading with FX bucketshops, even for the small trader.
    #40     Dec 19, 2005