I should have ignored your insults but you don't know what you are talking about. 1. I wanted you to know that I am not a trading newbie. Why should I be "humble"? 2. I didn't say the hedging was perfect. But the drawdowns are safe enough and do not concern me. 3. I said nothing about being short - I BUY negatively corelated pairs. If you don't know what that means, I go long pairs that move in somewhat opposite directions. 4. Yes, I buy low and sell high. Do you??? I have never had to take a loss. Have you??? 5. My bank account is the only ratio I care about. Anyway, thanks for the warm welcome to ET. Nice to see that contrary views of the market are encouraged!
I trade options quite a bit. PLEASE inform yourself before making such parralels between playing on deltas, gamma and theta in options and those "hedging" gadgets on retail platforms. To compare options spread trading and those "hedging" gadgets is like comparing the work of Mozart to intentionaly crushing your balls in a vice. ... not much of a comparison.
Because vanity in the markets, and in general, is usualy the great mark of anasshole .. enough said. pleased to meet you
I repeat, you don't know what you are talking about, and you don't know me. I am sure your future posts will be dripping with humility... Meanwhile, I will continue being an "asshole", but I am much too humble to claim to be a "great" one!
The number one reason traders lose money is leverage. You know you hear all about leverage and how wonderful and great it is, but leverage only adds value to traders who are already consistently profitable and disciplined traders. The bottom line is, the FX market attracts the under capitalized trader. You give leverage to a guy that can't trade and he has zero chance of making it. So really, it not only applies to FX traders but also to guys that trade Crude, Natural Gas and even GOOG. There is no way around this. Most traders don't have the emotional capacity to deal with the gearing involved in highly leveraged instruments. There is nothing inherent in the actual product itself. For example, you can trade the FXE, which is an ETF on the Euro against the dollar. It trades just like a stock. My guess is if most of the guys on this thread would trade that instead, they might actually make money, just not very much because it is highly de-leveraged. BTW, I say this as a guy that runs a prop office. I have seen first hand how leverage ruins traders. And I'm a proponent of leverage! Just only to those that are net profitable. When one is learning how to trade, they should trade the least leveraged instrument they can find. The problem is FX attracts all the newbies either from late night info-mercials or from the onslaught of new FX books hitting the local Borders. So to sum it all up, no, I do not believe there is anything intrinsically harder about FX to trade over say bonds or index futures. I just feel with the hyper leverage involved, 99% of those on ET don't stand a chance. They will never admit, they will just slowly fade away with the money in their account.
I completely agree. Because of the significant leverage offered on spot FX, along with the commercials that incite everybody and their dog to trade FX like McDonalds commercials, there are alot of people that are trying to trade FX not only without trading experience, but also without the mathematical understanding of the FX market. Its not that the math in FX is particularly complex, but how is it that so many do not realise, for example, that being long eur/usd and short gbp/usd is the equivalent of holding an outright long eur/gbp ? ... we've seen so many guys here who do just not seem to grasp the idea that FX pairs are so highly correlated that hedging between spot pairs is futile. Of course, one can be profitable doing so, but then why don't they just take the outright positions to save spreads & margin ? ... they would be all that more profitable. As for the guys who think that a long eur/usd can be hedged with a short eur/usd, well, those mathamaticaly disabled individuals are probably beyond any hope. Also, the FX crowd in general definitely has sank to a "Yahoo message board screaming red neck" level. Years ago, FX traders were typicaly from institutional back grounds and conversation was at an intelectualy acceptable level. Of course, there still are some here that are bright and professional people, but just look at how much useless "I'm so good , and you're stupid" type rant goes on now. Its as if a million drunk kindergarten kids suddenly showed up in the FX sphere. When I started trading FX 13 years ago I was hard pressed to find anyone that could discuss FX. These days, dispite the internet and the enourmous communication that it has opened for us, of course I have found several sources for intelligent conversation, but the "filtering process" is incredibly dissapointing ... for 1 bright guy, there seems to be 50 ranting rednecks with the IQ of a fence post. Anyway, I suppose we shouldn't complain too much as even the insane & stupid money in the market provides liquididy... just dissapointing from an intelectual perspective though.
As far as the leverage in FX is concerned, I suggest to new traders to trade FX without any leverage. then, only once they prove to be profitable should they use leverage . ... when suggesting this, the inevitable remark "but my account has 100:1 leverage and my dealer doesn't offer 1:1 leverage" ... confusing margin rate with leverage used ... another basic that too many seem not able to grasp.
Dont worry mav, its all good. The above quote from paris jom was quite good i thought I dont think you killed the thread, it commited suicide. I should mention, in my original post in this thread, i asked the MM about simultaneous long and short positionS, not market nuetral by any means, i just wanted to know what they would say. The example of being in multiple lots one direction, earning sweet interest on a weekly trend, and wanting to have a bit of fun shaving a few pips off intraday shorts because your bored didnt seem to press their (MMs) happy buttons. Its not REAL hedging of course, but people do things because they can, not because its a great idea, or sensible generally.