How can you daytrade FX off, say, a 1 minute chart with spreads so large? At 20:1 leverage, a 2 pip spread on the EUR/USD is a .35% loss on every trade. At OandA the EUR/USD bid/ask quote is 1.1548/50. The spread is 2 pips which is the lowest in the industry, I think. A good sized move is about 8 pips. How can you profit with that kind of handicap???
I always laugh when people complain about the spreads in forex. Who cares about 2 pips when the rewards in this market are so huge? A good size move is not 8 pips. A good size move is more like 80 pips. I find that many emini traders do not understand how to trade this market because they are used to scalping for 10-20+ trades a day. Forget the 1 min charts. The lowest time frame I ever look at is 5 min, and I mostly focus on 15 min charts. Trade 3-5 trades per day instead, and try to set your targets higher.
I have to agree...with the Forex markets you are in a much stronger position if you try to capture multi-day moves. Trade lighter but longer is my motto.
Ok guys, be more specific : what is a classical risk/reward strategy on say EURUSD or USDYEN? example : 20 pips stop for 40 pips target? What kind of strategy do you play ? Breakouts ? Trends? what pair do you prefer ?
as a novice forex trader, it's a long slow grind compared to index futures, et al . however, gauranteed stops, no gaps, and extreme trends make it an ideal market. paitence is the key, look at daily charts and base your entries on 5 minute chart-- this is what i do. best, surfer
I would like to add to this : How much is one cent move in USD worth? What is usual daily range in USD ? Thanks. Walter
Surf- r u using fxcm for true trades now? I'm using their demo acct..but it looks like Oana offers much better spreads .and overall better features. Any thoughts? Happy Trading. uptik