I am a stock/options trader, and tried a small forex account with FXCM (no major problems) during one year, the only issue was the spread of 3-4 pips. I practiced last month with IFX because it have 2 pips for EURUSD, but after all the reading in this site I am going to try Forex with IB. Let's see how it goes, I will use IB as backup for Stock-Options (currently using Tradestation).
thanks, Adventurer! pls give us ur insights, and opinions on Forex with IB once u have gotten some experience, and formed ur own opinion. thanks!
I enter with stop or limit orders (which are, of course, one and the same on Oanda) and exit with stop, limit and sometimes market orders. Don't shy away from volatility at all. Unless you mean something like "do I deliberately straddle the news?" -- no, that's not a part of my trading strategy. What do you mean by "actual fills vs. system fills"? Do you use the API?
How tight are your stops man? Would you reccomand using stops of tighter than 20 pips for daytrading?
It all depends on your strategy. To have an edge, you must find a way for your expectancy to be positive. Expectancy = average win x % wins + average loss x % losses. Note that average loss is a negative number, the way I choose to define it. Also, don't forget to exclude break-evens, if any, so that % wins + % losses < 100%, possibly much less. If your SL is 20 pips, what's your TP? 10? 20? 36?... How often can you capture that amount before you get stopped out? What is the volatility of the pair(s) you're looking at, at various times and after various types of setups and entries? Those are the dynamics you're playing with. Not difficult -- conceptually, that is. Personally, I judge 20 pips in, say, cable and euro to be far too tight, most of the time. But that's just me. And if you're trading, say, EUR/GBP, 20 pips might be far too wide. Again, the real key is to understand, then internalize the above expectancy relationship, and how it fits in with your particular strategy.
How do you calculate expectancy? Should I make a note of all my trades and calculate in percentages my losses and wins than fill in the terms of that ecuation? or is it more like develloping an instinct. Why is 20 too tight? Because it can be easily triggered with a spike by the brooker, or were you talking about the actual market evolution risk? By the way, did you have a chance to take a look at that book?
Yes, exactly. Based on your trades, preferably real, not simulated. Van Tharp's first book is a highly recommended read for basic expectancy stuff, and much more. 20 on those majors is far too tight in my experience. Cable sneezes, and it's moved up or down more than that, many times every day. Why try to be a hero, a neuro-surgeon with ordinary kitchen tools (TA), when you can do very well, playing just a doctor on TV? Didn't have a chance to look at that book yet. But don't worry, I will. Is that where you got 20-pip stop loss from?