Discussion in 'Forex' started by 50 cent, Nov 26, 2003.

  1. Hi, looking into forex, I just subscribed to the delayed feed at eSignal and can look at the charts in a decent way.

    Do you guys trade this thing intraday? There is constant overlap between the bars, and if you add the spread you have to pay on top of that, it doesn't look too promising to me.
    I can see the benefit in swing trading forex, but for taking intraday moves (few minutes to few hours) it seems problematic to me. Plus there is no real fixed trading hours, so there are no known reversal times like there are in equities. These reversal times work pretty well for me on the nq.

    Any opinions?
  2. 50,
    Are you talking about reversals like 10, 12, 13, 15:00 ?
    Every market which moves from S to R has own reversal times.
  3. Well yes, such reversal times too. When they are combined with other signals they work well. There is also no volume reading on forex (at least i couldn't see one). That also is one huge disadvantage for me. I usually look at price, time and volume, now I am left only with price. Plus it seems to me that the edge is further diminished by these overlapping bars and the spread.

    I'd be happy to hear other opinions though.. that's why i posted...

  4. cvds16


    i trade them intraday using the futures, saves a lot on the spread.
  5. yes, if you can handle the size.. i was thinking of a mini account.

    as an intraday index futures trader, i was looking into forex, but i am deterred by what i described. so i'm hoping to hear some contrary opinions.
  6. 00009


    How big is the spread when you use the futures?
  7. spread on the futures is 1 pips at most times, 2 pips sometimes. It reduces the spread problem but doesn't solve the other issues i mentioned.
  8. corvus


    I agree that forex trading intraday versus index futures trading intraday are really very different beasts. Here are some of my observations, and please forgive me if this is just incredibly obvious:

    The forex market is open 24x5+ and traders arrive and depart based on their own local (albeit extended) business the participants are always changing and major players are nearly omnipresent. Asian traders are active from 7pm EST to 3am EST, European traders are active from 3am EST, the US joins in 9am EST, and everything quites down from 4pm on. But while news relevant to one currency may come out only during business hours for that currency's region, because of currency crosses, the supply and demand landscape for the euro/usd will change along with the usd/yen, and so yen news affects the euro, even though the euro markets are not really open at 7pm EST. A big change in any of the players rebalances the others. I find, for instance, that I get the best intraday EUR/USD plays between 8pm EST to 2pm EST. Point being that information relevant to price is being factored in over a much larger timeframe per day than for the (US) index futures.

    Further, the forex market isn't open-outcry or centralized, and is far more heterogenuous in terms of the individual participants interests, so price discovery is likewise decentralized, with parties rarely agreeing on a supply/demand -based change in price 100%. Flag continuations are a classic pattern that I find work far less well on intraday forex versus intraday indicies...the follow-through just isn't there alot of the times.

    But three other more relevant points to your post:

    First, let me mention that the overlapping bars aren't always a disadvantage...because the overlap is so consistent, you're often given many decent opportunities for an improved entrance just by waiting to enter after a signal until the price rises/falls to the contrary side of the "channel" of overlapping bars.

    Second, although volume in the strict sense is irrelevant in the forex market as a consequence of it's decentralized nature, depending on what you use "volume" for, it does exist. Esignal supplies volume in the form of "tick count" per bar on intraday bars. I find this useful.

    Third, the cost is not significantly different from the futures. Typically, the spread in the 6E is say 2 pips, or $25 + $2.40/contract commission so, ~$30/contract. Margin for one contract 6E is ~$2000. Oanda offers 2-3 pip spreads in the EUR/USD. 3 pips is $30 for a ~$2000 20:1 contract. Yes, this is typically about 2x the ES, with .25 spread = $12.50 + $2.40 = $15/contract and also ~$2000 margin.

    Mini accounts would be 1/10th the above retail fx numbers.

    Feel free to correct me if I'm off-base...
  9. I believe that my edge won't work in this market, so I'm letting it go for the time being. In other words, I doubt an NQ trader can switch to trading FX without facing some major difficulties.
    #10     Dec 4, 2003