Buying 100 000 units (one lot) at 1.5 pip spread, you have 15 USD cost (spread). So you start down 15 USD when opening the position. Every pip will move you 10 USD in the direction of the pip.
Thats considering a 128K position on Euro. So the cost would be $15, 15*100/128,000 = 0.0118% As I already have pointed out. As I said account size have an effect on this, the bigger the worse is to use forex but I havent saw any evidence that daytrading or scalping is impossible as some have CLAIMED. In fact I would like to know if someone have some data on equities/futures slippage, how much of % of position in costs on avarege
5-second snapshot quotes on top of the artificial spread? Then yes, I would say forget about scalping off forex. Hard enough to be profitable scalping on globex, so just trade CME and put limit orders to good use.
True, But I view scalping as precision...(in the true sense of the word). But there are many that scalp at Oanda... Michael B. P.S. Folks, In Forex each Dealer/Marketmaker has their OWN quotes, their OWN fills, their OWN spreads. So they decide the WHAT and WHEN and the HOW they report to you THEIR market. So it is imperitive that you get honest Forex, as there is not any regulation to speak of (not like Futures anyways) and not any standardization. I find that Oanda is the best game in town and I hear that IB is good too.
The nature of the FX market (as I've seen in, from the POV of a small trader) doesn't seem to lend itself to scalping...maybe somebody has a strategy that could make it work though. If your gonna scalp the tight FX consolidation, and you have a way to do it consistently, then that might be pretty close to the holy grail....but considering whats against you...seems really tough. Other than than the ranges, if you 'scalp' a move in the right direction, its probably gonna go for more than your scalp, so why not hang on? PS. for comparison, probably use about $5 mininimum commish/contract for the mini index futs.
Just my .02 on this subject. There are times to scalp and there are times to trend trade in the FX market. Fortunately those times are pretty much the same every day and every week so once you figure it out you can follow the same pattern. For instance noon Eastern time seems to be the great cutoff between the morning trending period and the afternoon non trending time. If you just scalped after noon you probably wouldn't have to take too big a stop loss on trades that went against you. However you might find that because of the lack of movement it is actually harder to scalp in the afternoon depending on your strategy and style. Anyway you will have best results if you align your trading style with the trend / non trend tendencies of the market you trade. These times tend to be pretty consistent in the currencies from what I've seen.
If the market is not moving much, you can increase your position size(fortunately you can go as high 100:1 on forex), the same way you decrease when there is a lot of volatility, all keeping the risk under 2%(of YOUR money) if you know what your doing Forex spread costs gets to $5(on a 1.5 pip spread) when you have about $42K, trading the current eur/usd. I believe you could buy several contracts with that, so in this sense forex is 'better'. And we haven't even taken in account slippage... But there must be some drawbacks
No, you are wrong. For example: Buying eur/usd (100 000 units), thus: buying 100 000 euro AND selling (100 000 * 1.2810) USD. Now closing the position at 10 pip profit (no spread in this example): Selling 100 000 euro AND buying (100 000 * 1.2820) USD. As you can see, your net result is 100 USD (100 000 * 0.0010) or $10 a pip. Account size or current exchange rate are irrelevant. The exchange rate is only relevant if the quote currency (YYY, as in XXX/YYY) is not the same as your account base currency.
100,000 1.1(rate) ------ 90909(other currency) 1.1010(new rate + 10pips) 100,090(result) +$90 = $9/pip 100,000 4.5000(rate) 22,222 4,5010(new rate, +10 pips) 100022.22 $22 = $2.2/pip Hows exchange rate not relevant?