Hi, i am new in forex. can anyone tell me 1) where is the major exchange for eur/usd pair? i found some sources about it but the price are quite different, may i know any reliable data source? if i want to do back test for this pair, which exchange's data i should use? 2) i know MT4/MT5 are famous. any good and large brokers with low commission supported by MT4? 3) seems fx is trading 24 hr from Sun to Fri. may i know any break within intraday and is there something like pre market auction period when it opens on Sunday evening? thanks so much for your help!
1-Forex is not a centralized market so there is no “exchange “. Each broker has liquidity providers that provide the market if that particular broker doesn’t have enough participants providing tight bids/asks. For backtesting use a large broker like OANDA. Quotes on EURUSD will be very similar from one broker to the next as it’s the most heavily traded pair. 2-OANDA has no commissions but you pay the transaction cost with the spread. You can choose a set commission but smaller traders are better off with the spread. 3-There is no intraday breaks after the market opens Sunday evening. Most traders use 5 pm eastern for the official close of the day. Spreads will widen every day at this time and can take 15-30 minutes for spreads to normalize. There are sites that will show estimates of opening prices Sunday but don’t recall the names. Try a search. You can check the news & chatter on forexfactory Sunday to get an idea where the prices are opening.
Same as @BKR88 said. Forex is an OTC market where the two parties, basically you and the broker negotiate to arrive at a trade price. Since the broker is so much bigger than you, it's basically you taking whatever the price that the broker gives you. There are some "exchanges" for forex but they are really not centralized exchanges like the New York stock exchange and etc., they are just collections of liquid brokers that are willing to take the other side of your transaction through your broker. At the end, you are still dealing with your broker. Because of that, there is NO reliable data source for the price. Each broker's price for a forex pair is different. If you want to backtest for a pair, you just take whatever price that you see fit from a broker that has the largest volume or you can take data from independent data provider like eSignal which you have to pay. MT4/MT5 are good but the brokers that do use them are not ones that I would use if I were you. The software can be manipulated to the broker's advantage against you. If I were you, I wouldn't use MT4/MT5 to trade irl. They are good for research and backtesting purposes but when you want to trade forex, you shouldn't go for a broker that uses MT4/MT5 or use MT4/MT5 when trading with a broker. Depending on the broker, many brokers have a break between 5:00 - 5:15 PM between the closing of the New York market and the Sydney market. Other than that break time, the market is continuous so there is no pre-market or post-market. It's just the market. The market does get quieter or busier in some time periods but not in a sense of pre-market or post-market and there is no pre-market auctions.
You can use the futures contract. Forex is dominated by the interbank market and OTC market makers. So much ignorance in this space. Global fixed income flows and trade/GDP are affecting the majors. First, even a "spot" transaction is actually a forward agreement with 24 to 48 hour settlement. Second, is that the spot rate is arbitraged against the OTC market and the futures. I highly recommend futures VWAP and technicals when analyzing the pair.
1) do you guys know are the trades in https://www.myfxbook.com/most-popular-forex-systems real? i found some crazy guys (carefully make the filter) who can earn 300%-400% each year and consistent in the past 3,4 years i thought they do HFT but after reading carefully their trades, they hold several hrs to several days...do you guys have any ideas on what trading method they use? 2) thanks @BKR88 @TheDawn the tips for making use of MT4/MT5. so can i get free historical data from them and freely to use it? my concern is, if i get a set of historical data for testing but in live trade, if i am not trading this set of data, i would like fooling around myself... 3) @Real Money do you mean using futures price to back test but trade the fx underlying in live? for futures, is there globally one fixed price series and which exchange (any centralized?) is the largest?
1) The major exchange for EUR/USD is the spot market, primarily traded on NASDAQ and CME. 2) Brokers with low commissions on MT4 include IC Markets, LQDFX, FP Markets, and Pepperstone. 3) The FX market is 24/5, with lower liquidity during off-peak hours and a slight pause over the weekend before Sunday evening's market open.
thanks a lot. if i use IC Markets, LQDFX, FP Markets, and Pepperstone, can i trade NASDAQ and CME? if yes, it will be the same as using IB (Interactive Brokers), right? why people choose them instead of IB? guess there should be some advantages and, what's your view on myfxbook?
Forex is not traded on NASDAQ or CME. Forex is traded between you and the broker in the form of actually CFD (Contract For Difference) contracts. You are not actually trading the foreign currency itself unlike the real interbank market. Retail Forex that we trade are CFD contracts that mimic the Forex prices off the interbank market with the price that's set by each broker. So if you look at the price for the same forex pair between different brokers say Oanda and IC Markets, they will be slightly different.
True Not true. Forex is not a CFD. If you trade forex you're trading actual spot currency. If you trade CFDs or futures you're just trading a contract so not really trading the actual product it represents. CFDs are not allowed in the U.S. so if forex was a CFD then Oanda would be offering a product that was not allowed to be traded. CFDs are traded at some forex brokers but they usually represent commodity markets (oil, gold, silver, etc..), equity markets (S&P 500, Nasdaq, etc..) or stocks (AMZN, AAPL, etc...) that are normally traded with futures contracts or stocks.
If you are a multi-billion dollar international company that has direct line to the interbank forex desk in those major banks, yes. For us little retailers who've only maximum five-figure accounts at retail forex brokers like forex.com. It is precisely CFD that we are trading. https://www.google.com/search?q=is+retail+forex+a+cfd+according+to+ASIC?&oq=is+retail+forex+a+cfd+according+to+ASIC?+&aqs=chrome..69i57.13512j0j7&sourceid=chrome&ie=UTF-8 Precisely and this is how retail forex are traded. When you open a position in a forex pair, say EUD/USD with USD, you are really owning the Euro or USD if you are ever long in either of the currencies; you can't withdraw either of these two currencies out; you are expected to eventually enter an opposing transaction to offset all of your open positions and pay/receive net carrying charges/interest in the meanwhile. If you can't withdraw them that means you don't own it. This might not be true with some brokers like IB which actually allows you to exchange currencies for real and you can actually withdraw the foreign currency that you have just exchanged but then you are not really trading it and just exchanging one currency for another. For the majority of retail forex brokers where you are actually trading forex, you can't withdraw the currency you are longing in because you don't own it so you are really just trading a contract mimicking the underlying asset in this case the forex pair and making/losing $$ on the price difference which is exactly what CFD is. All of the retail forex are CFD traded OTC and not on an exchange. Took me a while to realize this. EXACTLY!! That's why retail forex is banned in the USA. They are not allowed to be registered as a CFM anymore with CFTC/NFA which is the regulatory body that oversees retail forex. As a US resident, you are not allowed to open retail forex trading accounts with forex brokers in the US and US retail forex brokers are not allowed to solicit retail forex trading business from US residents either. It's quite sad that IB had to exit the retail forex business because of this ruling. Despite of everything that I hate about IB, it's actually one of the best and reputable retail forex brokers out there but no matter how much they advertised that they provide DMA and how they are an ECN forex broker, at the end, it was discovered that it too was just offering CFD services in retail forex trading.