Just a general question. Background. Successfully traded NYSE from 01-08 (sole income, good living). Hybrid system slowly took away my edge and in 2009 I had enough. Couldn't find a new edge and quite frankly was getting burnt out. Fast forward to today. Been out of the markets for 4 years and am considering looking into forex. When I traded NYSE, it was with the standard shops, Echotrade, Andover/Assnet, etc. with the benefit of a trading room. From quick glance, can't find any trading rooms in Los Angeles or Denver specifically for forex. Do these exist? Or with the hours and structure, is everyone more on their own. Again, just now starting to kick this around and haven't done much reading or anything. Are there any programs like the old prop shops? I always liked the office atmosphere, knowing forex is a different animal.
I bet you were doing arbitrage before ....which strategy are you going to use in fx? breakouts/ momentum strategies ain't working well coz of low volatility and mean reversion/cointegration just don't work in the long run coz fx is traded in pairs. fx market has the least edges of any market.
My pet theory is delevering 20:1 to stomach st volatility then use a trending system with the carry trade providing wind to the sails. More investing than trading, though. I don't have the skills for original research nor do I find any books/easy reading on it, so it's in the back burner. Short term, Imho, it's all price action trading. Don't mess up your sleep cycle trading prime hours and watch your health!
Like you I started out as an equities trader as well. I trade for a prop trading firm in NYC. The stuff I do is mainly discretionary trading so it is me vs. the algos most days. I have found ways around them frequently by trading stocks that have them temporarily turned off but its beginning to get harder and harder to keep up on some days. Algos that peg your order so they step in front of your bids/offers and many other sketchy stuff. I still trade equities but I'be recently moved into Forex as well and I am beginning to trade more forex than equities. The thing I like about equities is that you can day trade them and catch quick movements while limiting your risk by limiting your time in the markets. Most forex traders seem to put on positions that are more long term instead of making quick trades on short term price fluctuations. This is mostly because there is a lot of noise in the shorter term time frames and most fx traders don't understand how to read order flow since it is harder to get real market depth in fx since its OTC. I started using a trading system called The AvantEdgeFX trading system. Most fx traders love historical based technical indicators but this system uses none of them Its built on real time order flow analysis combined with market cycles and a prediction algorithm that scares me sometimes with its accuracy. The best thing is that this system enables you to trade off the 1min time frame so you're in and out of the market pretty quickly which limits your exposure to fundamental risk which helps me sleep better at night. The system is the most consistent that I've seen and it comes with a trading course and a bunch of other educational material. They also have a live trading room every morning So you get to learn and interact with the AvantEdgeFX traders while they are trading the market. The system is a bit pricey but the way I think about it is that I could either be investing that money in a good system that works consistently or I could be losing it in the markets because I am using a system that is faulty. For me it pays for itself in the first few trades so I don't mind paying for it. To answer your question about forex traders and the longer trading hours. A lot of the time you'll find forex traders on their own because they like to trade at weird trading hours or they like to trade specific sessions but its also pretty common for forex traders to group together in a live trading room or a chat room and trade the second half of the European session and the first half of the US trading session because of the increased volume and volatility. Hope this helps cheers!
What exactly would you want to pay a prop shop for in FX(or currency futures)? There is plenty of leverage available for individuals/small firms - no need to split profits.
FX can be a tough nut to crack. If you intend to trade on an intraday basis you should pay attention to market openings and overlaps, that's where you'll find the high volume consistently. It can also be an extremely efficient market, stay on top of economic data releases. I'd recommend trading the futures for the volume data (fading huge volume spikes *might* be kinda profitable) and the singular limit order book, as opposed to the fragmented FX market. Another reason to trade the futures is that there are a good number of legit prop firms out there that are active in FX futures.
How old are you ? In my humble opinion, 7+ years of successful speculation + sole income + good living are the footprints of an above average ''experience'' in the game. I am asking you how old are you? Because I would want to know if you can take the ''time'' and ''effort'' to understand a whole new animal called forex. Have you considered the ''stick to your plan or edge'' before going for a new specific market? In my opinion, the so called ''edge'' is not more than psychology at work. Meaning, confidence in yourself AND YOUR ''SYSTEM'' to be profitable over the long haul. Currency speculation is not that much of a different game {when played correctly}. Sure, market's outside-factors change from market to market, the dealer-market access-brokers-platoforms may vary too BUT the price's moves belong to the same equation.... supply and demand