trade stocks but interested in FOREX

Discussion in 'Forex' started by billpritjr, Nov 20, 2003.

  1. Hello

    I am a individual investor that trades stocks using a trend following strategy, fortunately with fairly good success.

    I am unable to sit at the computer all day, due to my "real job", and typically hold stocks 1 to 3 months, and buy and short as the trend dictates. My broker is DATEK/Ameritrade.

    I recently have become interested in FOREX, and would like to know:

    1. For a "non-pro" trader like me, which broker is recommended?

    2. I am very fond of dual MA crossovers, is FOREX receptive to such trend analysis?

    3. Maybe a simple-simon question, but is the "profit potential" with FOREX more than with stocks? Which one offers more bang-for-the-buck?

    thanks for the info

    BILL
     
  2. Hello Bill, here's my opinion.

    1: There are many reasons for an individual's choice of broker, two main reasons appear to be based on the pip spread between the Buy/Sell amounts, often 5 pips for mini accounts, 3 for whole lot accounts on the 'majors' pairs; the charting program/s provided without charge by the broker.
    You might also consider: is the broker registered, which may relate to safety of funds and ethical dealings; provides toll free telephone numbers and permits price quote requests/order entry particularly for mini accounts; 'instant' order entry, not 'requote'; guarantees 'stop' orders will be filled; provides a DDE price data link for $40 ? per month via purchased converter to client charting program; high level of customer service; reliable quote system, some brokers were down in the August blackout, some weren't, generally most are very dependable. A number of brokers qualify including some who aren't registered, further research at the MoneyTec forums will provide many opinions/reasons for broker choice, you might start at fxcm.com.

    2: MA crossover - see chart, Day-to-Days trading is potentially very profitable.

    3: On the attached chart of the EUR/USD, the 'pip/tick' value is $1, the dollar amount between the horizontal lines is $100.
    Recently the NFA required registered FCMs to increase the trading margin of 'lots/contracts' to 1%, beginning Nov 30/03. To trade one mini-lot will require $100, to trade one lot will require $1000. Minimum account margin varies with brokers, for your stated trading method you might consider a 10:1 Account to Trading margin ratio as a starting point.
    There is a technical Close each day at 6pm EST to calculate the interest rate difference between the currencies in the pair, the amount credited/debited to the trader's account, flat rate of $1 per mini-lot with some brokers. Being a 24/6 market, trades are able to entered at any time. Nominally, the most active market hours for the EUR/USD is during the US trading day see: http://www.aboutforex.com/timezones.html .

    I trust that you will be able to see and evaluate for yourself with the attached chart, the "profit potential" and "bang-for-buck". Wallace.
     
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