The title says it all. I have had success trading equities, as well as running a small trading office, where I have seen my share of success and failure. My question is, for the few traders who can make a living trading stocks, how hard is the transition to trading currencies, and how long is any learning curve? I know the generic answer is that negative traders of equities should remain negative in currencies, and positive stay positive. More specifically, would the trader who is profitable, but does not have a large pool of capital, benefit from a move to currencies?
If you are a profitable trader all you need is fluid price and volume. Shouldn't matter what vehicle. Take your risk management skills and apply them to any market or instrument and a real trader will make money.
elaborate? edit - How many markets do you trade? Personally I trade equities, commodities and currency. Derivatives on all as well. No debt.
If you are talking about FX currency trading, I don't know, but trading the Euro Currency in the futures market via the CME product is fantastic. Plenty of volume in the mornings until around noon usually. If you can get up early there are usually good starts to moves ~3:30 a.m..
Sorry. To be more specific, I'm talking about going from trading equities, where neither I nor others focused on any one in particular. Rather, we traded whatever was moving that day. Earnings shortfalls, upgrades/downgrades, etc. The new shift I'm looking at is focusing on trading spot currencies. Focusing on 5 specifically. The 4 major pairs & 1 minor. The mentality is, yes, companies can lie...bs earnings, whispers, false rumors, plus human error, from ceo's being investigated, etc. Moving to a spot currency on assumption that: whereas iomega/atari, whatever, can fall out of bed forever, a currency will eventually have a major bank or gov can step in and buy or raise/lower interest rates. Based on the fact that currency pairs haven't gone to 0 that often in the past few years, you could afford to sit in a losing trade, if you've only used 5% or so of your equity, til you can average a bit & let it turn. Based on this, the leverage isn't so much something that appeals to me to trade more with, but to use to avoid a sell-out. A common stock drops, you have maintenance requirements & house/fed calls that can take you out. With 100:1 or more, but not trading with it, I've seen guys succeed by holding onto positions, having gone in light, and make nice profits when it turns. When you're right in either market, you're right. When you go in heavy & are wrong, you're wrong. When you use little% of your equity, it seems you can ride it out more w/ a spot currency, based on the fact that it is more likely to not file 11 or fall out of favor when a competitor steps in or ceo's have lied about earnings, & the fact that you have more leverage to allow you to ride it out. Thanks.
Explanation underneath: The mentality is, yes, companies can lie...bs earnings, whispers, false rumors, plus human error, from ceo's being investigated, etc. --> This mentaltiy is WRONG price action will show before this even happpens. Based on the fact that currency pairs haven't gone to 0 that often in the past few years, you could afford to sit in a losing trade, if you've only used 5% or so of your equity, til you can average a bit & let it turn. -> This mentality is EXTREMELY wrong, you are using this as a crutch, All trades are either RIGHT or WRONG, they are not long term investments -----> Just because a product moves like a crazy nut does not mean you can profit off of it with a viable risk management plan easily. There are no external forces in currency , You are a guppy with earplugs trading forex, You have no information, You are at the mercy of "tech analysis" which imo is useless when there is a motivated buyer or seller and not used in conjuction with information. Basically, you have no information to trade FOREX.
eurosport, I think the answer to your question is fairly simple. If it interests you, then give it a try. What other people say is immaterial because they don't know how you trade, and you don't know how they trade. You may well be talking apples and oranges with one another and not even know it. You know how you trade. Therefore, test your method on currencies without risking money and see how your hypothetical trades would fare. If they do not fare well, then you have your answer, for now. If they fare well, then try risking a small amount of money. You will know if you are on the right track. But whatever you do, don't assume a false sense of security. That is always the most painful and expensive lesson. As an aside, I have not traded currencies in years, but I think that approaching it in this manner is valid and reasonable. You will then know if you can transfer your existing method to currencies, whether you will need to modify your approach or design a completely new one, or whether you should move on to another vehicle. No one else will be able to tell you this.