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waveslider

Forex Question

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Hi,

 

I have never traded forex before, and don't really understand the pricing / fees.

 

I want to set forward a system to see if it is actually trade-able with slippage and commissions.

 

Since Forex trades 24 hours, it looks like liquidity would be the main issue with the system.

 

Does anyone trade forex with tick or volume charts? That might alleviate the problem a bit.

 

Anyway, this system is set to a ten minute chart trading the USD/CAD.

 

Over the past 4 years the avg. winning trade is approx. $150, the avg losing trade is $250.

 

This is trading one contract.

 

The entries and exits are on limit orders.

 

Can I expect that the winners would be seriously eroded by pip spreads?

 

My broker is Tradestation if that makes a difference.

 

Thanks is advance for your advice!

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Liquidity wouldn't be an issue because your "broker" is a bucketshop and would always be on the other side of every trade. They claim to make money from the spread but actually make money by taking the other side of your trade. Slippage would be a massive issue.

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Guest cooter

That, and cancelled trades, and the usual bucketshop goings-on.

 

If you can afford it, waveslider, try trading Currency Futures instead of spot FX.

 

At least you'll know where you stand once you start making real money.

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Guest cooter

Don't know much about spot FX, so I can't comment.

 

Here's the CME page on Currency Futures:

 

Outright Rates for CME Currency Futures Created by PBIS system

 

Your broker should be able to give you much better rates - if you ask nicely.

 

One noticeable difference is the direct commissions on Currency FX. In Spot FX brokers get their "vig" from the difference between the bid and ask spread, and don't normally charge a per trade commission.

 

Currency FX is just like the other regulated futures - you've got exchange fees, regulatory fees, and broker commissions for each trade - and on each side (in and out).

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Thanks Cooter (is that from dukes of hazzard?)

Here is an email from TS I got regarding forex. I just moved to Canada from the Us so am much more interested in hedging b/w currencies now. Any comments on this email?

 

 

Tighter spreads with no markups/markdowns

Fixed spreads are a way for FCMs to markup or markdown the best bid or offer. This is usually done to hide their fee into the price of the currency pair instead of displaying their best quote. Of course, there are costs incurred in transacting trades, so when you see an FCM claim they have “no commission” you should be aware they are making money with the built-in markup/markdown in the spread.

 

TradeStation Securities has nothing to hide. We understand traders need the tightest possible spreads, and with the release of TradeStation 8.3 will offer tighter spreads with no markups/markdowns and openly display a low commission rate. With our new upfront commission pricing you’ll know exactly what you’re paying for — and allow us to offer you narrower price spreads.

 

New Forex Commission Structure

We quote the best bid/offer from multiple large banks and charge a separate transparent commission, which include exchange and regulatory fees.

 

TradeStation Forex

EXAMPLE #1: 100,000 EURUSD = $2.67 (0.00002 X 133,333*)

 

EXAMPLE #2: 100,000 GBPUSD = $4.00 (0.00002 X 200,000**)

 

EXAMPLE #3: 100,000 EURJPY = $2.67 (0.00002 X 133,333***)

 

* Assuming fill price of 1.33333

** Assuming fill price of 2.00000

*** Assuming fill price of 160.000 and conversion rate = 1 USD : 120 JPY

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Wave : you want to check oanda.com they have a spread/execution policy that its worth looking... I actually dont trade forex, but have acct with them and so far I believe they got one of the best spreads... no second pricing... etc... also no minimums and flexicontracts... hope helps cheers Walter.

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Oanda are one of the worst bucketshops of them all and have been known to increase their GBP/USD spread to 200 pips during data releases. Waveslider, these bucketshops are just glorified bookmakers who offer 400:1 leverage in an attempt to get their gullible punters to part with their money.

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Guest cooter

It's all Marketing BS.... what it comes down to is how they treat trading during news events, and how profitable they will allow you to be.

 

In case you're wondering why they call it a "bucketshop" it's because in the majority of cases for retail spot FX you're trading against yourself and the house.

 

The trades stay in-house in a "bucket" and aren't necessarily matched at the real market. Sort of like your local bookie, I'd guess. They set the odds (spread), and you play (trade), and they decide how much they want to give you at the end of the day (busted trades, etc...) , essentially.

 

Nice racket, huh?

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  notouch said:
Oanda are one of the worst bucketshops of them all and have been known to increase their GBP/USD spread to 200 pips during data releases. Waveslider, these bucketshops are just glorified bookmakers who offer 400:1 leverage in an attempt to get their gullible punters to part with their money.

 

Oanda gives a maximum of 50:1 leverage, I think thats a serious leverage, they have a 1.2 pips spread (real) on eur/usd pair , and there are no IB brokers for them... at news euro/usd spreas can open up to 10 pips... during max 1 minute... think thats the only complaint I would have.... They are quite big forex dealer and it is a member of the National Futures Association (NFA ID #0325821).

 

I believe Notouch, to keep this forum serious and profesiional should you inform yourself before making such non-fundamented statments... OR if you have material to backup your information, please post it.... cheers Walter.

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I used to have an account with Oanda and have a lot of evidence that they are a total bucketshop. Someone posted a video over at ET showing they had a 200 pip spread for one second after a data release (enough to take out plenty of stops) and I have screenshots of their spread widening and slippage games. I'm not going to spend hours carefully documenting ever post I make on this forum though. It's up to you what you believe.

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  notouch said:
Someone posted a video over at ET showing they had a 200 pip spread for one second after a data release (enough to take out plenty of stops) and I have screenshots of their spread widening and slippage games.

 

For your viewing pleasure:

 

YouTube - Oanda spread on Non farm payroll 2/2/2007

 

Enjoy!

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yes... they do that... thought that doesnt make them a bad forex dealer....

 

if you compare to so many dealers that dont take your trade and offer you a second price... oanda never does that... any way I think every one knows what work best for him... I still would recomend it for forex scalping, their spread its very competitive and my previous experience was nice and smooth with them.... cheers Walter

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Why trade spot when you can trade futures? I can think of many advantages of trading in the futures market, but can think of none when trading spot. The only disadvantage is that the futures market is closed for one hour each day (the liquidity in the spot market is poor then anyway). Honest forex brokers are rarer than hen's teeth and with so many discount futures brokers to choose from these days, why put yourself through the pain. They're all bucket shops and anyone who says otherwise is just plain wrong! There is no obligation for them to carry out your trades and more likely than not, they'll just get tossed into the metaphorical bucket along with all the other mug punters' tickets.

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  Alex said:
Why trade spot when you can trade futures? I can think of many advantages of trading in the futures market, but can think of none when trading spot. The only disadvantage is that the futures market is closed for one hour each day (the liquidity in the spot market is poor then anyway). Honest forex brokers are rarer than hen's teeth and with so many discount futures brokers to choose from these days, why put yourself through the pain. They're all bucket shops and anyone who says otherwise is just plain wrong! There is no obligation for them to carry out your trades and more likely than not, they'll just get tossed into the metaphorical bucket along with all the other mug punters' tickets.

 

Ok... can someone make a list of decent "non-bucket shop" forex brokers ? I would like to know then wich are the true serious forex dealers for the retail trader.... thanks Walter.

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Also, which currencies provide the most liquidity? The Canadian dollar trades beautifully, but looking at the continuous contract of the Dollar it looks weird, maybe I have the wrong time settings...

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  Alex said:
Suffice to say, hen's don't have teeth.

 

 

Alex : there is one great edge a good forex trader may have over futures trader... and that is volume.... a good futures trader may trade up to 100 or 200 contracts on ES maybe... on ER up to 30 or 50 contracts... wich on a monthly basis they may work some good thousands of dollars profit... now a good forex trader can grow into millons of dollars if he wishes... the market has a tremendous liquidity and there are no maximums regulations....

 

so if you get good at futures you can aim thousands, but if you get good at forex you can aim millons... cheers Walter.

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  waveslider said:
Also, which currencies provide the most liquidity? The Canadian dollar trades beautifully, but looking at the continuous contract of the Dollar it looks weird, maybe I have the wrong time settings...

 

For futures contracts it's: Euro, Yen, British Pound, Swiss Franc, Canadian Dollar, Australian Dollar, Mexican Peso.

 

CME FX Records

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