Hello fellow "Traitors"

[AbeSmith 10]

Hello. I would like to say that I'm a "traitor." I have been betting against the US Dollar and have been doing ok. I'm also considering "betraying" the YM and moving to Forex. Forex is open 24 hrs, and it is more flexible to control how much you want to risk. But with YM, for a small time beginner trader like me, it is too expensive, even with 1 contract, and very volatile. And now there is a $55 a month charge for the YM data at TS.

 

So I find it fitting to change my avatar to Benedict Arnold. He is recognized as a traitor, and phonetically that is like trader.

[MrPaul 10]

Hello. I would like to say that I'm a "traitor." I have been betting against the US Dollar and have been doing ok. I'm also considering "betraying" the YM and moving to Forex. Forex is open 24 hrs, and it is more flexible to control how much you want to risk. But with YM, for a small time beginner trader like me, it is too expensive, even with 1 contract, and very volatile. And now there is a $55 a month charge for the YM data at TS.

 

So I find it fitting to change my avatar to Benedict Arnold. He is recognized as a traitor, and phonetically that is like trader.

 

 

Well Abe,

 

You seem to be taking smart steps on your road to becoming a trader.

 

That is, you are discovering what your risk tolerances are and what kind of markets fit your personality and situations.

 

 

Good luck

[AbeSmith 10]

Thanks Paul. I just would like to add a list of pros and cons of Forex and YM. Ofcourse the Pros and Cons may not apply to everyone, but for me it seems that:

 

1. Forex is 24hrs, live. That means that there is no premarket and postmarket restrictions.

2. Forex has more volume.

3. Less volatile.

4. And is very flexible as far as how much money you want to risk. Can be highly leveraged, or low leverage.

5. I'm not sure how reliable the Forex trading is, but I have not heard about Forex servers going down.

6. I have not heard about Forex trading being closed because it was going down too much in value.

 

 

Now, I would be interested to know the disadvatages of Forex. One disadvantage I know of is that it is not very regulated. But if regulated means closing down trading because it is going too far in one direction then that may not be good however.

[brownsfan019 17]

Thanks Paul. I just would like to add a list of pros and cons of Forex and YM. Ofcourse the Pros and Cons may not apply to everyone, but for me it seems that:

 

1. Forex is 24hrs, live. That means that there is no premarket and postmarket restrictions.

2. Forex has more volume.

3. Less volatile.

4. And is very flexible as far as how much money you want to risk. Can be highly leveraged, or low leverage.

5. I'm not sure how reliable the Forex trading is, but I have not heard about Forex servers going down.

6. I have not heard about Forex trading being closed because it was going down too much in value.

 

 

Now, I would be interested to know the disadvatages of Forex. One disadvantage I know of is that it is not very regulated. But if regulated means closing down trading because it is going too far in one direction then that may not be good however.

 

Abe,

Allow me to play devil's advocate:

1) The e-mini's are virtually 24 hours as well.

2) That volume number is an interesting one. I wonder how much volume a small trader needs in order to be successful?

3) We could find charts showing less/more volatility at certain times. Personally, I thrive on volatility so that works for me but I can see what you are saying here.

4) Same with the e-mini's. YOU control the leverage being employed.

5) You may not hear about servers going down b/c there is no centralized place to trade forex! You are trading against the broker! It's all on the broker's servers!

6) I would agree here but I've also read how certain types of 'bucket shops' will go stop hunting and since there is no centralized price center, there's not much you can do if Company A shows price there even though Company B does not...

 

And as you said, there is next to zero regulation here. That alone is enough for me to stay away. When there is no regulation, that only helps the BIG boys. Lack of regulation only hurts the small, retail trader.

 

I'll be interested to see how your forex trading goes Abe but I would guess if you go through a 'stop hunting' time period or the spread being outrageous during econ news, you may reconsider. And make sure you do your homework on what broker to go through!

 

Good luck Abe.

[mister ed 10]

Abe - I am all for FX trading, you just need to know about some of the less pleasant aspects of it before going all-in.

 

This article I took from here - post number 3 - well worth reading and thinking through.

 

---------------------------------------------------------------------

Hi Tom,

 

Quote:

hmmm...let me think about this...what is my commission? (yes, Virginia there really is commission in forex...it's disguised as the spread and the extra commission we do not see is the altering of the price that your broker shows you....)...assume a 4 pip spread

 

OK....I risk $400 to make $1600...wow! but...but...my fee on the

sale is $4 x 100 when I sell short & then $4 x 100 when I buy to cover

 

so...it seems I have just paid 1/2 of my profits to the broker.

 

what am I missing here? does this make sense?

Yeah, it makes sense to me.... It's called getting RIPPED-OFF!!! The reason most people like Forex is because these jackass brokers tell people they can get started with as little as $500 and open up an account... this is insanity... do the math: 2% on $500 = $10 bucks... what trade are you going to find that carries a $10.00 risk??? Hell, the pip spread 2-3 pips which is $20. $30 dollars... Anytime I see brokers doing this I just light them up on the spot, because they know damn well people are not going to make any money and they are just ripping people off left and right.... it's pathetic!!! I don't blame the innocent people for this (because they don't know any better), this is why they need to regulate Forex.

 

Joe Ross wrote an excellent piece on Forex in 2005 (and it fully warns people about the stupid games the brokers and banks play on retail traders)... this is why you can't trade Forex on 60-minute or less time frames... they will clean you out. Since 2003 I have watched people try to day trade forex and it's not pretty...have you noticed how the Forex "hype" has slowed down? Here's why?

 

Brokers can deceive you about there being no commissions. $30 minimum/round turn (called the spread) is in reality a commission that eats up your capital at an astonishing rate. Even winning traders lose money and end up with negative results because of this outlandish overhead. Trading futures, you should never have to pay a broker more than $10/round turn, and usually quite a bit less than that.

 

Guaranteed fills. True but… The only way a broker can guarantee fills is for the broker to become the buyer or seller of last resort. That means the broker is running a bucket shop. All forex brokers are the buyer and seller of last resort.

 

Brokers do not all tell the truth about volume. They show the volume for all forex trading, which doesn't even come close to the volume they truly have at their own brokerage, which is where you are trading. Volume in currency futures is considerably higher than the volume traded at any single forex broker, often greater by a factor of ten.

 

Leaning. Brokers say they are charging you a 3 pip spread to trade the popular currency pairs. But in reality a broker may be making as much or more than 10 pips on your trades. He does this by skewing prices. Since you are not trading at an exchange, the broker can feed you any price he wants to feed you. He can buy at the bank for perhaps 7 pips less than he sells to you. He then charges you 3 pips for the privilege of being ripped off for a total of 10 pips.

 

Unregulated. Forex may sound like an exchange but it isn't. It exists entirely in cyberspace with every broker and every bank having different prices for any particular currency. There is little or no regulation, even for brokers who register with the CFTC and the NFA. Forex brokers do not have to mark to market each day as do futures brokers. If your forex broker files for bankruptcy or absconds with your money you have zero recourse.

 

No guarantee. If a forex broker does go out of business, you could lose all your money. There are no guarantees and no one standing behind it. Futures brokers are required to mark to market at the end of every session every day. They have to put up cash to cover every open trade on their books. Futures brokers have gone broke, but no futures customer has ever lost one cent of the money in his trading account because of a failed broker. Nor have they had to wait for their money. It is immediately available.

 

You can get exactly the same action in the euro fx futures as you get in the "Euro" forex. Commissions are as low as one tenth per round turn depending on volume, through a regulated broker, trading electronically at an exchange where you know the true price of the currency.

 

What is the true price? A forex broker can only give you the price of a currency as quoted to him by the bank through which he trades. Banks have differing prices for a currency. You never know what the real price is because there is no central exchange through which all prices flow. Besides not knowing the true price from the bank, you can also be deceived by "leaning" or "skewing" of the real price at the bank. Forex brokers commonly lean the prices.

 

Forex brokers are not necessarily truthful. They lure people in with hype and false advertising: "No commissions!" "Guaranteed fills." "24 hour trading:" Who in their right mind is going to trade in the middle of the night unless they have a special need. While it is true that total forex volume is greater than in the futures, futures, volume at the exchange is greater than the volume at your broker for the most popularly traded currencies. The only place where the liquidity differential matters is in currencies like the Mexican peso, the Brazilian real, and somebody's drachma. Those thinly traded currencies may be more liquid in forex. But if you trade anything but the few most liquid and popular currencies, you are going to be paying at least 5 pips, and often more. Unless you have a particular commercial need to deal in Polish zlotys, Indian rupees, or some other thinly traded currency, you don't need forex.

 

You are told by forex brokers that there is little or no stop running. This is one of their biggest and boldest fabrications. The truth is there is far more stop running in forex than in futures, and possibly as much stop running as in the stock market. I have friends who work in forex as well as many traders who of necessity have to trade forex. One of my students is a market maker in forex. These are people who should know, but in case you don't want to believe me or them, simple observation of forex trading will reveal the vast amount of stop running that takes place there. Who is it that runs the stops? Why it is your friendly forex broker. The broker has a vested interest in seeing to it that your orders are filled. Stop running is nothing more than order filling. The broker sees to it that everybody's order gets filled.

 

Probably you have heard that if you are winning regularly in forex, you may be barred from trading. Is this true? Yes it is. The fact that it is true is just another proof that when you trade forex you are trading at a bucket shop. In the book, "Reminiscences of a Stock Operator," we are told that Jesse Livermore was banned from trading at certain stock brokers because they couldn't stand him beating the house. The same thing is true with many forex brokers. Since they are the ones guaranteeing you a fill, they are in effect the buyer and seller of last resort. The truth is that most forex brokers have precious little liquidity at their firms. In order to give you the impression that there is liquidity, it is the broker who gives you your fill. It is the broker who does the stop running that supposedly doesn't exist in forex. But if you are regularly beating the socks off the broker, he will ban you from trading at his firm.

 

Now you know the truth about forex. I challenge any and all forex brokers to prove that I am wrong. I will change or remove anything proven to be untrue in what I stated above.

 

THere is nothing wrong with FOREX on longer term charts, but don't try and trade it intraday or you will expeience all the problems above. This means trade Forex on a 60 minute or higher time frame.

 

 

---------------------------------------------------------------------

 

Don't get me wrong Abe - FX is OK, but what is written above is accurate and you need to be very careful. Unregulated does not just mean the price can move without limits, it also means that when you ask for a price the price is what the broker you are dealing with wants it to be.

 

There are, or course, reputable brokers, but try to find one that is part of an ECN, the prices will be close to the real market adn you will be dealing into a bank rather than with the broker itself as the market maker.

Edited January 24, 2008 by mister ed

[torero 10]

It's true the commissions are a bit stiff. But I prefer fx just on the fact that there is liquidity is 24 hrs, globex if you're lucky (or unlucky) to get enough volume out there to get out at your price, usually slippage is large, 3-6 ticks (but I'm sure it was much much more last Tuesday). When I say 24 hrs it's 24 hrs even volume day or night. I trade eminis and forex and globex is still virtual 24 hrs. Last Tuesday when there was panic in the markets, forex was just another day, moving up more than usual but I didn't see panic like what I saw in the markets. The market is one of the steadiest I've seen when it comes to crisis events.

 

It's true there is no tight regulation like US-based exchanges, but so far I haven't had trouble with the brokers, software, or anything ifor the last 2 years now. Although there is no strict regulation, things are changing. More and more brokers are offering real service, just stick to Non-dealing desk and you'll see what I mean. And there is no limit up limit down like we saw the other day. When I want to get out, I get out, simple as that. Days like that I wish eminis are more flexible. I see positive things that could be improved on emini rules.

 

I also have to say that forex trends like the mother.... no doubt about it, less erratic than eminis. If you want to play S/Rs, this is your game, more so than eminis. It's very technical. I use stops on both and I tend to get less stops on FX than eminis (maybe it's just strategy). I don't see any head games just because the market is so big, no one can really influence anyone else there. I like trends, not sure about anyone else so this is what I see often. Swing trade forex won't get surprises like Tuesday.

 

Just my observation.

Edited January 24, 2008 by torero

[brownsfan019 17]

Tor - thanks for sharing! I'd love to see some charts for comparison purposes. Just wondering how some fx charts compare to the e-minis. I personally would like to see 5 minute charts. Or is there a good site to get past charts as well?

[torero 10]

Try this one:

 

http://www.easy-forex.com/en/Forex.Charts.aspx

 

 

If I find more I'll post some more. But I'll give you an example, this morning, EURJPY went up from 155.00 to 156.6 (160 pips or ticks at $10 a tick), consolidated then started from 156.00 to 157.00, much pretty straight up. If you hold it a few hours, it was going in one direction. I use 100 tick charts so it's bit shorter timeframe than 5 min charts. But you get the idea.

 

One of the best things about this market is the ability to place trailing stops and letting it ride. I could have never done it with eminis. The move is usually wide enough for me to catch a nice one before the trailing stop stops me out. And to be honest, I used to never trade the news, but now I usually sit around and wait for the reaction and ride with it. I could never do that with eminis.

 

Here's an attachment of this morning's move. You can see the double bottom and double top, almost right on the mark. Make a counter-trend entry with a stop loss would work here because it stopped cold turkey. I shorted (the red bars) that stop with a tight stop and didn't hit it at all. Had it failed, I would have gone the other way no problem.

Edited January 24, 2008 by torero

[AbeSmith 10]

Abe,

Allow me to play devil's advocate:

1) The e-mini's are virtually 24 hours as well.

Broswnfan,

With eminis, if you want to get out of a swing position afterhours, aren't there some restrictions? Like limit order only, wide spreads, less liquidity? Not sure about the restrictions but I know it is more difficult to trade.

 

2) That volume number is an interesting one. I wonder how much volume a small trader needs in order to be successful?

Doesn't more volume tend to cause less eratic movements? I heard that YM is more eratic than S&P because there is less volume on YM. So I assume with the high volume on Forex it is not as eratic. Watching YM and Forex closely on an intraday basis the past few days I have noticed that YM was alot more eratic.

 

3) We could find charts showing less/more volatility at certain times. Personally, I thrive on volatility so that works for me but I can see what you are saying here.

4) Same with the e-mini's. YOU control the leverage being employed.

With emini's though the control is not as much, both in terms of amount of leverage I think and fluidness or exactness of how much you want to risk. In YM, each contract is a big chunk, with one tick moving as much as $5 in the YM. But with Forex you can more closely control how much you want to risk. For me 1 YM contract is often too much. So I'm often finding myself getting stopped out in the YM volitility, partly because I don't want to risk the money for a wider stop.

5) You may not hear about servers going down b/c there is no centralized place to trade forex! You are trading against the broker! It's all on the broker's servers!

 

6) I would agree here but I've also read how certain types of 'bucket shops' will go stop hunting and since there is no centralized price center, there's not much you can do if Company A shows price there even though Company B does not...

 

And as you said, there is next to zero regulation here. That alone is enough for me to stay away. When there is no regulation, that only helps the BIG boys. Lack of regulation only hurts the small, retail trader.

I would like to see more regulation to keep them honest. But Brownsfan, don't be so quick to shun Forex. There must be some good Forex brokers out there that are not bucket shops. IB I hear is ok in that sense. A talented trader like you might do well in Forex.

I'll be interested to see how your forex trading goes Abe but I would guess if you go through a 'stop hunting' time period or the spread being outrageous during econ news, you may reconsider. And make sure you do your homework on what broker to go through!

 

I need to do more research about Forex.

Good luck Abe.

 

Thanks.

[AbeSmith 10]

Abe - I am all for FX trading, you just need to know about some of the less pleasant aspects of it before going all-in.

 

This article I took from here - post number 3 - well worth reading and thinking through.

 

---------------------------------------------------------------------

Hi Tom,

 

Quote:

hmmm...let me think about this...what is my commission? (yes, Virginia there really is commission in forex...it's disguised as the spread and the extra commission we do not see is the altering of the price that your broker shows you....)...assume a 4 pip spread

 

OK....I risk $400 to make $1600...wow! but...but...my fee on the

sale is $4 x 100 when I sell short & then $4 x 100 when I buy to cover

 

so...it seems I have just paid 1/2 of my profits to the broker.

 

what am I missing here? does this make sense?

Yeah, it makes sense to me.... It's called getting RIPPED-OFF!!! The reason most people like Forex is because these jackass brokers tell people they can get started with as little as $500 and open up an account... this is insanity... do the math: 2% on $500 = $10 bucks... what trade are you going to find that carries a $10.00 risk??? Hell, the pip spread 2-3 pips which is $20. $30 dollars... Anytime I see brokers doing this I just light them up on the spot, because they know damn well people are not going to make any money and they are just ripping people off left and right.... it's pathetic!!! I don't blame the innocent people for this (because they don't know any better), this is why they need to regulate Forex.

 

Joe Ross wrote an excellent piece on Forex in 2005 (and it fully warns people about the stupid games the brokers and banks play on retail traders)... this is why you can't trade Forex on 60-minute or less time frames... they will clean you out. Since 2003 I have watched people try to day trade forex and it's not pretty...have you noticed how the Forex "hype" has slowed down? Here's why?

 

Brokers can deceive you about there being no commissions. $30 minimum/round turn (called the spread) is in reality a commission that eats up your capital at an astonishing rate. Even winning traders lose money and end up with negative results because of this outlandish overhead. Trading futures, you should never have to pay a broker more than $10/round turn, and usually quite a bit less than that.

 

Guaranteed fills. True but… The only way a broker can guarantee fills is for the broker to become the buyer or seller of last resort. That means the broker is running a bucket shop. All forex brokers are the buyer and seller of last resort.

 

Brokers do not all tell the truth about volume. They show the volume for all forex trading, which doesn't even come close to the volume they truly have at their own brokerage, which is where you are trading. Volume in currency futures is considerably higher than the volume traded at any single forex broker, often greater by a factor of ten.

 

Leaning. Brokers say they are charging you a 3 pip spread to trade the popular currency pairs. But in reality a broker may be making as much or more than 10 pips on your trades. He does this by skewing prices. Since you are not trading at an exchange, the broker can feed you any price he wants to feed you. He can buy at the bank for perhaps 7 pips less than he sells to you. He then charges you 3 pips for the privilege of being ripped off for a total of 10 pips.

 

Unregulated. Forex may sound like an exchange but it isn't. It exists entirely in cyberspace with every broker and every bank having different prices for any particular currency. There is little or no regulation, even for brokers who register with the CFTC and the NFA. Forex brokers do not have to mark to market each day as do futures brokers. If your forex broker files for bankruptcy or absconds with your money you have zero recourse.

 

No guarantee. If a forex broker does go out of business, you could lose all your money. There are no guarantees and no one standing behind it. Futures brokers are required to mark to market at the end of every session every day. They have to put up cash to cover every open trade on their books. Futures brokers have gone broke, but no futures customer has ever lost one cent of the money in his trading account because of a failed broker. Nor have they had to wait for their money. It is immediately available.

 

You can get exactly the same action in the euro fx futures as you get in the "Euro" forex. Commissions are as low as one tenth per round turn depending on volume, through a regulated broker, trading electronically at an exchange where you know the true price of the currency.

 

What is the true price? A forex broker can only give you the price of a currency as quoted to him by the bank through which he trades. Banks have differing prices for a currency. You never know what the real price is because there is no central exchange through which all prices flow. Besides not knowing the true price from the bank, you can also be deceived by "leaning" or "skewing" of the real price at the bank. Forex brokers commonly lean the prices.

 

Forex brokers are not necessarily truthful. They lure people in with hype and false advertising: "No commissions!" "Guaranteed fills." "24 hour trading:" Who in their right mind is going to trade in the middle of the night unless they have a special need. While it is true that total forex volume is greater than in the futures, futures, volume at the exchange is greater than the volume at your broker for the most popularly traded currencies. The only place where the liquidity differential matters is in currencies like the Mexican peso, the Brazilian real, and somebody's drachma. Those thinly traded currencies may be more liquid in forex. But if you trade anything but the few most liquid and popular currencies, you are going to be paying at least 5 pips, and often more. Unless you have a particular commercial need to deal in Polish zlotys, Indian rupees, or some other thinly traded currency, you don't need forex.

 

You are told by forex brokers that there is little or no stop running. This is one of their biggest and boldest fabrications. The truth is there is far more stop running in forex than in futures, and possibly as much stop running as in the stock market. I have friends who work in forex as well as many traders who of necessity have to trade forex. One of my students is a market maker in forex. These are people who should know, but in case you don't want to believe me or them, simple observation of forex trading will reveal the vast amount of stop running that takes place there. Who is it that runs the stops? Why it is your friendly forex broker. The broker has a vested interest in seeing to it that your orders are filled. Stop running is nothing more than order filling. The broker sees to it that everybody's order gets filled.

 

Probably you have heard that if you are winning regularly in forex, you may be barred from trading. Is this true? Yes it is. The fact that it is true is just another proof that when you trade forex you are trading at a bucket shop. In the book, "Reminiscences of a Stock Operator," we are told that Jesse Livermore was banned from trading at certain stock brokers because they couldn't stand him beating the house. The same thing is true with many forex brokers. Since they are the ones guaranteeing you a fill, they are in effect the buyer and seller of last resort. The truth is that most forex brokers have precious little liquidity at their firms. In order to give you the impression that there is liquidity, it is the broker who gives you your fill. It is the broker who does the stop running that supposedly doesn't exist in forex. But if you are regularly beating the socks off the broker, he will ban you from trading at his firm.

 

Now you know the truth about forex. I challenge any and all forex brokers to prove that I am wrong. I will change or remove anything proven to be untrue in what I stated above.

 

THere is nothing wrong with FOREX on longer term charts, but don't try and trade it intraday or you will expeience all the problems above. This means trade Forex on a 60 minute or higher time frame.

 

 

---------------------------------------------------------------------

 

Don't get me wrong Abe - FX is OK, but what is written above is accurate and you need to be very careful. Unregulated does not just mean the price can move without limits, it also means that when you ask for a price the price is what the broker you are dealing with wants it to be.

 

There are, or course, reputable brokers, but try to find one that is part of an ECN, the prices will be close to the real market adn you will be dealing into a bank rather than with the broker itself as the market maker.

 

Thanks Mister Ed. How would you rate IB as a FX brokers, and also do you know if they do any of the evil things mentioned above? Are there any other reputable FX brokers that you might recommend? Thank.

[mister ed 10]

Hi Abe - sorry for my scaremongering post! Let me admit a bias, I am with BF on favouring eminis...

 

There are two types of brokers in FX, the market makers and the ECNs. The market makers are where the customers trade against the MM (notwithstanding that the MM may well hedge customer trades so neutralising this effect somewhat), the MM provides the liquidity but the risk (well, one of the risks!) the customer runs is the MM triggering stops etc. and generally behaving like a bucket shop. Having said this I think some of the MMs are getting better, realising that they can make money from a customer in the long-term as well as the short-term, so behaving less like a bucket shop. I think the improvement is also coming from some tighter application of regulations especially in the US. This makes MM brokers located in the US probably the best. Also, avoid any MM broker with 666 in the phone number :haha:

 

The other type of retail FX broker in the one that customers are shown prices coming from banks and the deals are routed through to the banks. These are the brokers that use ECNs - article here is a good run down but it might be a little dated so check the named brokers (and there some others not named here too). These types of brokers usually charge some sort of commission (better way of saying that is the commission is usually visible, not hidden in the spread) and their spreads can be a little wider than the MMs at times (an MM can provide an extremely tight spread if they know which way your coming from ... anyway a spread is sometimes irrelevant, you're only looking for one side of it right?

 

I don't know anything about IB sorry...

 

Have you been to the website Forex Factory? I think its a really good FX site, probably the best I have seen. I use their economic calendar even though I don't trade FX ... FX people generally seem to value good economic analysis/info.

[torero 10]

Abe, check out out EFX, MBTrading, Oanda. Also read this forum thoroughly to understand the issues involved: nondealingdesk.com. I traded with MBTrading for 2 years and haven't had problems so far. Only last few days, I've gotten delayed quotes (not sure if it has to due with unusual volume in the markets).

[AbeSmith 10]

Hi Abe - sorry for my scaremongering post! Let me admit a bias, I am with BF on favouring eminis...

 

There are two types of brokers in FX, the market makers and the ECNs. The market makers are where the customers trade against the MM (notwithstanding that the MM may well hedge customer trades so neutralising this effect somewhat), the MM provides the liquidity but the risk (well, one of the risks!) the customer runs is the MM triggering stops etc. and generally behaving like a bucket shop. Having said this I think some of the MMs are getting better, realising that they can make money from a customer in the long-term as well as the short-term, so behaving less like a bucket shop. I think the improvement is also coming from some tighter application of regulations especially in the US. This makes MM brokers located in the US probably the best. Also, avoid any MM broker with 666 in the phone number :haha:

 

The other type of retail FX broker in the one that customers are shown prices coming from banks and the deals are routed through to the banks. These are the brokers that use ECNs - article here is a good run down but it might be a little dated so check the named brokers (and there some others not named here too). These types of brokers usually charge some sort of commission (better way of saying that is the commission is usually visible, not hidden in the spread) and their spreads can be a little wider than the MMs at times (an MM can provide an extremely tight spread if they know which way your coming from ... anyway a spread is sometimes irrelevant, you're only looking for one side of it right?

 

I don't know anything about IB sorry...

 

Have you been to the website Forex Factory? I think its a really good FX site, probably the best I have seen. I use their economic calendar even though I don't trade FX ... FX people generally seem to value good economic analysis/info.

 

Ok. Thanks Mister Ed.

[AbeSmith 10]

Abe, check out out EFX, MBTrading, Oanda. Also read this forum thoroughly to understand the issues involved: nondealingdesk.com. I traded with MBTrading for 2 years and haven't had problems so far. Only last few days, I've gotten delayed quotes (not sure if it has to due with unusual volume in the markets).

 

Ok. Thanks Torero. I will look into those.

[monad 10]

AbeSMITH

If you really want to get into currency, why not opt out for currency futures (CME), a highly regulated market and the moves are similar to the forex market, except you can employ the traditional trading platform (DOM) to execute your trades with a reputable brokerage like infinity brokers:thumbs up:, you know the commissions, you know the spread, hassle free administration.:thumbs up:

[AbeSmith 10]

AbeSMITH

If you really want to get into currency, why not opt out for currency futures (CME), a highly regulated market and the moves are similar to the forex market, except you can employ the traditional trading platform (DOM) to execute your trades with a reputable brokerage like infinity brokers:thumbs up:, you know the commissions, you know the spread, hassle free administration.:thumbs up:

 

Thanks monad. I will surely look into it.

[AbeSmith 10]

Tor - thanks for sharing! I'd love to see some charts for comparison purposes. Just wondering how some fx charts compare to the e-minis. I personally would like to see 5 minute charts. Or is there a good site to get past charts as well?

 

Brownsfan, here is the 5 minute chart of EURUSD and YM today, in that order:

 

As you can see, EURUSD was orderly today. Followed support and resistence very well, and lacks in the eratic movement one sees in the YM.

 

Now look at YM. Like something out of the wild west.

 

I'm not saying one is better than the other for you. You seem to be comfortable with eminies. Anyways, here is the charts you were curious about.

[Hlm 10]

Just to throw this thought out there...

 

I am NOT sure about this statistically, but they both seem very similar if you look back over time. There are days in January where the ES trended down much nicer than the GBPUSD (on the same day). FX also has a tendency to skip levels at times with news announcements and create congestion zones for the rest of the day. If you are trend trading it just depends on what levels and timeframes are currently being hit (where Market Profile steps in). I do think both are VERY tradable. In my opinion the factors that will determine which is best include such things as capital, hours you can trade, and strategy.

Edited January 24, 2008 by Hlm

[AbeSmith 10]

Just to throw this thought out there...

 

I am NOT sure about this statistically, but they both seem very similar if you look back over time. There are days in January where the ES trended down much nicer than the GBPUSD (on the same day). FX also has a tendency to skip levels at times with news announcements and create congestion zones for the rest of the day. If you are trend trading it just depends on what levels and timeframes are currently being hit (where Market Profile steps in). I do think both are VERY tradable. In my opinion the factors that will determine which is best include such things as capital, hours you can trade, and strategy.

 

Thanks Hlm. Good points.

[brownsfan019 17]

Brownsfan, here is the 5 minute chart of EURUSD and YM today, in that order:

 

As you can see, EURUSD was orderly today. Followed support and resistence very well, and lacks in the eratic movement one sees in the YM.

 

Now look at YM. Like something out of the wild west.

 

I'm not saying one is better than the other for you. You seem to be comfortable with eminies. Anyways, here is the charts you were curious about.

 

Interesting charts Abe. I guess the questions to ask yourself are:

 

1) Do I trade trending markets better over range bound markets?

 

2) Does FX actually trend as much as I think it does? In other words, have you done some serious, in-depth research or just cherry picking nice looking charts?

 

3) How do non-trending FX days compare to the indexes?

 

I agree with the suggestion to trade the EC/6E on the CME. It's a currency based futures contract so you get the best of both worlds in my opinion. Not huge volume there, but again, I have to wonder how much is needed in the beginning.

[james_gsx 16]

Brownsfan, I have been looking for those currency based futures contracts but I don't know where to get a list of all the currencies. Do you know where I can get that?

[AbeSmith 10]

Interesting charts Abe. I guess the questions to ask yourself are:

 

1) Do I trade trending markets better over range bound markets?

 

2) Does FX actually trend as much as I think it does? In other words, have you done some serious, in-depth research or just cherry picking nice looking charts?

 

3) How do non-trending FX days compare to the indexes?

 

I agree with the suggestion to trade the EC/6E on the CME. It's a currency based futures contract so you get the best of both worlds in my opinion. Not huge volume there, but again, I have to wonder how much is needed in the beginning.

 

Well Brownsfan, I'm by no means cherry picking nice looking charts. I'm new to Forex and this is my observation of EURUSD. So I don't know the answer to all these questions, but they are valid questions which I will be finding out about.

[brownsfan019 17]

Brownsfan, I have been looking for those currency based futures contracts but I don't know where to get a list of all the currencies. Do you know where I can get that?

 

The CME site has them listed somewhere, but the Euro (EC or 6E) has the most volume. I would probably stick with that one.

[torero 10]

I traded 6E in the past, very little volume. It may moved like EURUSD but the volume is a concern. EC is not but it's too big for what Abe is looking for (12.5$/tick). With FX, you can go at micro-lot ($10K) with a cent per tick. I think anyone can trade this lots as a substitute to paper trading. We're talking super peanuts here, can't get that with e-minis. I think anyone can afford trading with so little risk involved to test out the market.

 

Anyway, wish you luck with your research Abe.

[Anonymous 11]

24 hour currency markets is a red herring. There are only certain times a day that a small trader should be trading. Assume you trade a currency against the U.S. dollar. This is of course the main way currencies are traded. In fact, if you trade two currencies where one is not the dollar, it is called a CROSS rate. Think the dollar is important. Well if it is, then times when the U.S. treasury market is open and the U.S. stock market (NYSE) are open must be too. Right away you can see that trading the GBP/USD pair after 1700 (5pm est.) starts to make less sense.

 

Now you need to add in the type of brokerage firm you are trading with. Even though your firm may "sell" the point of the 24 hr market, many of their clients may trade during more traditional trading hours. Since your trade is either matched against another client or the broker themselves this matters. The fewer people trading on your brokers platform (no centralized exchange) the worse the fills, and the less trending the moves tend to be. Speaking of trends, the high propensity for currencies to trend is their greatest asset for traders.

 

The other thing that is sort of misleading is the no commission hype. Yes there is a cost to trading and it is called the spread. Some futures brokers charge less than $10.00 a round turn. In the forex you are doing good at 2 pip spread: 2*$10.00= $20.00 (euro).

 

If you want to trade forex:

 

1. Think about a broker that not taking the otherside of the trade.

 

2. Think about the time you will be trading.** The best time starts at 0200 hrs EST. (which is the London open) and goes to 1200 Est. Unless it is a Fed Day, and then the market can be active until after 1500 (fed announcement at 1400).

 

3. If you live in the Western part of the U.S. these are less than ideal hours for many. Especially those with families. Then again, it might be worse if you live on the East Coast. But either way, don't think you can come home from a 9-5 and trade after dinner and before Lost starts.

 

4. Currencies trend. Certainly some try and scalp but a more trend catching approach works better.

 

5. No centralized exchange. Thus it is hard to the most important data: Volume. The fact that volume is so hard to get in this market, should tell you of its importance: the big boys don't want poeple knowing what they are doing. And with volume, it can be seen. (some brokers offer tick volume and it can be used. Esingal does offer volume based on a certain number of banks. But if you use many broker provided platforms you will not get volume.)