A Question About Trading Forex

[BrianNC 10]

I am new to Forex and something I was wondering. Are there currency pairs that I should not take the opposite direction in when trading because they always move in tandem? In other words, say I put two different trades in on two different currency pairs at the same time, and I go long one, and short the other, but those two pairs always move in tandem so you should go in the same direction when trading those two markets at the same time. Hope that is clear.

[zdo 20]

Brian, Yes many pairs are so highly correlated that if you sell one and buy the other it’s just a costly wash. … and ‘hedging’ a position in this manner instead of just stopping out is ultimately – in a word – costly!

 

Trading the 'spreads' can be profitable but it requires developing expertise and there are so many other instruments beside fx that are better spread candidates. Btw, there is a ‘correlation trading’ niche – see Jason Fielder, etc for examples (definitely not an endorsement btw)

 

Currency Correlation | OANDA FXTrade InfoCenter

 

Forex Correlation - Mataf.net

 

I also found a cool site on the internet called google the other day

 

hth

[brownsfan019 17]

Brian - as someone that has tempted playing the forex game, I always come back to just trading futures. There are currency futures and if you are already trading futures, it's a very quick change on your charts to pull up that data. And there's some other reasons to trade futures vs. forex as well, but I don't want to derail your thread too much.

[BrianNC 10]

Brian - as someone that has tempted playing the forex game, I always come back to just trading futures. There are currency futures and if you are already trading futures, it's a very quick change on your charts to pull up that data. And there's some other reasons to trade futures vs. forex as well, but I don't want to derail your thread too much.

 

You can derail it if you want. I got my answer the my question.

 

As you know, I post in the P/L thread and have been sim trading the ES which is my goal, but I got to thinking about opening a micro account just to start trading real money on a small scale for 'real' practice. That was my thinking about trying Forex.

[brownsfan019 17]

You can derail it if you want. I got my answer the my question.

 

As you know, I post in the P/L thread and have been sim trading the ES which is my goal, but I got to thinking about opening a micro account just to start trading real money on a small scale for 'real' practice. That was my thinking about trying Forex.

 

I see where you are going w/ that. If you just want to open a $500 account and see what happens, have at it.

 

But long term, I would stick w/ futures. To start, they are regulated and there's no bucketshops. To me, if your broker not only makes a commission (it's called a spread in the fx world even though they advertise as commission free) but also can work trades against you all the while he gets to tell you what the prices are... seems like a losing battle to me.

 

I'm a futures guy through and through b/c of the transparency and regulation. I don't have to wonder if OEC is taking the opposite side of my trade to make even more money off me. They make their commission and that's it.

[robertm 10]

I see where you are going w/ that. If you just want to open a $500 account and see what happens, have at it.

 

But long term, I would stick w/ futures. To start, they are regulated and there's no bucketshops. To me, if your broker not only makes a commission (it's called a spread in the fx world even though they advertise as commission free) but also can work trades against you all the while he gets to tell you what the prices are... seems like a losing battle to me.

 

I'm a futures guy through and through b/c of the transparency and regulation. I don't have to wonder if OEC is taking the opposite side of my trade to make even more money off me. They make their commission and that's it.

 

Regardless of which instrument is "best", spot FX or Futures, the simplicity and low risk of a Spot account is a good place to start. If a strategy doesn't work on spot FX moving to trading FX Futures or FX Options probably isn't going to fix it in most cases.

 

Just avoid all the crappy little FX start up brokers offering you bonuses & go with one of the bigger players. Why so many FX brokers need to exist in what is mostly a virtual trading world is quite beyond me (well it's not, it's because it's an easy way to make a buck for them). Like all industries there will be a huge consolidation at some point in the future.

[Kiwi 16]

I like Interactive Brokers because I can have both and because its an ECN model so you are not constrained by funny rules that some of the bucket shops apply.

 

Also, you can be long futures and short cash should it suit you to be so.