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Soultrader

Currency Futures Question

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Hello guys and gals,

 

I am complete newbie when it comes to Forex and currency futures. I decided to start watching a few pairs to get a hang of it and perhaps find some good opportunities in the near future to trade.

 

I have a few questions. First I would prefer to trade currency futures. What pairs are recommended and what are the symbols for Tradestation? I pulled up a Japanese Yen chart with the symbol @JY. On the cme website it states that 1 point is equivalent to $12.50 per contract. Would a move from 0.84 to 0.841 be equivalane to 10 points or $125.00 per contract? I noticed that the liquidit is extremely low for the @JY and just entering would lead to serious slippage.

 

Im starting off with simple observation and strategies using trendlines for perhaps a 1-3 day swing opportunity. (wont be trading them yet though) Any advice would be appreciated. Thank you.

yen.jpg.3459f939b02912815dee743a96e7730d.jpg

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The problem is that CME quotes the JPY/USD rate whereas if you were trading spot the quote is the USD/JPY rate. There's something called CME e-quivalents that converts it the other way round. It's a better idea to trade Euro or British Pound futures, especially if your trading hours are during US hours. They move in the same way as EUR/USD and GBP/USD although there will be a premium or discount if there is an interest rate differential. For Euro futures one pip is equal to $12.50 so if the price moves from 1.3050 to 1.3150 (that move would be a little bit more than the daily average true range) then you would win or lose $1250. British Pound futures are good because it's $5 a pip. The liquidity is reasonable between the London open and the New York close.

 

FX is especially sensitive to data releases and interest rate meetings but also great for swing trades lasting a few days or weeks.

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Thank you for the reply notouch. I am looking to trade a pair during my Tokyo Hours. I prefer to focus on the eminis during the US hours. For currency futures traded on the CME, is the most liquidity found during US and London hours only? I prefer to trade something with minimal slippage.

 

Do you know the symbol for the British Pound futures? Thank you.

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James, check out EURJPY, USDJPY, and GBPJPY. I trade the last one from time to time, but the main for me is GBPUSD. Tokyo hours offer decent volatility but better during Londond session, might fit your evening hours.

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CME British Pound Futures & Options

 

The GLOBEX symbol is 6B but I'm not sure that's what TradeStation would use. $6.25 per pip.

 

Definitely you wouldn't want to trade that during Tokyo hours - it moves within a very narrow range. I would be especially careful trading FX during the Tokyo session because it's usually very quiet - just Japanese exporters filling orders - but sometimes banks go on stop hunting sessions are there's a massive and unexpected move. USD/JPY is dominated by the carry trade so the trend is steadily upwards but sometimes the hedge funds will liquidate their carry trades causing a massive drop. Very risky business. Also consider the Australian and New Zealand Dollars which probably have more life at that time of day.

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Torero,

 

I can't seem to find the right symbols for TS. I tried PJYH07 for the British Pound/Yen for TS but it is not giving me historical data.

 

I cant seem to find the USDJPY symbol as well. grrr... I hate being a newb.

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James, check out EURJPY, USDJPY, and GBPJPY. I trade the last one from time to time, but the main for me is GBPUSD. Tokyo hours offer decent volatility but better during Londond session, might fit your evening hours.

 

The 0930 GMT economic releases out of the UK are the big market movers for GBP/USD. Also you'll notice some great patterns between the Frankfurt open (0700 GMT) and the London open (0800 GMT) which might be suitable for someone trading from Japan.

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No slashes, put in daily chart first, just 6 letters. Stay away from the currency futures except for @EC. There's not enough volume when you need to get out at a reasonable price. Why trade a pseudo instrument when you can go straight to the source with volume at all times, the forex?

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No slashes, put in daily chart first, just 6 letters. Stay away from the currency futures except for @EC. There's not enough volume when you need to get out at a reasonable price. Why trade a pseudo instrument when you can go straight to the source with volume at all times, the forex?

 

Okay so basically you recommend I stick with Forex and not currency futures? From my understanding Forex brokers charge free commision because they are ripping you off the spreads to begin with. Wouldnt currency futures provide me with a more equal level playing field?

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Most forex brokers are bucketshops - including the one with TradeStation. Your order never makes it to the interbank market so they are not really brokers at all. They create their own little market based on interbank price feeds. Their business model is based on the fact that most of their clients lose so they're happy just to take the money of their clients. They're really just bookmakers. It's in their interest if you lose. The exceptions are Interactive Brokers' IdealPro, EFX Group, HotSpotFX and Currenex. There's plenty of liquidity in British Pound futures if you trade during London hours.

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Thanks notouch. I will look into the British Pound futures. Would it be possible to post a chart of it? I'm just having some serious issues finding the correct contract so would love to compare it with your charts.

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Thank you very much notouch. Looks like I found the right contract: symbol @BP.

 

At $6.25 a tick I can tolerate the potential risk. It seems to be somewhat in between the YM and ER in terms of volatility. What time zones is this contract most active in? You mentioned the London open... is this the most ideal time to be trading this?

 

Here is an interesting technical setup for the @BP.

bp.jpg.85a4f8bd0186dd2180ff150fcbe2f6e9.jpg

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Movement starts with the Frankfurt open at 0700 London time and really starts moving about 0800 with the London open. You see totally wild moves before and after UK economic releases at 0930 and then it calms down a bit after 1000 until the US traders are awake.

 

One very interesting technical set up is to look for a 0.618 retracement from the Frankfurt open to the next high or low. Look for a continuation of that after the London open. Also there's the "Big Ben" strategy which is just buying a breakout after the London open but that's never worked well for me. You need to keep your eye on a good economic calendar. Here's a good one:

 

Forex Calendar @ Forex Factory

 

Next big market mover is the Bank of England minutes on Wednesday.

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Very interesting notouch. The 50% fib retracement took place before the London open? Would you recommend this pair for intraday trades? That is quite a move in terms of P&L just in 1 hour. I am quite amazed. Also how many ticks do you normally use for a stop loss placement? Thanks

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I would put the stop above the Frankfurt high if you're going short. It doesn't always work but the risk:reward ratio is good. There aren't any official opens in the currency markets but yes it took place before the London equities open. 0720-0740 London time is often interesting. I prefer medium term swing trades but sometimes trade intraday. How about this for an amazing move: 150 pips in seconds. It followed the surprise Bank of England rate hike.

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wow... that is insanity. Im very used to calm contracts, I guess the currencies are extremely wild compared to contracts such as the dow minis.

 

That is one thing I will avoid 100% of the time.. trading before news. I prefer to rely more on the technicals.

 

Regarding the previous chart, a stop above the Frankfurt high is approx 15 pips? This is a very reasonable stop placement in terms of risk. ($93.75 per contract) A fair 1:3 or 1:4 risk reward ratio. Very interesting :)

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Guest FLX

I want to know if any one looked at the Eur/Chf from Friday.

This pattern is screaming falling price on the short term, and has bounced of the last support down and look like a good place to enter.

I have a sell signal for the day, and will try to position a trade on the break out, Price projection 90 pips or better at the break of support. Flx

 

 

The other one that is on my hot list is the USDCHF let me know what you think Please!

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wow... that is insanity. Im very used to calm contracts, I guess the currencies are extremely wild compared to contracts such as the dow minis.

 

That is one thing I will avoid 100% of the time.. trading before news. I prefer to rely more on the technicals.

 

Regarding the previous chart, a stop above the Frankfurt high is approx 15 pips? This is a very reasonable stop placement in terms of risk. ($93.75 per contract) A fair 1:3 or 1:4 risk reward ratio. Very interesting :)

 

Long term fibs are even more important than short term fibs for GBP/USD and the weekly pivot points are also important so you would take these things into account before placing your stop but a stop above 1.9550 would have been good.

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Soul, see my blog Forex News Trading Journal I have been trading forex and now much prefer currency futures as the forex bucket shops are unregulated and they have stop hunting software designed to take you out of trades. Most bucket shops take the other side of your trade so it is in their interest for you to fail, not so with futures. The two best instruments are the euro @EC and the british pound @BP. @EC has much more liquidity than the @BP but the @BP is still tradeable if you stay under 10-20 contracts, expect slippage if you go higher than that. Hope it helps, my blog shows you my entries and slippage I get, I have screenshots of TS charts and ToS.

 

The best times to trade are from 0700 - 1500 GMT.

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Keymoo, sounds like you're using one of those nasty autoclick services. Which one, Felix, Dustin or Sanjay? I think they're all a rip-off because you can program one yourself in Excel which performs much more quickly. I don't trade that way anymore though. Too much hit and hope.

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I use Safwan's, I think it's superb value as it is an institutional level feed which is quicker than any retail-level feed. I can often be in the trade within 1 second of the release, you wouldn't get that with a retail feed. One trade pays for a few months membership, I think it's amazing value - the software itself is superb. Felix's and Dustin's feeds are no good.

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There's no such thing as "institutional level feed" or "retail feed". Safwan is such a BS merchant. You need access to Bloomberg or Reuters and you can be in a trade in less than a second if you a know a little bit of Excel VBA and Windows programming.

 

Also looking at your blog (which is nice by the way) you would get better fills straddling with tight stop-limit orders.

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Most forex brokers are bucketshops - including the one with TradeStation. Your order never makes it to the interbank market so they are not really brokers at all. They create their own little market based on interbank price feeds. Their business model is based on the fact that most of their clients lose so they're happy just to take the money of their clients. They're really just bookmakers. It's in their interest if you lose. The exceptions are Interactive Brokers' IdealPro, EFX Group, HotSpotFX and Currenex. There's plenty of liquidity in British Pound futures if you trade during London hours.

 

I currently trade with MBTrading, great customer support. It's the reason I don't trade through tradestation. I get signals from TS but I place all orders through MBT. Try the demo. EFX and MBT have the same platform btw.

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