Is it possible to daytrade the forex in hopes of making $500 a day. If so, how difficult do you think this would be.
Day Trading the Forex
- Thread starter showtime23
- Start date
Yes it is. I just talk to someone yesterday who is doing it and he has only been trading them for a couple of months. I am learning more about it over the next few days to find out what he is doing. Of course he is still trading small and you can really scale up in currency to some good size.
I know next to nothing about currency trading, but it seems as though you are immediately behind three or more ticks upon execution. There is no buying the bid or selling the ask. I'm wondering how easy it is to overcome 4 ticks per trade when daytrading. I also have no experience with good realtime data or charting for currencies so I don't know how similar to stocks or futures the quality of the data and charting is.
I would like to hear that it is possible to carry over stock and futures pattern recognition and technical analysis experience into currencies. I was wondering if you can use the same concepts that work in daytrading stocks and futures to beat the currencies. Are there any successful currency traders who could comment on this?
I would like to hear that it is possible to carry over stock and futures pattern recognition and technical analysis experience into currencies. I was wondering if you can use the same concepts that work in daytrading stocks and futures to beat the currencies. Are there any successful currency traders who could comment on this?
I used to trade currencies exclusively. Depending on time of day, its a very good day trading medium. Currencies trend probably better than anything else. It is true that you usually give up at least a couple tics (which they call pips for some reason). At least there is no commission. Its still more expensive than the single tic spreads you get with eminis however. The main reason I quit trading currencies was the hours. The best movement was the London open (midnight west coast).
Jay
Jay
If you trade dollar against the majors at IMM/CME via Globex, you have probably an answer. I trade them frequently on a contraction/expansion method for the sake of identifying strong trend days. In fact the currency futures show very strong trend days, you can play them nicely intraday. But this is not exactly Forex, it's IMM.
A word of warning: because the regular trading hours at the merc do match most of US economic data releases, US corporate earnings releases and the wallstreet opening throughout the day, you have frequent false breakouts and shakeouts, especially during the first 2 hours (0720-0930 CT). It's not an easy market, but it has a pace which suits me personally quite well.
Regards,
Berliner
Although it is possible to day trade for profit, the bid/ask spread involved makes it necessary to trade larger lots to reach the $500 level referred to above.
At the IMM/CME you pay a broker commissions, plus the spread, usually 2-3 points. On FX you pay the spread in and out. Basically amounts to the same transaction costs.
A very important point is FX is 24 hour from Sunday evening to Friday evening. If you are a trend follower, much of the direction is determined at the close of Tokyo-opening of Europe and Close of Europe-Open of New York.
Trading currencies is very difficult, as they react quickly to Economic data around the world, which leads to chasing the highest yield, coupling with an appreciating currency.
Since there are regularly 30 to 50 pip swings, fundamental analysis/projection, and "position" trading is only for those with VERY deep pockets, who can bear the large losses without tight stops.
An even more interesting point is that currencies do not seem to return to the mean [linear regression]. They typically continue towards over extension versus pulling back against fundamentals. [See George Soros - Alchemy of Finance]. He states he could not make $ consistently, trying to pick tops and bottoms..i.e. regression/contrarian, that the trend tended to self fulfill to extremes. We have found this to be true.
What to do? We use elliott wave analysis to get a daily/weekly/monthly bias and then use proprietary tech indicators to enter on pull backs against the bias direction with very tight stops. Our stop management is key to success.
In summary, you cannot simply buy high and sell low, because high tends to go higher and vice versa until total capitulation and triggering of lots of stops in a big gap reversal. It's all to easy to get caught in this without proper money management/risk policy. $500 per day is possible if you trade over one million lots, which would require at least $75,000 in capital, and really needs $100,000. For most smaller retail investors, it is more viable to shoot for $100 to $200 per day...taking more when things run your direction [like Euro last three days], and avoid losses/big gaps.
cmbfx.com
At the IMM/CME you pay a broker commissions, plus the spread, usually 2-3 points. On FX you pay the spread in and out. Basically amounts to the same transaction costs.
A very important point is FX is 24 hour from Sunday evening to Friday evening. If you are a trend follower, much of the direction is determined at the close of Tokyo-opening of Europe and Close of Europe-Open of New York.
Trading currencies is very difficult, as they react quickly to Economic data around the world, which leads to chasing the highest yield, coupling with an appreciating currency.
Since there are regularly 30 to 50 pip swings, fundamental analysis/projection, and "position" trading is only for those with VERY deep pockets, who can bear the large losses without tight stops.
An even more interesting point is that currencies do not seem to return to the mean [linear regression]. They typically continue towards over extension versus pulling back against fundamentals. [See George Soros - Alchemy of Finance]. He states he could not make $ consistently, trying to pick tops and bottoms..i.e. regression/contrarian, that the trend tended to self fulfill to extremes. We have found this to be true.
What to do? We use elliott wave analysis to get a daily/weekly/monthly bias and then use proprietary tech indicators to enter on pull backs against the bias direction with very tight stops. Our stop management is key to success.
In summary, you cannot simply buy high and sell low, because high tends to go higher and vice versa until total capitulation and triggering of lots of stops in a big gap reversal. It's all to easy to get caught in this without proper money management/risk policy. $500 per day is possible if you trade over one million lots, which would require at least $75,000 in capital, and really needs $100,000. For most smaller retail investors, it is more viable to shoot for $100 to $200 per day...taking more when things run your direction [like Euro last three days], and avoid losses/big gaps.
cmbfx.com
in the IMM/Globex Euro FX contract (IMM symbol EC, Globex symbol 6E, contract size ⬠125.000) $ 500 represent a 40 tick ($ 12.50/tick) move or just 20 ticks for 2 contracts - nothing special for a contract that regularly ranges 40 to 100 ticks on a daily basis.
http://www.cme.com/products/currency/products_currency_eurofx.cfm
http://www.cme.com/products/currency/products_currency_eurofx.cfm
You can backtest the futures using TradeStation.