Timboy Sykes and the truth about FX
http://www.timothysykes.com/2013/08...ly/?utm_source=twitterfeed&utm_medium=twitter
Forex trading is a fucken joke â 5 out of 6 traders BLOW their entire account up in the first 6 months.
Itâs a disgusting, dirty business in which the brokers/bookies make it seem easy but in reality where the average trader has almost no chance whatsoever to succeed and sadly if these greedy degenerates just theyâd be saved.
But most people canât be saved, theyâre too lazy and stubborn so let them burnâ¦degenerates with no futures, this guest blog post is for you:
Trading foreign currency directly is tough, meaning not as easy as stocks. Forex trading is a heavily involved activity due to the 24-hour nature of the business. It also involves managing margin, fees, and plenty of other things. It also requires a fairly substantial monetary investment to be really effective, though the draw of massive margin from overseas brokerages make some people think they do not need a large investment. The reality is that you shouldnât be using the amount of margin you may be offered.
There is a way to jump into currencies through the stock market. There are plenty of ETFs for the main currency pairings in both the long and the short direction, which allows you to go long on a short ETF for people who use IRAs to trade. The ETFs also come in the âultraâ variety, which means leverage is used.
Currencies are About Movement
Currencies are all about movement since they trade in pairs. A currency can be flat, but if its paired currency changes the pair moves. Some currencies fall into long term trends, though sometimes government act to counteract the prevailing trend like Japan. However some currencies are stable within a range. There is however a lot of money that can be made even with the slightest fluctuations so the movement inside the established range still presents opportunities, but this is more for direct Forex trading. With ETFs you would be looking for slightly larger movements, but that means a week and above in order to let the macroeconomics play out.
The other thing about currencies is that if you have the option to go long or short, directly or via ETFs, then there is no point in worrying about a general decline in stocks. A lot of people keep plenty of money in IRAs, which force them to go long. That makes them sensitive to recessions, and it is a prevailing concern for people who are long the market. On the other hand if they stay in cash or bonds then you can have very low returns.
Currencies are all about relativism and there for can still bring in returns during a recession. With IRAs you just need to go long the short ETFs. Since currencies trade in pairs both currencies can be doing well but one is stronger than the other one. It is much like the new binary options where you just pick which will do better.
Currently there is a lot of concern that the market has hit a top, but this is not assured. You cannot just short SPY, for example, and expect to sleep soundly at night. The fear is based on the fact that the market has gone up so much, but the forces that drove that rise are still in place. Money is still flowing and the economy is actually improving now. The fear stems from too much of a good thing. The things that drive currencies tend to be far more concrete and sentiment matters less since massive banks, nations, and corporations are players in the currency market. They are not there as traders to make a return, but for the purpose of doing business or minimizing risk. With currency you need to analyze the concrete long-term information and the short-term technicals.
Educate Yourself
Currencies are not easy. There is not really a reason to focus on currencies as a replacement for normal stock trading. It is helpful to keep an eye on currencies as a gauge of the economy, as well as to take the occasional trade when there are no other good options. Currencies are complicated and require a large amount of research. Technical analysis, of the currency pair not the ETF, can also be used for short-term movies. However, fees might be a problem since you are using ETFs, which are likely to move slowly.
You will be looking at interest rates and central bank policies, because these have a major impact on how a currency moves relative to others. High interest rates tend to draw capital to that currency, because if it is going to sit and gather dust it might as well be at the higher interest rate. Other important factors are manufacturing data for certain currencies and myriad of other indicators. These are less important individually, versus an extremely important one such as inflation or the interest rate. There is plenty more to look at, so it will take some work. However, the universe of currencies is far smaller than stocks so it should not be that much more work. It is just new to a lot of stock traders.
Technical analysis tends to work the same way, and is very effective. The things that effect currencies the most tend to be governmental or central bank policies, and these are usually indicated far in in advance. Also, economic data works on a longer timescale so it follows well established trends and is also telegraphed most of the time. This makes technical analysis more robust in currencies, because there are less surprises.
Conclusion
There are many ETFs that deal in currencies from all over the world, and some indexed ETFs for general exposure to a currency itself instead of a pair. It will take some time to get a sense of all the currencies and how they behave. Each one has its own character, such as the Australian Dollarâs tendency to move with the price of gold. The effort will be well worth it as there is always a currency trade out there somewhere, which forms a fairly constant source for trades.
http://www.timothysykes.com/2013/08...ly/?utm_source=twitterfeed&utm_medium=twitter
Forex trading is a fucken joke â 5 out of 6 traders BLOW their entire account up in the first 6 months.
Itâs a disgusting, dirty business in which the brokers/bookies make it seem easy but in reality where the average trader has almost no chance whatsoever to succeed and sadly if these greedy degenerates just theyâd be saved.
But most people canât be saved, theyâre too lazy and stubborn so let them burnâ¦degenerates with no futures, this guest blog post is for you:
Trading foreign currency directly is tough, meaning not as easy as stocks. Forex trading is a heavily involved activity due to the 24-hour nature of the business. It also involves managing margin, fees, and plenty of other things. It also requires a fairly substantial monetary investment to be really effective, though the draw of massive margin from overseas brokerages make some people think they do not need a large investment. The reality is that you shouldnât be using the amount of margin you may be offered.
There is a way to jump into currencies through the stock market. There are plenty of ETFs for the main currency pairings in both the long and the short direction, which allows you to go long on a short ETF for people who use IRAs to trade. The ETFs also come in the âultraâ variety, which means leverage is used.
Currencies are About Movement
Currencies are all about movement since they trade in pairs. A currency can be flat, but if its paired currency changes the pair moves. Some currencies fall into long term trends, though sometimes government act to counteract the prevailing trend like Japan. However some currencies are stable within a range. There is however a lot of money that can be made even with the slightest fluctuations so the movement inside the established range still presents opportunities, but this is more for direct Forex trading. With ETFs you would be looking for slightly larger movements, but that means a week and above in order to let the macroeconomics play out.
The other thing about currencies is that if you have the option to go long or short, directly or via ETFs, then there is no point in worrying about a general decline in stocks. A lot of people keep plenty of money in IRAs, which force them to go long. That makes them sensitive to recessions, and it is a prevailing concern for people who are long the market. On the other hand if they stay in cash or bonds then you can have very low returns.
Currencies are all about relativism and there for can still bring in returns during a recession. With IRAs you just need to go long the short ETFs. Since currencies trade in pairs both currencies can be doing well but one is stronger than the other one. It is much like the new binary options where you just pick which will do better.
Currently there is a lot of concern that the market has hit a top, but this is not assured. You cannot just short SPY, for example, and expect to sleep soundly at night. The fear is based on the fact that the market has gone up so much, but the forces that drove that rise are still in place. Money is still flowing and the economy is actually improving now. The fear stems from too much of a good thing. The things that drive currencies tend to be far more concrete and sentiment matters less since massive banks, nations, and corporations are players in the currency market. They are not there as traders to make a return, but for the purpose of doing business or minimizing risk. With currency you need to analyze the concrete long-term information and the short-term technicals.
Educate Yourself
Currencies are not easy. There is not really a reason to focus on currencies as a replacement for normal stock trading. It is helpful to keep an eye on currencies as a gauge of the economy, as well as to take the occasional trade when there are no other good options. Currencies are complicated and require a large amount of research. Technical analysis, of the currency pair not the ETF, can also be used for short-term movies. However, fees might be a problem since you are using ETFs, which are likely to move slowly.
You will be looking at interest rates and central bank policies, because these have a major impact on how a currency moves relative to others. High interest rates tend to draw capital to that currency, because if it is going to sit and gather dust it might as well be at the higher interest rate. Other important factors are manufacturing data for certain currencies and myriad of other indicators. These are less important individually, versus an extremely important one such as inflation or the interest rate. There is plenty more to look at, so it will take some work. However, the universe of currencies is far smaller than stocks so it should not be that much more work. It is just new to a lot of stock traders.
Technical analysis tends to work the same way, and is very effective. The things that effect currencies the most tend to be governmental or central bank policies, and these are usually indicated far in in advance. Also, economic data works on a longer timescale so it follows well established trends and is also telegraphed most of the time. This makes technical analysis more robust in currencies, because there are less surprises.
Conclusion
There are many ETFs that deal in currencies from all over the world, and some indexed ETFs for general exposure to a currency itself instead of a pair. It will take some time to get a sense of all the currencies and how they behave. Each one has its own character, such as the Australian Dollarâs tendency to move with the price of gold. The effort will be well worth it as there is always a currency trade out there somewhere, which forms a fairly constant source for trades.
