Forex VS. Globex

[Burtakus]

I'm not a scalper so I target more than $2-$5 a trade. When I first started I tried short term trades but it didn't work out to well. Since the start of this year I have been able to catch a few good ones that gave me $30-$40 in a day with scaling into a position. Keep in mind though each position that I put on had a pip value of $0.10-$0.40 initially that increased as I scaled into it.

I have just recently started to look at holding for more than 1 day. So far it is working out ok but time will tell. My last foray into multi-day holding ended pretty bad due to a lack of patience and confidence in my setup. I decided to work my way back to it because I got tired of watching trades continue my way long after I got shaken out.

I still consider myself a rading novice and as such my strategey is under constant review and change as it developes to suit my personality.

 

[traderob]

Quote from sammy12:

I am a newbie here..

Don't have to pay software fee for globex trader? Velocity features charges around $500/month for software.

Sammy,
If you are daytrading with Velocity futures you must be doing the volume to justify the patform fee: I guess about 500rt per month?
Otherwise you have brokers like IB that don't charge for their platform but whose commission is relatively expensive at $4.80 rt. Still way cheaper, of course, than the spreads from the forex shops.

 

[cosmic]

so, I did some research & now some questions pop up.

1. Wouldn't it be better to compare costs for same dollar amount moved & same leverage? (forex standard lot 100k & emini sp approx. 50k USD)

2. Trading Eur/Usd through CMS-Forex with 3pip spread complete 20-25 $

3. Trading Emini through IB approx. 17.5 with 1 tick spread.

So, is there really so much difference? At least as long as the most liquid forex lots with spreads of 3-4 pips are concerned.

If you then take finally into account the higher leverage provided with Forex, this sounds like a very good daytrading market.

Or something wrong in my reasoning?

Forex pros please respond

best
cosmic

 

[clandestine]

Quote from cosmic:

so, I did some research & now some questions pop up.

1. Wouldn't it be better to compare costs for same dollar amount moved & same leverage? (forex standard lot 100k & emini sp approx. 50k USD)

2. Trading Eur/Usd through CMS-Forex with 3pip spread complete 20-25 $

3. Trading Emini through IB approx. 17.5 with 1 tick spread.

So, is there really so much difference? At least as long as the most liquid forex lots with spreads of 3-4 pips are concerned.

If you then take finally into account the higher leverage provided with Forex, this sounds like a very good daytrading market.

Or something wrong in my reasoning?

Forex pros please respond

best
cosmic

Cosmic,

I can comment about daytrading FX from firsthand experience: In order to compare fairly with futures, I feel one must first assume that he/she is getting an automatic fill at the quoted price/price clicked on. Electronic fills are a given in futures, but NOT w/ spot FX. I'm in the process of closing my account w/ GFT Forex because they are trading directly against me, and refuse to give me a fill unless/until I am on the wrong side of a trade. At first, auto-fill daytrades through GFT Forex weren't a problem, but after analyzing my trading style, they put me on "dealer-intervene", and I have not had an honest shake since. It is either a requote (my requote rate is about 50% this week), or they hold your order until it is firmly against you, then SURPRISE!! - filled!! Why, just today they robbed me of a 25 pip trade. They took over 1 minute to execute - and the only reason I got filled was because the price retraced to the original level. I would've cancelled, but they do not offer a cancel button, and cannot explain why. I find GFT Forex particularly pathetic because they're doing their best to trade directly against a guy playing 2-lots. These are disgusting people in an ugly, shady, unregulated business.

GFT Forex and many other FX brokers are SCAMMING, THIEVING, DISHONEST PIGS, simple as that.

I know this doesn't directly answer your question, Cosmic, but there are other factors to consider besides just the raw "numbers". Best to you.

 

[Transact Futures]

I have never traded Forex either. I can tell you that if you trade the currencies through the CME you are going to get the best 5 bids and the best 5 offers. You will be trading against other traders or other market makers. I fyou have a lot of questions the CME is a great place to call up and get answers. They are very helpful and very eager for people to use thier currency trading system.

 

[nkhoi]

Quote from clandestine:

... I find GFT Forex particularly pathetic because they're doing their best to trade directly against a guy playing 2-lots. These are disgusting people in an ugly, shady, unregulated business.
...

from their website look like they are regulated
"As an FCM, Global Futures & Forex, Ltd. (“GFF”) is required to adhere to strict capital requirements and follow rules and guidelines of high professional and ethical business conduct. We are pleased of our status of FCM registration and pledge to our customers only the highest integrity in everything we do.
"

 

[Cutten]

Quote from SethArb:

50 RT a day in FX futures? ... I scalp in 3 times zones and do not do anywhere that many

A couple of weeks back I did over 150. If the exchange fees weren't such a ripoff I'd do more, no problem.

 

[corvus]

Alright, while we're at it let's discuss stops.

One of the big risk factors I would face in the futures market are the trades you can't babysit...unlike with the ES, in forex my trades are often days long. Consequently, I want to have some sort of protective stop in at minimum, and this implies a stop held at IB since Globex doesn't have support for native stops.

Well, this sort of stop has two problems...first, very rarely, IB loses their connectivity to globex...it's happened to me twice in my limited experience. This means that you aren't protected and your risk, at least for that short period of time, is unmanaged. It doesn't take a very vivid imagination to come up with scenarios where this could be very expensive.

Second, in a light or fast market, you are likely to get a good bit of slippage on your order.

So, how do the globex FX traders manage this risk? Do you just pay up on the slippage if your stop gets triggered betwen the US and Asian markets at low volume or after data comes out and the futures are on a rip? What about the weekends when you are totally exposed to a gap? Anyone use the futures options for protection?

Certainly it pays to be an institution and have at least one trader always watching your position for 24 hours, but I do not, as of yet, have that luxury.

 

[paradox]

Why don't you just use a stop-limit on Globex?

Quote from corvus:

Alright, while we're at it let's discuss stops.

One of the big risk factors I would face in the futures market are the trades you can't babysit...unlike with the ES, in forex my trades are often days long. Consequently, I want to have some sort of protective stop in at minimum, and this implies a stop held at IB since Globex doesn't have support for native stops.

Well, this sort of stop has two problems...first, very rarely, IB loses their connectivity to globex...it's happened to me twice in my limited experience. This means that you aren't protected and your risk, at least for that short period of time, is unmanaged. It doesn't take a very vivid imagination to come up with scenarios where this could be very expensive.

Second, in a light or fast market, you are likely to get a good bit of slippage on your order.

So, how do the globex FX traders manage this risk? Do you just pay up on the slippage if your stop gets triggered betwen the US and Asian markets at low volume or after data comes out and the futures are on a rip? What about the weekends when you are totally exposed to a gap? Anyone use the futures options for protection?

Certainly it pays to be an institution and have at least one trader always watching your position for 24 hours, but I do not, as of yet, have that luxury.

 

[corvus]

Quote from paradox:

Why don't you just use a stop-limit on Globex?

Because a stop limit is no protection. If the price passes through the election price and then past your limit price, you will not be filled. Leaving you holding your contract with it (potentially) still ripping against you.