From Index futures to Futures Currency Trading while watch the Spot market

Q

qtip

Hello all-

I have been trading the Index futures for the last few years and am looking to move into the FX markets.

I do monitor the Spot quotes but feel much better about executing my trades via the CME's futures currencies since it is a more regulated exchage rather than the interbanks.

I do have some questions for those that are experienced.

1. Do you know of a book or books that can give insight on how the pairs relate to one another beyond the basics. I have seen many books, but truthfully they all seem for the beginner who knows nothing.

2. Do you know of any web sites, paid or free that offer good news and strategy commentary. Compared to the morning analysis that the brokerage houses like Refco, Citibank, and Bear Sterns send out.

3. Any good books about Risk Management regarding the FX markets?


Any input would be greatly appreciated.
 
1) i assume you are asking about currencies correlation - then google for the term, you will come to several websites providing the correlation of pairs - i can't paste any links here as its disallowed by ET.
If you are asking about which pair leading which pair, then there's no clear cut answer, you'll find out soon.

2) For good market commentary - sign up for a free demo with Refco/FXCm and use the IFR plug-in, top notch news and commentary IMO. Or you can sign up for a demo with Oanda and use the 4cast news and commentary too. A bit lagging, but good enough for me.

3) For risk management on forex, IMO its the same with index futures - good position sizing, don't over leverage etc. If you survived years in index futures, this should'nt come as a problem. I've searched high and low for good books on forex trading, and have been disappointed, they are written for those who have zero knowledge in fx (how to place orders, who the participants of fx are etc)... So save your money. If u find one that's worthy, pls tell me.
 
some nick nacks...

look at cme.com e-quivalents section. this gives spot, forward and futures prices. all real time..

may help???

imo, bp tends to lead ec (eurofx)

risk management is a personal thang and you gotta figure it out yourself as the dude above suggests.

personally i wouldnt bother with spot v futures or which leads what for correlation unless trading fx spreads or arbing the two which is probably unlikely for most traders here.

just trade what you see in the market you trade.
 
qtip:

Take a look at the bookstore of the NYIF if your looking at some good reference material for the forex market. Also, fxstreet, Reuters & Bloomberg offer decent commentary. A few points regarding the forex market:

1. A market is a market so if you've got a good(simple) strategy trading index futures then it'll work in forex. If your looking for some new techniques then let me know & I'll give you some no brainer strategies which work in various timeframes.

2. The forex market is going to do what it wants to do regardless of what economic data, news, or guru commentary is advising so I'd be very leery of trading off what others are saying. A good example is what the majors did last week; we've got the Fed raising, good economic data, BOE decreasing .25%, & continued news of repatriation by US corps. and the dollar couldn't rally for more than a few hours on any day last week. My point is I'd master a strategy w/ sound risk management & stick to it like glue & stay away from what others are advising.

As far as risk management, everyone will tell you to keep it small and I couldn't agree more if for no other reason but to say the forex market offers nice volatility/opportunities all the time so there is no reason to place big bets. Good luck, Mike.
 
Quote from skipper:

1) i assume you are asking about currencies correlation - then google for the term, you will come to several websites providing the correlation of pairs - i can't paste any links here as its disallowed by ET.
If you are asking about which pair leading which pair, then there's no clear cut answer, you'll find out soon.
More...



I think I second that. My recommentation would be for you to download FX historical quotes and calculate correlations yourself. You don't need a full Bloomberg subscription for that, free FX historicals are available all over the Internet.
You can also check how correlation changes over time so that you can gauge of the volatility of correlations.

Finding for yourself will add more value than reading a book.
 
Thanks Skipper for your advice...

Do you mind PMing me the websites since you are not able to post them here on Elitetrader?

I will check both Refco and Oanda for their morning commentary. I have an account right now with Refco but have not found anything worth while.

I agree, the books I have seen regarding the Forex markets have been a total waste of time.

Quote from skipper:

1) i assume you are asking about currencies correlation - then google for the term, you will come to several websites providing the correlation of pairs - i can't paste any links here as its disallowed by ET.
If you are asking about which pair leading which pair, then there's no clear cut answer, you'll find out soon.

2) For good market commentary - sign up for a free demo with Refco/FXCm and use the IFR plug-in, top notch news and commentary IMO. Or you can sign up for a demo with Oanda and use the 4cast news and commentary too. A bit lagging, but good enough for me.

3) For risk management on forex, IMO its the same with index futures - good position sizing, don't over leverage etc. If you survived years in index futures, this should'nt come as a problem. I've searched high and low for good books on forex trading, and have been disappointed, they are written for those who have zero knowledge in fx (how to place orders, who the participants of fx are etc)... So save your money. If u find one that's worthy, pls tell me.
More...
 
I will take a look at the www.cme.com website... Since I watch the Forex market to lead the futures currencies, then the real-time swaps may help. If you know the direct link for these real-time quotes, please post it.

Basically what I have been doing is using the Forex as a leader to what the futures was going to do.

For example, if I have a buy signal for the Eur/Usd pair, I would calculate the spot so I can covert the price to futures and place the trade. Not sure if this is worth the time, but that is how I have been trading.

Maybe I should just watch the futures currencies and use the same method I as I do for the Forex....?

Quote from FredBloggs:

some nick nacks...

look at cme.com e-quivalents section. this gives spot, forward and futures prices. all real time..

may help???

imo, bp tends to lead ec (eurofx)

risk management is a personal thang and you gotta figure it out yourself as the dude above suggests.

personally i wouldnt bother with spot v futures or which leads what for correlation unless trading fx spreads or arbing the two which is probably unlikely for most traders here.

just trade what you see in the market you trade.
More...
 
I do have a simple method for trading the index futures so I have been using that for the Forex and then placing the trades through the futures currencies. The only issue is that I must covert the Spot price to the futures currencies when placing the trade.

I would really appreciate any of the strategies your are currently using.

What I have learned is that the currency market is a true back and fill market. For example, if you were short and the market moved against you, in about 100 pips or so the market comes back. Of course, this doesn't mean someone's account can handle this, however it is something I have noticed.

Quote from Brites:

qtip:

Take a look at the bookstore of the NYIF if your looking at some good reference material for the forex market. Also, fxstreet, Reuters & Bloomberg offer decent commentary. A few points regarding the forex market:

1. A market is a market so if you've got a good(simple) strategy trading index futures then it'll work in forex. If your looking for some new techniques then let me know & I'll give you some no brainer strategies which work in various timeframes.

2. The forex market is going to do what it wants to do regardless of what economic data, news, or guru commentary is advising so I'd be very leery of trading off what others are saying. A good example is what the majors did last week; we've got the Fed raising, good economic data, BOE decreasing .25%, & continued news of repatriation by US corps. and the dollar couldn't rally for more than a few hours on any day last week. My point is I'd master a strategy w/ sound risk management & stick to it like glue & stay away from what others are advising.

As far as risk management, everyone will tell you to keep it small and I couldn't agree more if for no other reason but to say the forex market offers nice volatility/opportunities all the time so there is no reason to place big bets. Good luck, Mike.
More...
 
qtip:

I trade both FX futures & spot but for the most part trade futures unless the signal is indicating I hopefully will be holding for a few days & then I'll trade spot if I'm getting paid overnight via interest differential. Spot vs. futures is pretty much efficient so I've never been concerned with currency conversion of the majors. Basically, you'll pay anywhere from a few pips to +10-15 to spot depending on were the futures contract is to maturity.

Take a look at the tread "Forex Scalping" for some basic techniques I use. I trade FX, indices, bonds, & crude for the most part & these techniques work well in all markets. I stay away from all technical analysis except for a simple moving average to confirm trend & trailing stops.

I've never thought about FX as a true back & fill market but I guess it is. To me it reaffirms the notion that the market is going to do what it wants regardless of what news it hitting our screen. Good luck, Mike.
 
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