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Futures Currency questions
- Thread starter schulzey
- Start date
the pathetic thing is, now he is lying in the graveyard, yeah I out lasted him, but now he has no worries, and I am still worried that I might be a failure.Quote from oldtime:
Many of us started out on the Mid Am, where you could trade grains and beans at just a 1000 bushels at a time.
It would be a better story if now I was really big, but I am still small, and will probably always stay that way.
I'm still living on the money I made from one big ES trade, and that's probably the last big trade I will ever make. Now, all that money is sitting in stocks and bonds making about 6% a year, but you can enhance those returns with a small trading account.
It takes about ten minutes to learn how to invest.
Apparently, it takes a lifetime to learn how to trade, because I still haven't learned it.
I still enjoy ridiculing people that think they have it figured out.
I suppose it could be different for different people. It didn't come naturally to me and I had to read and research everything.
The only thing that came naturally to me was not really giving a shit about how it all iurned out.
During a time when my father in law was always giving me hard time about what a failure I was I had a delivery route where I drove by a graveyard every night at about 2 am, and I use to think, "Well yeah, but that's where we are all going to end up."
Quote from schulzey:
Hi everyone,
I've been trading stocks for a few years and I thought I'd start learning as much as I can about Emini futures. I downloaded a demo program called firetip. I don't know much about forex and I've never traded futures or currencies.
When I talked to the broker they said they don't do forex but on the program there is contracts that you can trade called "Euro Currency (9/12 GLOBEX)" and "EuroDollar (9/12 GLOBEX)". I always thought that currencies had symbols like EUR/USD, etc. Are these something different, some sort of hybrid futures contract/currency or this Forex? One pip was equal to $12.50 (at 1.2576 last quote) so how much leverage is that?
These are total newbie questions, I don't know much about forex or futures yet. I have a basic understanding of futures and I do understand how E-Minis work.
Thanks for all the help!
You actually raise an interesting question, at least from an historical standpoint. Spot FX, as is currently available from various brokers, is a relatively recent concept. Back in the day, ie 1980's and 90's, FX trading was the province of banks. You had to be able to swing a pretty big line to participate. The CME had hit a big home run with S&P futures, so it was natural to look for something else, hence currnecy futures were born. Unlike FX, in which the "larger" currency is always the numerator, CME currency futures were all priced in dollars, just like beans, and had a fixed contract size, just like every other commodity.
Since futures have an expiration date, they are priced somewhat differently than spot. In spot, interest rate differentials are a key factor. You can earn a nice spread by shorting a low yielder and going long a high yielder, provided the relative values stay close. And of course, that spread can be multiplied many times by leverage. With futures, the rate differential is already priced into the contract value. Of course, you have to hold the contract until expiry to realize it all. And leverage is fixed by exchange margin requirements.
More recently, another product has been introduced to allow currency trading for smaller players, FX ETFs. They trade exactly like stocks, so you don't need to have a futures account.
it also helped when you had a president that boldly said, "The dollar must go down."Quote from AAAintheBeltway:
You actually raise an interesting question, at least from an historical standpoint. Spot FX, as is currently available from various brokers, is a relatively recent concept. Back in the day, ie 1980's and 90's, FX trading was the province of banks. You had to be able to swing a pretty big line to participate. The CME had hit a big home run with S&P futures, so it was natural to look for something else, hence currnecy futures were born. Unlike FX, in which the "larger" currency is always the numerator, CME currency futures were all priced in dollars, just like beans, and had a fixed contract size, just like every other commodity.
Since futures have an expiration date, they are priced somewhat differently than spot. In spot, interest rate differentials are a key factor. You can earn a nice spread by shorting a low yielder and going long a high yielder, provided the relative values stay close. And of course, that spread can be multiplied many times by leverage. With futures, the rate differential is already priced into the contract value. Of course, you have to hold the contract until expiry to realize it all. And leverage is fixed by exchange margin requirements.
More recently, another product has been introduced to allow currency trading for smaller players, FX ETFs. They trade exactly like stocks, so you don't need to have a futures account.
But getting back to opie, he likes stocks and thinks he has a read on the market, his only interest in currencies is that he is concerned moving to index futures will put a cramp on his account balance due to the minimum of trading 67k at a time.
Those were the days my friend, long cattle, long swiss francs, beat the heck out of having a real job.
Quote from 1a2b3cppp:
There are e-micro futures which are 1/10 the size of the normal currency futures but their volume is so low they are virtually untradeable.
I'm checking into that. It's the (eur/usd) M6E right?
Are the spreads huge because of the low volume?
I'm very interested in that because it would be just $1.25 per pip which would be great for intermediate term trades even if the spreads were a little wider than normal.
With a small size contract like that I can practice trading M6E while I'm doing my other strategies with the E-mini. I'm definitely not going all forex or currency futures for a while. But it'd be nice to try something here and there with low leverage to see if I can get a feel for it.
like Bubbie always said, "A healthy man you feed, to a sick man you offer."Quote from schulzey:
I'm checking into that. It's the (eur/usd) M6E right?
Are the spreads huge because of the low volume?
I'm very interested in that because it would be just $1.25 per pip which would be great for intermediate term trades even if the spreads were a little wider than normal.
Is the M6E the most liquid of all the E-micro currency futures? I won't be able to tell until the market opens.
I've traded a lot of stocks with very low volume in the past and it's not the end of the world. I would just have to be a little more careful with my risk control.
I would assume the margin requirements for these contracts is very small as well so if something is going my way I could really load up on them.
I've traded a lot of stocks with very low volume in the past and it's not the end of the world. I would just have to be a little more careful with my risk control.
I would assume the margin requirements for these contracts is very small as well so if something is going my way I could really load up on them.
Quote from schulzey:
Is the M6E the most liquid of all the E-micro currency futures? I won't be able to tell until the market opens.
I've traded a lot of stocks with very low volume in the past and it's not the end of the world. I would just have to be a little more careful with my risk control.
I would assume the margin requirements for these contracts is very small as well so if something is going my way I could really load up on them.
Micro Euro futures are alright. One penny is $125, so it's appropriate for smaller accounts. I've noticed during RTH the spread and liquidity is reasonable.
And yes, Micro Euro futures are the most liquid of the Micro FX Futures contracts.
One would consider this more for position trading in a listed market, rather than scalping or shorter term trading.
GL trading