How hard is Forex?

hi mate

Like I said earlier everything I know is from the interbank side of things. A huge part of the problem on that side of things is credit as banks are forced to pull limits left right and centre by their risk depts. This adds a lot to the liquidity problem. However I can say for sure that spreads in the market in any sort of size are as wide as ever. EBS is regularly 3 pips wide in 1-3 eur/usd which is unheard of. It is very possible to move FX markets urself by trading in small amounts and triggering algoritmic traders to push pxs one direction or another.
People are no longer leaving big orders resting on systems because of this. If you leave a large stop loss out with someone it is like a target and it is very easy to trigger it and then watch it all the way back down again. This adds to the volatility as markets are pushed one direction until they finally hit something real and then it immediatly pulls back again.
A quote in 5 mio EURUSD used to be 1 tick wide and is now at least 2 and probably 3. People will not even quote 2 sides of a price in anything over 30 mio eur and will try and work an order instead. Less liquid currencies like GBP and AUD and NZD are even wider.
Most of the big bank systems UBS Deutsche and Barclays etc all feed directly from Reuters and EBS so this liquidity veil continues to develop as eventually this liquidity can only be cut out on EBS, Reuters and voice brokers. I can only assume that retail trading is the exact same and eventually all trades find their way into the interbank system.
 
Quote from irish88:

A huge part of the problem on that side of things is credit as banks are forced to pull limits left right and centre by their risk depts.
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Ah right. Speaking of, I've heard from one large credit-based Currenex hub that they're having issues retaining small institutional clients due to credit limit cuts. Many are shifting over to the retail margin-based side as a result.

EBS is regularly 3 pips wide in 1-3 eur/usd which is unheard of.

A quote in 5 mio EURUSD used to be 1 tick wide and is now at least 2 and probably 3.
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That's interesting, another ET trader who uses EBS mentioned the same (that spreads are wider on the majors than non-users would suspect). I'm curious as to why that is, why the underperformance vs ECNs. Typically on the latter during market hours, you'll find 5 mio on EUR/USD at spreads ranging from 0.5 - 1 pip (rare to see it >1.5).

In terms of displayed liquidity, it seems most of the liquidity providers are only showing 3 mio - 5 mio (which on average is lower than pre-crisis levels). I've heard that there is more liquidity behind those quotes (in terms of Iceberg orders), but I'm a little bit suspect given the volatility.
 
I dont doubt that they are struggling for limits and to get access to pricing from larger players on currenex. If they do switch over to the retail side then I am sure they will get the same pricing which you are getting rite now. But if they are any good at FX or sniping alot of machines at the same time for the best price (ie. they want to do 25 mio and hit 5 ECNS for 5mio) then they will not get that pricing for long. Their line will either be pulled completely or they will shade their pricing and widen the spreads.
I can only assume that the reason that the pxing is so tite on the platforms u talk about is because it is not dangerous for the banks who back them to offer those pxs. Like any bookie if you win consistently they dont let you play anymore.
 
Quote from irish88:

hi,

I can honestly say at the moment that fx is incredibly difficult to trade. ....I can only imagine how frustrating and incredibly difficult trading at home must be on retail platforms.
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In the virtual bucketshop world it's really no different than it's always been, we're sheltered from most of the problems you mention, I guess that's one of the benefits :)
 
Quote from short&naked:

Is this a joke? I could beat those yearly returns in a day or two (or a few days at most!) with minimal risk.
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Certainly not a joke. Just something for complete beginners to review, since like the OP, they hear these claims about "20-40% a month" and might get the wrong idea.
 
Quote from short&naked:

Is this a joke? I could beat those yearly returns in a day or two (or a few days at most!) with minimal risk.
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Exactly, talk about underperformers!
 
892king,

Please trade forex only if you are absolutely passionate about it. Although you could have a very nice start, the drawdowns or daily fluctuations in your account balance during the learning curve may cause a lot of doubt about yourself or your system. The thing that allows you to keep going (and everyone on ET for that matter) is their love for trading.

All the best,

Kris
 
Quote from 892king:


So I wonder that if making 20% average return is exceptionally hard in forex market, in 10~50K stake.
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Look, it has nothing to do with how much you have in your account. Let’s hypothetically say that the trader is good, and is constantly making 10% per month with conservative money management and doesn’t have too many losers in a row. All he needs to do is increase the number of trades and/or to change his position sizing to bump up the returns to 20% per month ( but the negative aspect of this will be more volatile equity curve).

Don’t expect to become a trader and have these profits after a year of full time trading , it is unrealistic, it takes much longer than that. Trading is not a get rich quick scheme, it is a very long journey.
 
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