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Shame On Fxcm
- Thread starter jmoris
- Start date
Quote from RedDuke:
Hi Ddunbar,
I said they tick the same, not that their value is the same. There is a premium in price, but we as traders do not really care about it because they move in unison. Take any indicator and put it on both, and you will see that it will look the same. Make sure you do it on charting platform like e-signal or something like this, and not your
broker whose prices could be different.
Yes, I was using non- broker quotes. There is sort of a lag between the two in real time. Yes, the charts look the same. But as the Futures near expiration, the premium shrinks as it does with all futures. More...
Can you please explain to me why you would choose forex over futures? Futures are cheaper and they are centralized. They move about the same, and you are not exposed to your broker. I am not sure how good IB is in forex, but there is a really good forex MM - Oanda. But it just makes more sense to trade futures. I started trading forex in 2004, but I go where I have less risk and same opportunities. If it was more risk more opportunities, then I might consider it, but with all other things being equal, I choose a less risky and cheaper option.
Regards,
redduke
I also trade Emini S&P. I use the S&P cash for charting and take my signals from there for the Emini's. But I'm a position trader with S&P's. With Forex, I trade breakouts. Trades last anywhere from a few seconds to several hours. Spot data is continous making my analysis simpler. Which in turn makes my system simpler. I use no indicators. Now, I'm sure I could do this with the Forex Futures, but as far as historical data goes, when the charts are "chained" (connecting expiring contracts with the next front month) the data will be a little off. I need that data to be exact to within 1 to 3 pips which only the spot can provide going back past 3 months.
I haven't had a single problem trading spot currencies. That might be because of the brokers I've used. IB so far is the best. I've suffered no bad fills. But then again, I only trade the most liquid pairs. Specifically and mostly, EUR/USD. Slippage on stops is none to a max of 2 pips. If I use stop limits, 0 slipage. When I use Stop limits to initiate a trade, I usually get 1 pip better than what I would expect.
My other reason for trading Spot is liquidity. I've done 100,000 to 2,000,000 without a hitch. Entry/exit no problems. As I become more experienced, I hope to move to 4 million+. Here I expect to need a more protective Entry and exit strategy. But I do have to tools to deal with that.
Spot is getting better all the time.
hope this helps.....
1) I think its great to trade both fx spot and futures
2) First thing I would do is close my FXCM account......and move to an ECB.....IB or any of the others...I will be opening with IB soon
3) I might have a bias towards spot FX since I have been a bank trader for a long time......
4) (may sound like a repeat of #2).....DEFINITELY close my FXCM account.......NO EXCUSES....ZERO TOLERANCE....
happy trading....(not for me though I got killed in STG/US futures)
1) I think its great to trade both fx spot and futures
2) First thing I would do is close my FXCM account......and move to an ECB.....IB or any of the others...I will be opening with IB soon
3) I might have a bias towards spot FX since I have been a bank trader for a long time......
4) (may sound like a repeat of #2).....DEFINITELY close my FXCM account.......NO EXCUSES....ZERO TOLERANCE....
happy trading....(not for me though I got killed in STG/US futures)
Quote from ddunbar:
Well, I'm looking at the EuroFX and the Eur/USD Spot right now. They don't seem to tcik the same to me. Plus the futures has a 35+ pip premium over the Spot. Though, if you trade with IB, the margin for the Futures and Spot is basically the same. But that'll change sometime next month when IB lowers their margin. I'm guessing that they'll go from 50:1 to 100:1 or more.
I haven't had a problem with actual trades in FOREX. And when Reuters and CME start that new centralized "exchange" next year, it'll be even better.
Spot Forex is where it's at, IMO.
there's no need for you to 'look' at eurfx and eur/usd spot fx rates. The so called premium on the futures takes into account the interest you'd receive/pay if you were holdin the same spot position. If the underlying spot moves up, so will the futures by an amount determined by a futures price eq which takes the interest as an input param. If the futures ever get out of line with the spot, someone will arb it back in line.
Quote from cvds16:
well someone explained it allready: they move in unison and the 35 pip premium is caused by intrest-rate differentials over the remaining period the future will exist, it changes on day to day basis, just as it would if you held a forex position overnight, only futures will be cheaper to do it ... it's basic finance math ...
Yeah, I explained the 35 pip dif in Eur/USd.
They tick in unison overall, but not precisely the same in real time. It's just a fact of life for Futures v. Spot in any instrument. Arbitage, hedging, etc causes them to go out of sync in realtime. If you're position trading forex, then big deal. If you're not, it can matter greatly.
Ex. A 50 pip move is Forex spot may only translate to a 45pip move in Futures. If you were trading a breakout system or some other short term system, which sets exit targets, you might not get an exit in the futures and end up getting stopped out when it reverses. Or vice versa of course. But they do not move in precise lock step.
There are significantly more players in FX than there are in the futures. Reasons for this vary. AVG daily volume in CME's EUROFX is around 120,000. @ 125,000 Euro's/contract * Euro's value relative to the dollar that translates into appprox $19 billion in notational value. Where as the EUR/USD trades approx $600 billion per day. CME's futures are only 3% of the Euro's daily spot trading value.
Ddunbar,
If you chose to stick with spot, it is fine. I am a bit lost in your logic around contract expiring time, it seems that you trade forex on intra day basis (I trade intra day myself), so why do you care? I personally do not trade the last day at all. When I traded forex, the only pair I traded was eur/usd.
2mil is $200 per pip, which is equal to 16 eur contracts. Not a problem on globex at all.
Like I said before, futures are cheaper and safer, why not give them a try?
Now about 600 billions daily for eur. If you really think that by trading at retail forex market maker you are exposed to this liquidity, you have a lot to learn about this business. It is there for banks, institutions and very large individual traders where they truly trade on inter bank. What retail traders are exposed to is their local Market maker platform, so this makes CME futures probably much bigger then any forex market maker.
Regards,
reduke
If you chose to stick with spot, it is fine. I am a bit lost in your logic around contract expiring time, it seems that you trade forex on intra day basis (I trade intra day myself), so why do you care? I personally do not trade the last day at all. When I traded forex, the only pair I traded was eur/usd.
2mil is $200 per pip, which is equal to 16 eur contracts. Not a problem on globex at all.
Like I said before, futures are cheaper and safer, why not give them a try?
Now about 600 billions daily for eur. If you really think that by trading at retail forex market maker you are exposed to this liquidity, you have a lot to learn about this business. It is there for banks, institutions and very large individual traders where they truly trade on inter bank. What retail traders are exposed to is their local Market maker platform, so this makes CME futures probably much bigger then any forex market maker.
Regards,
reduke
Quote from RedDuke:
Ddunbar,
If you chose to stick with spot, it is fine. I am a bit lost in your logic around contract expiring time, it seems that you trade forex on intra day basis (I trade intra day myself), so why do you care? I personally do not trade the last day at all. When I traded forex, the only pair I traded was eur/usd.
2mil is $200 per pip, which is equal to 16 eur contracts. Not a problem on globex at all.
Like I said before, futures are cheaper and safer, why not give them a try?
Now about 600 billions daily for eur. If you really think that by trading at retail forex market maker you are exposed to this liquidity, you have a lot to learn about this business. It is there for banks, institutions and very large individual traders where they truly trade on inter bank. What retail traders are exposed to is their local Market maker platform, so this makes CME futures probably much bigger then any forex market maker.
Regards,
reduke
While I do trade on a intraday basis, many of my signals come from levels which can be months old. That's why I need good data going back some months. Futures charts data of course, when chained, will not be as precise as the spot. That's why I used the S&P cash when trading the S&P eminis.
While a retail market maker will not have the volume exposure which would be indicative of the overall EUR/USD spot, an ECN would have significantly more liquidity than a market maker. That's one of the reasons why I don't use a market maker. ECN's counterparties are numerous and can tap into a much greater precentage of the Forex Spot and don't have to worry about building in their commission on the spread and acting as a counter party to the customer. I was on the verge of opening up an account with Refco FX back in Sept '05 until I realized this.
I'm not highly averse to to trading the Forex futures. Nor am I knocking them. I would just have to alter my style to trade them. I personally see no material advantage to trading them at this time.
But let's back track a bit. Your reason for trading the futures is for "security." If I found that to be a problem with the spot, believe me, I'd be seeking an alternative and would be more than willing to mod my trading style to adapt to it. Escpecially if I was using a troublesome Market Maker.
Quote from RedDuke:
Ddunbar,
If you chose to stick with spot, it is fine. I am a bit lost in your logic around contract expiring time, it seems that you trade forex on intra day basis (I trade intra day myself), so why do you care? I personally do not trade the last day at all. When I traded forex, the only pair I traded was eur/usd.
2mil is $200 per pip, which is equal to 16 eur contracts. Not a problem on globex at all.
Like I said before, futures are cheaper and safer, why not give them a try?
Now about 600 billions daily for eur. If you really think that by trading at retail forex market maker you are exposed to this liquidity, you have a lot to learn about this business. It is there for banks, institutions and very large individual traders where they truly trade on inter bank. What retail traders are exposed to is their local Market maker platform, so this makes CME futures probably much bigger then any forex market maker.
Regards,
reduke
why ppl make claims to the benefits of one over the other without stating their trading style is beyond me. Try trading fx futures in a fast market after nfp like today and getting 20 contracts without any slippage and you'll find that quite difficult. It's not a dead cert in spot fx but much more likely if you're on a proper ecn like currenex. Use whatever works for you, one or the other or both
I just wanted to add this quoted response to me from an Interactive Broker's rep on this forum regarding Forex spot liquidity and order size. I am of course assuming he's refering to the most liquid pairs like EUR/USD, USD/JPY and GBP/USD.
Quote from IBj:
... I am considering lowering the margin for max liquidity hours but 100:1 is risky for the broker so even that is not very popular around here. For an account with 100K, we can handle that risk, even if we dont want to. Our system puts clients directly to the market and they can easily trade 100M without any alarms going off. And if 5 minutes later, there is economic news ...
Remember silver last week. 17% move. Doesn't happen often but it does happen. Extreme leverage is extremely dangerous.
Ddunbar,
Your usage of S&P cash to trade ES futures can be applies to currencies. Use reliable forex data to generate currency futures entries.
Sccz97,
I trade on short term basis anywhere from 1 min to usually no more than 1 hour. Spread is very important to me. With futures you usually get 1 tick spread, with forex the best spread I have seen was 1.5 pip on eur/usd, cable is 3 pips on average, which makes it very expensive to trade from my point of view.
I chose futures not just because of security, central exchange but also because of the cost associated to trade them. Those little costs add up to a large chunk of cash.
As far as NFP goes or other major economic numbers, I wish best of luck to people who trade the news. I view trading on economic numbers as gambling not trading. The best things, I can do for myself is to be flat when the number comes out. When the dust settles a bit, I start looking for entries. But, if you telling me that you have no problems what so ever placing forex trades right after NFP, I solute you.
Cheers,
redduke
Your usage of S&P cash to trade ES futures can be applies to currencies. Use reliable forex data to generate currency futures entries.
Sccz97,
I trade on short term basis anywhere from 1 min to usually no more than 1 hour. Spread is very important to me. With futures you usually get 1 tick spread, with forex the best spread I have seen was 1.5 pip on eur/usd, cable is 3 pips on average, which makes it very expensive to trade from my point of view.
I chose futures not just because of security, central exchange but also because of the cost associated to trade them. Those little costs add up to a large chunk of cash.
As far as NFP goes or other major economic numbers, I wish best of luck to people who trade the news. I view trading on economic numbers as gambling not trading. The best things, I can do for myself is to be flat when the number comes out. When the dust settles a bit, I start looking for entries. But, if you telling me that you have no problems what so ever placing forex trades right after NFP, I solute you.
Cheers,
redduke