Sharing Thoughts on Forex

C

Corso482

Ok, I've been paper trading FX on oanda for a while now and I just can't seem to get an edge. Here are the reasons I feel that FX trading may be giving me trouble:

- oanda's charts are primative and I don't want to pay $50/m for esignal so i've only dealt with them

- I haven't been able to do any screening/backtesting with FX for the same reasons as above.

- The commission (spread) is a percentage, which cannot be made negligable with size; instead it grows with your account.

- There aren't enough (liquid) pairs to choose from, which clashes with my trading style.

- Maybe the same TA I use for stocks cannot be applied to FX??? Just a thoery.

Anyone have some thoughts on how to succeed in FX vs. Stocks?
 
Funny, I was just thinking about starting a Forex thread.

How profitable are you with stocks?

The way I see it, stocks are easy, ES and NQ are hard, and FX even harder.

And now consider this dismaying observation:

I don't know about you, but my profit in stocks is just about the order of magnitude of the spread less commissions. One could say I only make money off the spread. How can I ever expect to be a profitable FX trader if I have to pay the spread every time?
 
Quote from Corso482:


- oanda's charts are primative and I don't want to pay $50/m for esignal so i've only dealt with them
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I would spend the money for esignal.. But I have found that the charting package from forexnews.com is pretty reasonable for my purposes.


- I haven't been able to do any screening/backtesting with FX for the same reasons as above.
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If you're really interested in trading fx, I don't see how spending 50/month on your education is a bad expense.


- The commission (spread) is a percentage, which cannot be made negligable with size; instead it grows with your account.
The spread @ oanda is 2-3 pips, which is pretty reasonable when compared with currency futures.

I like other brokers better, but they seem within industry standards.


- Maybe the same TA I use for stocks cannot be applied to FX??? Just a thoery.
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It is different.. There aren't really market inefficiencies accessible to the retail trader. You could try to arb between two online fx brokers, but I'm not sure how the mechanics of that would work out. Anyway, all the institutional arbing is done way out of the retail trader's reach-- so price movement may be 'smoother' than you're used to. I.e., no predictable overreaction to, say, a JPM positive earnings release). I think it comes down to calling direction.. Countertrend trading (on whatever timeframe) can really wipe you out (I managed to lose $20k demo dollars in 5 minutes once)..

I've traded a couple of sample accounts with some techniques from Farley's 'Master Swing Trader', I've done okay with it, but 50:1 (or greater) margin scares me. I do think you have to take a longer timeframe approach-- say 15min bars on usd/chf, and really focus on multiple-time-frame analysis (without making trend relativity errors).

I like it, but then again I've never been successful at short timeframes (i.e. daytrading proper).

Thanks for starting this thread-- I haven't found any decent discussion of retail fx on the web.

Regards,
laz
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i'm using oanda too. their charts aren't great, but they seem to be the best broker for fx.

fortunately for me, my charting needs are very simple.

also, I've found that elitetrader.com is a great place for finding out about forex brokers.

However, if you are already using oanda, you should check out their forums which are very popular. Theres alot of discussion over there about everything related to forex.... except brokers (for obvious reasons)
 
Quote from Corso482:

- The commission (spread) is a percentage, which cannot be made negligable with size; instead it grows with your account.
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Isn't it true that if you are big enough you can do business directly with the Banks, in which case you pay no fees if you are the price maker?
 
I tried paper trade Forex last year. My own feeling is this market is particular noisy and hard to trade. The short-term charts(1-5 minutes) are always very choppy. If you trade by using long-term charts(15min or 60 min), you need to put a wide stop and this could be very risky. There are many spikes in the charts that could easily hit your stop and then go for the original direction.
 
Quote from hermit_trader:

I tried paper trade Forex last year. My own feeling is this market is particular noisy and hard to trade. The short-term charts(1-5 minutes) are always very choppy. If you trade by using long-term charts(15min or 60 min), you need to put a wide stop and this could be very risky. There are many spikes in the charts that could easily hit your stop and then go for the original direction.
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From my experience, trading the 1-5 minute charts is impossible because the spread is too big of a handicap to overcome. The only time I've had a modicum of success when when I used the 60 min- 1 day charts. But then the problem was finding good setups because there were only a few liquid pairs to trade.

I was also frustrated with oanda's charts because there's no longer timeframe than 1 day, so it's impossible to get a sense of long term trend, which is supposedly very important in FX.

I have a strong feeling, though, that if I did some extensive backtesting and toying around with FX on some decent charts I could figure something out. I just have to get over my 'frugality' and pay for esignal with it's $50/m FX feed, cus right now I'm using SWP with Qcharts. That would be another $150+/m just to experiment. UGhhhghg...

FX is still very appealing because with oanda you can open an account of any size, so I could experiment with real money, yet not risk a lot. FX would also add some nice diversification to any trading regimine. Also the 24 hours a day thing is very cool.

Still, I wonder why most traders don't have any interest in FX? Is it because of the lack of resources surrounding FX (like charting)? Or is it because before Oanda you had to have a huge account to trade? What's the deal?
 
Quote from Corso482:



From my experience, trading the 1-5 minute charts is impossible because the spread is too big of a handicap to overcome. The only time I've had a modicum of success when when I used the 60 min- 1 day charts. But then the problem was finding good setups because there were only a few liquid pairs to trade.

I was also frustrated with oanda's charts because there's no longer timeframe than 1 day, so it's impossible to get a sense of long term trend, which is supposedly very important in FX.

I have a strong feeling, though, that if I did some extensive backtesting and toying around with FX on some decent charts I could figure something out. I just have to get over my 'frugality' and pay for esignal with it's $50/m FX feed, cus right now I'm using SWP with Qcharts. That would be another $150+/m just to experiment. UGhhhghg...

FX is still very appealing because with oanda you can open an account of any size, so I could experiment with real money, yet not risk a lot. FX would also add some nice diversification to any trading regimine. Also the 24 hours a day thing is very cool.

Still, I wonder why most traders don't have any interest in FX? Is it because of the lack of resources surrounding FX (like charting)? Or is it because before Oanda you had to have a huge account to trade? What's the deal?
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FXCM and some other brokers also allow you to trade a mini contract. I think you only need about $1k to open such a/c.

I used to know some private FX traders but now most of them either changed to other instruments or wiped out. :D IMO, FX is a very volatile market and they can be affected by the actions of the government officials, esp. the JPY. But it's liquidity is nearly the best of all.
 
I traded Fx for about a year and was up only 20% after having a 50% draw down. I feel that Fx is not suited for small investors day trading but it can be very profitable for larger players with longer time frames because hardly anything trends as well or as long as the currencies do.

The big advantage is the off-shore tax avoidance that is the big draw for the wealthy speculator.

I have a friend who i introduced to FX trading several years ago who has been very successful and is presently system trading for clients. His web site is http://www.forexsystembroker.com/

He recently submitted his own systems to Futures Truth for testing and they will evaluate them for 3 months.

One trades only once a week and the other only once a day. The results where quite impressive but it will be nice to have some independent verification.

Dollar Trader by Dave Fox has consistently been in FT's top ten for years.

Hope this helps.

Mike
 
Not being knowledgeable about such things (FX) - this string brings up a Question for me - -

Why not just trade a Future on the currency you want ?

Hope this doesn't sound like toooo dumb a question.
 
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