What is the best instrument for retail fx?

Quote from late apex:

Could not disagree more.

As is quite common on ET and online, nearly everyone did a great job of advocating confidently why what works best for them will work for you as well. That often means that one side is presented, out of two.

Your question can't be answered meaningfully or intelligently, without considering all the relevant factors. Among them: your trading capital... financial situation... money management... currency pairs... trading hours... knowledge / skill / experience levels... full-time v. part-time... strategy type(s)... time frame... citizenship... location... taxes... OPM down the road.

Incidentally, what is your day job, in which you've "traded plenty of fx"?
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Thanks much for replying. To answer your questions: my trading capital for f/x is about 100k for now, I am a director at a hedge fund that trades lots of stuff (equities, fixed income, futures and other derivatives...) of which f/x makes up a small part, I am an academic by training (PhD Econ) and would say my knowledge/experience is moderate to high. My time frame is long term and I'm mainly interested in exploiting the forward bias but also have some longer-term views driven by quantitative macro models. I'm in the US and this is taxable money. Hopefully that helps you understand my situation better.

I'm looking forward to your response.
 
I think I'd have a pretty good answer about "What is the best instrument for retail fx?".

Which instrument safely makes you more money faster within your capability and strategy? :D
 
Quote from bobbyzimmy:

Thanks much for replying. To answer your questions: my trading capital for f/x is about 100k for now, I am a director at a hedge fund that trades lots of stuff (equities, fixed income, futures and other derivatives...) of which f/x makes up a small part, I am an academic by training (PhD Econ) and would say my knowledge/experience is moderate to high. My time frame is long term and I'm mainly interested in exploiting the forward bias but also have some longer-term views driven by quantitative macro models. I'm in the US and this is taxable money. Hopefully that helps you understand my situation better.

I'm looking forward to your response.
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Good to see ET attracting people like you. I would suggest that you take a close look at the liquidity -- both daily volume and open interest -- of the currency futures contracts, given your particular pairs, normal execution hours and typical notional capital you're going to employ.

If you judge the liquidity to be adequate, then futures may fit your needs well at this stage. Otherwise cash forex would be the only practical choice. (As already suggested, keep your eye on FXMarketSpace progress, although it may be a while.) In either case, consider setting up at least two separate accounts, to mitigate the usual risk factors.

In case you are going to be doing this from a home office (not already properly set up), you'll want to give particular attention to all the operational and logistical elements which you now probably take for granted in your day job. Things like connectivity, electrical power, hardware, security, backup and recovery, other emergency planning, record-keeping, business structure, and so on. Perhaps mundane yet ultimately critical success factors, I would say.
 
Quote from ddunbar:

Another thing to be on the look out for is CME/Reuters FX marketspace in early 2007. Google that for details.
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Can someone refer me to a link that has a good explanation of what is 'CME/Reuters FX marketspace'. I googled it but couldn't find any meaningful article on that.
 
From http://www.fxmarketspace.com/faqs.html#_3.3 :

"Q: Will FXMarketSpace be available to retail investors?

A: FXMarketSpace will be an institutional trading platform, not open to "retail" participants. In general, market participants would have to meet the FSA definition of a "Market Counterparty". Individuals would have to be sophisticated investors, typically with a net worth over $20 million."

So all the talks about it changing the spot FX market for retail traders are BS?
 
Quote from icash55:

From http://www.fxmarketspace.com/faqs.html#_3.3 :

"Q: Will FXMarketSpace be available to retail investors?

A: FXMarketSpace will be an institutional trading platform, not open to "retail" participants. In general, market participants would have to meet the FSA definition of a "Market Counterparty". Individuals would have to be sophisticated investors, typically with a net worth over $20 million."

So all the talks about it changing the spot FX market for retail traders are BS?
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No. It's just like with Globex. Retail investors do not have direct access to it but access via a broker. If you wanted direct access to Globex via iLink 2.0, you'd need to lease or buy a seat (memebership status), Get a user ID, deposit funds with a clearing agent, then get a front end like TT. A few other details I left out. Point is, for most retail traders, it's just not economically feasible to go through all that. IF you were doing serious volume in the E-mini S&P, it might. You could end up saving yourself 10% - 30% overall.

There will be several brokers signing on to offer access to FX Marketspace when it launches. One confirmed broker is Interactive Brokers. At least that was their intention as stated in July.

FX Marketspace is more a quasi-exchange than it is a "platform." Just like EBS is a quasi-exchange. You'd need a prime broker to get access to it. But FX marktspc will be closer to Globex in form and function than it would be to EBS or Reuters Dealbook.
 
Quote from late apex:



In case you are going to be doing this from a home office (not already properly set up), you'll want to give particular attention to all the operational and logistical elements which you now probably take for granted in your day job. Things like connectivity, electrical power, hardware, security, backup and recovery, other emergency planning, record-keeping, business structure, and so on. Perhaps mundane yet ultimately critical success factors, I would say.
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Thanks for this advice. I hadn't given much thought to it and you're absolutely right that I now take these things for granted.

Thanks to all who replied. I'll let you know how it goes.
 
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