Why the FX is not suitable for ...

A

alex.samant

...position trading with a small account?

My 2 cents here, feel free to argue:

Whoever ventures into stocks first finds that trading them based on weekly and daily charts or even longer term timeframes is worth the time, having a small account where he can control his risk to not be larger than say 5% of the balance.

You can have tens of trades in an entire month if you screen enough for your setup and with a good method and risk profile you can end up with a nice profit at the end of the month making trading worthwhile.

However, in futures and spot commodities markets such as the FX, you can't do that for the simple reason that you don't have much to choose from, at least with a regular broker (that is reason 1) and the markets are more efficient than stocks due to increased interest for each one of them in particular (that is reason 2).

You can make a nice 30% of your account position trading the FX at the end of the year, but that would mean you need a 1mil account to make trading worthwhile. Ok, at least a 300k account...

I think that fx and futures are good for position trading when you are completely diversified (stocks, futs, cash) or when you have a really large account.

In any other situation, be it small account, or single market focus, the futures/cash markets are PERFECT for day trading. It's that interest that makes intraday opportunities exist aplenty.

Cheers y'all and Happy New Year!
 
I have a medium sized futures account that generates 80 - 100% a YR trading Fx futs without taking major amounts of risk.

Most of my trades last from 3 hours to a week, I am not a scalper.
What do you consider a "small account?"

el surdo
 
holding for 3 weeks must mean you leave a lot of room to your trades....

i am referring to position trading the fx just as you would do with stocks. EOD data.
 
I am aware of plenty of people who trade FX off of daily charts..

Be careful of making sweeping generalizations. the market is too diverse and vast for you to attempt to nail down what can and cannot be traded. The only thing you can really determine is what can and cannot be traded by you.
 
optioncoach: i understand what you are saying, but i was referring to the account size. i may be wrong on my conclusions here, but this is the way i see things...
 
There are NO rules that are right or wrong trading ANY vehicle, if you make money at the end of the year, that is all that matters.

I trade Fx off of 30,90,240,Daily, as well as weekly charts.

What is considered a "small account"?

Happy New Year!

el surdo
 
I trade off EOD charts for FX futs...

No worries there I am only in for (usually) 2-10 days....no problems.....

Now, one thing I wanted to mention....have you considered lowering your leverage? (Note: I am referring to spot fx, and not futs as far as being able to change leverage) Your current broker may not allow it, but I would definitely look into it, that way you can treat your forex positions more like you would stocks, due to having lower leverage...


Give it a shot, it might make a pretty big difference for you. Good luck. Hope it helped.
 
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