Why trade FX versus futures exchange?

A

andrasnm

I am writing a book so I am doing a little research into FX, I think
FX is like sports betting - a pipe dream to millions of americans.
But since you know I am bias
I have a basic Q - why not currency futures?
I think your 20:1 leverage is more of a hindrance and can lead to fiscal ruin...
So you want to trade Thai money or Rubble why the F sake?
So you get a free software ? Bid deal...
I only accept one answer - you are a degenerate gambler...
Also I wager to say no one can show me broker statements for 5 years - the whole biz is a big con...
 
Everybody with money has risk. Workout how much you were worth in euros a year ago compared with now. Did you hedge? Some people did.
 
Quote from just21:

Everybody with money has risk. Workout how much you were worth in euros a year ago compared with now. Did you hedge? Some people did.
More...
I did read a lot of different posts and the summation is that FX brokers have gotten better than, say 4 years ago.
As for hedging you can hedge via globex or CME.
 
Quote from andrasnm:

I am writing a book so I am doing a little research into FX, I think
FX is like sports betting - a pipe dream to millions of americans.
But since you know I am bias
I have a basic Q - why not currency futures?
I think your 20:1 leverage is more of a hindrance and can lead to fiscal ruin...
So you want to trade Thai money or Rubble why the F sake?
So you get a free software ? Bid deal...
I only accept one answer - you are a degenerate gambler...
Also I wager to say no one can show me broker statements for 5 years - the whole biz is a big con...
More...
Andrasnm: "Also I wager to say no one can show me broker statements for 5 years." <-- Could you not say that about any kind of trading? Stats even indicate that 95% of new companies bite it within the first 5 years. 98% of contractors go broke in the first five years.

There was even a company in NY (Woolworth?) that bit it after over 100 years.

What else is new?

HA!

Regards,

Overload
 
i posted this question in another thread and recd zero response, so i'll try again here: several large dealers claim no "requoting"--my question is-- if there is no "requoting" where does their profits come from ? there is no commission and just the spread.

can someone explain this to me ?

thanks,

surfer
 
Yes, some FX brokers used to have commissions but I gather they are all six feet under....
Also, FX can be very volatile pefect vehicle who takes trading like heroin. The EUR/USD had a huge swing (150 points in matter of minutes) - say you happen to be on the wrong side with your 10k margin..
 
I believe the FX brokers profit by matching orders, for example I buy at the bid and you sell at the ask, then they have made the spread. Also, I believe that they are able to for example obtain eur/usd "wholesale" in the Interbank(with a spread of 1-2 pips) and then offer the pair with a "retail" spread, thereby earning 1 or 2 pips on each trade.
 
marketsurfer:

Here are a few thoughts on were the FCM's are making their money and bear with me because I've never worked for a fx dealer or bank so this is pure speculation:

1. I'm going to go with the stat that 85% of traders lose so if the FCM is holding onto their clients trades without hedging then the profit they incur from our loses has got to be huge.

2. The commission is the spread. They charge anywhere from 3-5 PIPs on the majors and if they are ofsetting the position with a bank which is charging them 1-2 PIPs then the difference is a huge number(your typical FCM turns over 15-20 billion $/month so what's the profit on that number?). In addition, I'm sure the bank is giving them some type of volume rebate.

3. Manipulating the price. I use 3 dealers and it is very rare that I will see the same price being offered by all 3 at the same time. This is especially true when a market is trending intraday or fast mkt conditions. Its not uncommon to see a 3-5 PIP diference among dealers. This is the one which really pisses me off!

4. Managed accounts.

5. Their receiving interest from the bank for funds non-segragated.

6. As far as "no requoting" goes, I have not found a dealer who states this on their web site and adheres to this policy 100% but I must say its gotten a lot better.

Its these issues which is why I've moved back to the CME for intraday NY trading. But in defense of spot dealers, they have come a long way in providing a better product from 3 years ago.

The revenue is there for the FCMs. Just look at how many retail fx dealers there are and why so many futures & prop shops are now offering fx to their clients. Just a few thoughts.
 
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