Anybody trade the Forex?

[maxell]

Interersted in knowing if there's any kind of a guide out there worth buying. also who do you place your trades with.

[wallstreet]

Maxell,

I wish. Way too speculative and capital intensive for me.

If you were wanting to get into foreign and US futures I would begin with the e-mini or the S&P futures.

I loved that movie Rogue Trader, what a good topic and acting.

I doubt you will find many commodities or futures traders around here.

GL

[maxell]

Thanks for the response Wallstreet. Just was intrigued by that no commission on trades deal. I've been watching the Forex and yes it does go fast but if you're a day trader, then this is the market to be active in right now. There are 14 catagories of which 6 are the main ones that are traded. I watched it for three hours last night and was amazed at how much money can be made in such a sort period of time. Of course like the stock market, you can put stops on your trades. It seems to me keeeping track of 6 catagories beats trying to get a handle on stocks of which there are about 40,000 of them out there. Hope someone in this forum has some smarts on the subject.

[wallstreet]

Maxell,

I know a bit about them..the futures trade differently than stocks or options. Say the S&P 500 futures..you buy a position at specific price it is at..and if it goes in your favor, you profit, if it goes against you, you lose. The people I have associated with usually had programs that would signal buy and sell, long and short trigger points and they would trade 1-5 contracts at a time. The real way you can get jobbed is the index is so wild, like on Thu, if you were long the S&P futures into 2 EST you got CRUSHED in the matter of 30 minutes..the futures went down over 20 points in no time at all..and at 250 a contract, if you were long you got murdered. On the other hand if you played short into the fed remarks, you made out like a bandit. To me the drop was so easy to spot..there was little the fed could have done to make the market go up..all the good stuff is priced in.

As for other markets..no way I would EVER trade the N225 (Japan) or any other markets like Agrentina, Brazil etc..no way no how. And I am not big on gold or oil either, although I said about 10% ago that oil was a short..I still think with time and timing, oil will go under 30 again.

I love the futures, but man you better have some DEEP pockets and some strong discipline..

If you want a program, do a google search for like "Futures Trading Software" or the like..

I love the topic too..

[maxell]

wallstreet

Thank you for replying again. I don't know much about this Forex or the futures/commodites market. From the little that I do know about commodities, this Forex currency thing looks like a different animal to me. This Forex market is set whereby a tick is a called a pip. Each pip is worth $10 so it's different from commodities in which you have $250 chunks. Please excuse my ignorance on the matter but I can't find much info on the internet where I can get the so called "free" info to make an intelligent decison on whether to get in or not. I started a demo account in which I was fooling around with last night and acutually showed a $1800+ profit on luck (I guess). Dumb luck.

[wallstreet]

Maxell,

I would keep paper trading, if you can make a profit when there is less volitility than we currently have and do so for a few months, I would give it a shot. You are doing it correctly, try and develop a system that works for you and do it without the real cash.

Interesting about currencies, I have zippo understanding in currencies but I imagine since the lack of real trading swings that you have to break it down to those denominations. A Euro/Dollar day might only be a matter of a few cents wheras Oil/Gold/Market Indexes can flux much more.

The people I knew traded the Spoos and used computer based program trading vehicles to signal buy and sell triggers. Of course you probably already know that in the general market there are times that these programs usually go at during the day and that the futures really dictate the action in the general market.

I would search for "currency futures trading" and see what you get hit on. I imagine you will find message boards and programs just like you would with the spoos or other futures.

Keep me posted, it is definately interesting to me!

[maxell]

Just thought I drop in with some knowledge of the Forex market that I've picked up after 4 days of trading. The market is volatile but it's a 24 hour market that runs from 12 PM EST Sunday to 4:30 PM Friday. This is someting that totally blows away the other markets in tems of hours (don't really know the CBOE hours but it's not important). Each currency is paired with another currency to form 14 different trading pairs. Of these 14 trading pairs, there are 6 that are termed the majors. So basically, if you're a newbie like me you don't have to immerse yourself in a whole bunch of graphs, reports, etc, as compared to the stock market.

This market trades 1.5 trillion dollars a day (no BS)! So you can see that there is a lot of bounce involved. What is known as a block in the stock market is called a LOT in the forex. A tick in the stock market is known as a PIP in this market. Each currency is carried out to four decimal places. For example, if the British Pound (GBP) to the US Dollar might be trading at 1.8625 to $1. A pip would be measured by the movment of the last decimal place. If the Pound is 1.8635, you have a + or - 10 pips movement in your position depending if you're long or short on the currency.

There are two types of accounts you can open:

1) Mini-typical amount to get started is $250-$300, but if you can affford it, $1000-$2000 would be better because it'll give you room to make trades that could save your bacon or enhance your profits. The margin on this account is 200-1. A LOT here is typically 10,000 (in currency denomination). Each PIP is worth $1.
This means you can control $10,000 worth of US currency with only $50 of your account balance.

2) Standard - $2500 will get you started. This has a margin leverage of 100-1. A Lot here is 100,000 in currency denomination. A PIP in this account is worth $10. In this accunt, you control $100,000 of US currency with $100!

I believe the accounts are all marginable. The big difference here is that in this market, you can only lose what's in your account even if you're margined to the maximum. Unlike the stock market, you get no margin calls from your broker. The account is automatically liquidated until your account comes into plus territory.

I've been doing this for 4 days now and it has been a rush! I never thought something like this would take me out of the sports world like it has. In fact I'd say baseball season in in jeopardy right now if I can get this thing going and start to make real money. I've been in situations where the market had moved against me but in this my demo account, I waited it out and the three or four times that is has happened, the thing turned around and came into big plus territory. The highs and lows in any 24 -30 period could be a double move, Example, say you're long and you leave to go do someting else without putting a stop on te downside ( something I've never done). The market moves against you say -100 PIPs. My limited experience so far is has shown that it will bounce back to a point where you either break even or show a huge profit. At $1.5 trillion average trade in a 24 hour period, there are many chances to make money in this market. I love it!

[wallstreet]

Maxell,

Yikes......

When you start talking about 100 and 200 to 1 in margin, holy crap my heart starts racing..that is way out there and I would suggest you try not to margin at all. You mentioned that the market went against you a few times but that it came back..I can tell you that once you get the real money in there it will only take once of it going against you and that will be it.

Back in the mid to late 2001 area I was doing forced margin calls on customers and it sure made me sick to my stomach..so if you take anything from what I say, do not margin at all. If you are margining then it is no longer investing, it is pure speculation and gambling. They want you to margin so there is more liquidity and action in the market, but you and I are flys on the window of a massive 18 wheeler going 100 miles an hour. Little margin guys are chewed up and spit out every day by the big boys..and they can see your little orders..the FOREX market has the same visibility that others do.

I suggest you develop a plan and a system for buy and sell triggers, and stay completely away from the "it will come back" method of trading, it will cause you to lose more than you can imagine.

Currency markets, futures markets etc are for PROS who have deep pockets and will exit a position even if they are getting killed..little guys like us stick it out and go down in flames.

Good luck, keep those updates comming, but let me strongly suggest you get a hard game plan together before investing even 500 bucks doing this.

[maxell]

wallstreet

Regarding margin, in this market, there are no margin calls made by any broker. Your position is automatically liquidated to put you back into positive territory in your account. On a 200-1 ratio, your rate of loss is .5% per PIP. As long as you have other positions or you keep monies in reserve to compensate for a big dip you should be ok. You can ask for a lower ratio or kill the margin altogether. If you have no margin, one LOT would cost you $10,000 (I believe).

I'm not saying to establish a position and watch it go in the oppsite direction until it stops and then turns around. Of course preservation of your assets will prevail when your investmnt heads south. What I meant by "it always came back" statement is that you can watch for the near bottom and then get back on the train leaving Losersville. The ride is exhilarating and you can play all the peaks and valleys along the way.

I know you're very knowldgeable about the securities market but from what I've seen so far, this is definitey a different animal. It's so different that the major banking institutions around the world were opposed to the opening of the Forex to individuals like myself. Not saying I'm an expert or even close to it but I really like this more than anything else that I've come across.

[wallstreet]

Maxell,

I have to comment on your message. First, thanks for the nice compliment on the financial market, I feel like I know a little bit, but more in some areas of course. The mechanics of the Forex are just the same as the mechanics of the CBOE and the market in general. The differences are very small, one being the hours of operation. That makes sense though since the world trades 24/7. Japan is open, China is open, Australia is open and we are not..so the hours are a function of the product. Just like if the QQQ and the DIA were to be open in Germany and Europe (which is the talk) then the SPX, QQQ, DIA and I imagine others like the BBH, SOX etc would also be part of that and the hours of operation would be wider.

Next, the scale of the market is due to the price of the instrument. Since the dollar, the Yen, the Pound etc are lower priced items, then to make a liquid market you have to expand or contract the playing field. Expanding includes margin, contraction includes the decimal points in which the market trades and the size of each unit. I dont care if it is a pip or a kip or a bop or whatever, it is just another name for a tick in the futures market and in the general market.

The exact reverse of your point about the scale of the market (4 decimal points) is the example of large bid/ask spread for BRKB or BRKA or gold or the like..higher priced items have wider spreads and differnent type of trading..but trading is trading. I dont care if it is oil, soybeans, platinum, SPX, the Dollar, S&P futures contracts, everything is the same. There is a market, there are measures of trading, there are units of measurement. So though I have not traded the Foreign Currencies personally, the principals behind trading them is no different. It would be like saying that traders before decimilization should quit trading because the format and spreads are so different. That makes no sense.

Money managment and discipline is what will make you money or lose you money in whatever you trade period. I personally see little merit to the levels of margin you have access to, and the rules arent made so that the little 50 dollar guy can come in the market, they are made because foreign currencies are very much like futures contracts for investment firms, they act as a hedge of other instruments that a bank holds or a company holds. For simplicity to the larger player is why the margin rules are as they are.. up until about 10 yrs ago or so the Japanese could margin in their overall market like crazy and it is what caused the greatest depression they have seen in 60 yrs.

I have to tell you because anyone that inquires about investing, I feel an obligation to give my opinion to. If you margin you will lose. If you put in 500 bucks and margin even 20 to 1, you will lose it all. If you put in 5k-10k-20k-50k and margin, you will lose. You cannot do it yourself using margin. If you want to get involved in the Forex, hire someone who is a professional and has experience doing this and let them manage your money with a large pool of other people or types of investing.

Much like options and the little guy, the little guy looses buying options, trading futures, trading the e-mini and the Forex. Trading in a paper account is wise but it is nothing compared to when the money is on the line.

I strongly, strongly...did I say strongly? Well, strongly suggest hiring a professional to manage your money or not participate at all. I hate to see people lose money, but you will lose. You are the guppy along side the whales in the ocean..

I hope that helps, you dont seem to like hearing what I have to say, and often times one has to take it in the chops on their own to learn the lesson others try and share. I hope if you put money into an account that it is not borrowed money and it is money you can afford to put on black or red on the roulette table because without years and years of experience, you are doing little but that exact thing.

BOL!!!

[maxell]

First of all:

...you dont seem to like hearing what I have to say...

Not true wallstreet. The main reason for this thread was to garner any information that the members might share regarding the Forex market. I'll admit I'm a rookie in this area. But in the past few days, I've come to realise that this particular market has something to offer and I'd like to try it. I'm probably going to put 2K in and see what happens.

As far as I will lose. It may be so but you have to take into account that this stock forum is located on a gambling website and everyone here has won, lost, and WILL LOSE if they keep wagering. The MAN beats 99% of the players over time. I like the concept of the Forex and I can see a potential there. I've lost more than 2K on one game many times over the last 6-7 years so the potential lost of 2K in the Forex does'nt phase me at all. I'm just tired of depending on a guy to make a free throw, complete a pass, not turn over the ball, not kneel it down inside the 2 yard line, not throw to the wrong base, not have the referee call back a TD because of holding, etc., etc., etc.

The scale of the market DOES NOT translate into a large spread in the bid/ask. The spread is always between 3-5 pips.There are NO BROKER COMMISSIONS whatsoever. I just inquired on the margin rates since you brought up a concern on the 200-1 ratio. There is no margin interest charged unless you carry over open positions overnight (close of business in New York at 5 PM EST). Here's the interesting part. IF YOUR OPEN POSITION IS IN POSITIVE TERRITORY, THEY PAY YOU INTEREST! No wonder the banking institutions protected this market lie it was their domain.

Now being guppy next to the whales does'nt scare me at all. What are we in everyday life anyway? Life and the ways and means that we live it is controlled by the whales. Unfortunately, red or black on a roulette table is part of everyday life, it's a matter of whether you choose to go for it or not.

Your have a good grasp of the concepts of investing wallstreet. And what you have to say about money management and such are sound, and have proven to be true over time. The whole buy low sell high mentality has gotten more people into hot water than you can shake a stick at. However, in this particular market, the swings in the currency pairs provide a go opportunity for financial gain. I concentrate on the British Pound/US Dollar currency pair, and I can tell you in a 24 hour period yesterday, there were 3 swings of approximately 100 pips. And it's beginning to show signs of another swing as I'm typing this right now.

I'm not trying to convince you wallstreet. You're a stock and securities guy and this concept is a little differentfrom the traditional markt. Ever wonderwhy the banks fough so long and hard to keep this market from the every day Joe? At $1.5 trillion traded daily with no comissions, they were willing to let us have the stock and commoditiies market with their built in spread trown in for good measure. All I'm saying is that I, personally, have found something that might just wean me off the games. I might blow off baseball season (my best sport by far) because of this.

[wallstreet]

A few things then I will stop with the guardian type of reply I keep giving you.

First, when I was referring to large spreads I was speaking in the exact inverse of the Forex..the forex has the tighest spreads that I have seen..maybe in commodities there are similar spreads, but my point was that of course the spreads are going to be compact in the Forex, the denomination dictates that, now if the Dollar/Euro relationship was like 200 instead of 1.20, then the decimal points wouldnt need to be carried out 4 places. So the matter of spread in the Forex is nothing different than in similar instruments. I know there is not a spread in the Forex, it is similar to the S&P futures, you buy a spot at whatever the price is at say 10:55 AM and from there you determine profit or loss. I fully understand that point, just to put us on the same page.

Another reason for the margin rules, how could you make a trade off a 4 places decimal trade? So if the Dollar/Pound goes from 1.4556 to 1.4490, there is no way in hell you could make a trade worthwhile, UNLESS you margin it 200 to 1, 100 to 1 whatever. This is part of making a market..if this type of trading wasnt available there would be no participants..so it is part of the medium you are trading on.

Now about margin, of course the rules only apply if you carry an open position overnight..that is where the ****** is dropped. Say you have 1k, margined 100X, so now you are leveraged 100,000 and you are short the dollar, long the pound or whatever the combination you make (I am sure you can be short the GB without having to be long the LB, but for sake of discussion) say that the president comes out and says to increase tax revenues and increase the value of our exports, we are going to increase a tarrif on all imported goods.. now your trade goes against you like a tidal wave..the issue isnt important, but sure as shit you will have it happen to you..so then you carry over a 100X leveraged position and you are in the red somthing fierce.. Now margin is going to eat you alive unless you cut it off and stop the trade..which you will NOT do..doing so would mean a 1 day trade takes half your capital..when you leverage at these kind of numbers and you do not have the pockets to carry a trade over a months time, then that is when you will see the exit..and it wont be due to the GB going up from 1.25 to 1.30, that is only a nickle..who cares?? But leveaged to 100X, you are screwed..

I had a client back in 2001 when I was a full service broker who took almost 50k and bought the Euro back when the Euro was at 85 cents..I am sure he margined a bunch of it, and for almost a year he was getting nothing with it..but now he has a 50% return on his investment and if margined, that could be much more.

The point is with such a small account, margin hurts you..it seems exciting and promising, but with no reserves, you lay it out on every trade..margin will be what ends your ride. Wheras for the larger customer who can leg into a position and ride out a short term loss, margin facilitates their efforts.. It is similar to a kid opening up a margin acct at Ameritrade with 2000 bucks..now he can margin and get 4k..but ever dollar down he is down 2..and the same goes for you.

I hope you find a person to join in with for a trading experience..because with 2-5k or whatever margin is the death of your account. And think..margin rates are sweet right now..I remember in 2001, rates were almost 9% for margin..9% margin on 100k adds up pretty quickly..oh and you dont get paid that same rate as if you borrow..or if they do then they are idiots..

I like this forum, but just because it is in a sports bettors website, it doesnt mean I have to play pink sheet stocks and use only speculation..

Good luck and when you get that account going, keep us updated!!