Forex Trading. Does anyone here do it? Opinions? Comments?

Nobody? Really?

Day 3, the Yen is driving me a little crazy because it isn't doing what I expected... but pretty good progress. 60% aint half bad for 3 days dickin.

So far; so good. This can not be this easy. First week I'm up 77%. Can it be this easy?

What are your trading costs per contract? Is it a set price per contract or a percentage?
What is your margin rate?

Are they both factored into your winnings for the week?

If it was really this easy, they wouldn't be giving you the opportunity to make money like this. Trading like this is no better than gambling and the brokerage firm where you do your buying and selling is taking the house percentage. Yes, you might be the lucky one but the odds say probably not.

Zero.
Neither, but the spread between the bid and ask is usually between 2 and 5 one hundredths of a cent.
Up to 200 to 1 (believe it or not) but the site I'm using appears to cap you at 100 to 1 and cashes you out if you get too near 200 (I've been warned once ). The market is remarkably stable compared to stocks, hence the huge margin allowances.

Yep, except for my open positions, of course.

Oh, it's straight gambling, no doubt... but so is every other market.

I'm learning this for professional reasons, as managed accounts are among the products the fella I'm working for offers. I won't actually raise money, or trade on his behalf myself, but I wanted to get familiar with it. What I've found so far is either an anomaly, or this thing just isn't that tough to predict.

My long term theory (for myself) is to spread savings out into several stable currency's, to act as something of an immunity to fluctuations. My prediction is:
If we don't attack Iran, the Euro goes up. If we do attack Iran; the Euro goes up. Seems like a good idea to park some dough in Euros. As a matter of fact; the Euro has out performed the dollar some 40%+ since it's inception. Now; since European banks are every bit as safe as American banks, and some offer much better interest rates (though with only the principal guaranteed), it seems win/win. Imagine if you had some dough parked in Sweden for the last 5 years, for instance, and received the same interest that you would have here... only since your dough was in Euros its value went up an extra 40%. Of course, it could go the other way too... but it seems to me diversification is the most logical way to protect against major moves.

Short Term, just for sh!ts and grins, I decided to try the strategies I've used while day trading the stock market... just to see where it would go. I'm probably behaving about 10 times as aggressive as I would if it were real dough; but the results thus far would make me wish that wasn't so. So far my strategy has been damn near flawless. A couple losers here and there, but I was able to offset most losses by re-buying positions that had taken major dives at the lower price... once in hideous quantity (friggin Yen )

Have you done this?

I guess the question of could it be this easy is a pretty obvious no. Otherwise, by the end of one year I could turn $20 into more than $156,906,106,720,939... which is pretty much enough dough to buy every privately held thing on earth. Really.

No brokerage firm is going to let you buy and sell contracts without charging you. The software you are using costs you nothing for commission since you aren't actually buying and selling. When you do it for real it will cost you and it could cost 10% or more per contract depending on how the brokerage charges for the contracts. It could be a set dollar amount per contract or it could be per contract plus a % of the overall price.
When you buy on margin you are borrowing money from the brokerage firm. The margin rate is the % they charge you to borrow that money. It is usually about double the prime rate. If you do a lot of buying on margin it will cost you 10-18% of the borrowed money for the year or more.

What you are describing sounds like the limit on margin. You are limited in what you can borrow based on the value of your account. Federal law requires that you not borrow more than a certain % of what you actually have. If the value of your holdings drop it could cause a margin call. If you don't wire money within the day on a margin call or sell to cover the margin the brokerage firm will sell your holdings until the call is covered. This is the big killer for most traders that are heavy on margin. Margin calls occur when the market takes a down turn then the margin calls cause more commodities to be dumped driving the price down even more.

They aren't factored in based on your answers. They are left out in the sample software. You have to add the cost in. It will take a huge bite our of your profits. It looks like there is a place to include the commission cost but you have to change it from zero. I find it interesting that I can't find the cost per contract on most of the currency trading sites. You can be sure it isn't free to trade. I finally found a discount site that lists its commissions as $7 per side if you have more than $5000 in your account. $14.50 per side if you have less. A non discount broker is going to charge at least double that. You need a lot of money to make money on small swings in the market.

Thanks for the insight, Parados. Have you done this at all?

I've searched the FAQs and can tell you that there no fees per transaction beyond the 'pips', which is the 2 to 4 (not 5) hundredths of a cent between the bid and the ask. They squeeze their profit in there as well. Keep in mind; a standard lot in FOREX is 100,000 dollars (or whichever currency is valued higher in the pair)... so even that' isn't chickenfeed. So, $20 to $40 is in the spread of a normal trade on a single lot at all times. I neither know nor care what percentage of that the house is taking; it doesn't much effect my strategy. My big winners come when the value of a currency makes a big run (like a whole cent :wink:). It doesn't sound like much, but a cent is actually HUGE when you consider the HUGE margins allow each cent to control a dollar.
Watch:
$10,000 can purchase $1,000,000 (practically in the blink of an eye with the platform I use because they own the Trading Banks... so they don't actually have to execute the transaction to profit). A one cent move would literally double your money... but a move that big would generally take hours, if not days. My single best trade to date was based on about a quarter of cent move. Second and third were half that size and so on... and that's out of dozens of very aggressive trades. My goal is generally 2 tenths of a cent... but I usually settle for less than a tenth because you can't win while you're still exposed. Long term theory would be to simply buy a currency that should increase and sit on it, but that's not my current experiment.

I searched through the 33 pages of the application, but interest on margin was found nowhere in it, nor in the FAQs anywhere I could find. I should be able to find out what it is on Monday when the Market opens (or late Sunday, actually).

Considering the tiny movements of the market, I have to assume that for day trading purposes the movements are mostly artificial in nature (other traders a little, but mostly big banks causing the changes, rather than responding to them), though not always. I did learn after making some dough on the Yen, and then swapping my position to catch the other side of the ripple that the news reporting of yesterdays moves made it jump again... though briefly, even more dramatically than the legitimate adjustment (or so I assume) (I'da been sh!tting bricks if my assumption was wrong, because that's when I got my margin warning :wink:). It would appear that, much like the Stock Market, no shortage of idiots react to yesterday's news so there is some somewhat predictable moves to exploit in the same fashion a day trader does on Wallstreet. Mostly though, it's straight gambling... trying to predict the inevitable peaks and valleys and hoping you do so consistently enough to cover your losses on your errors. I would equate the value of my strategies thus far to be the equivalent of counting my outs in Texas Holdem, pre-flop. Strategy will only work as well as lady luck allows.

Aggressive day trading isn't that new to me, though Forex is. My best real money trade on Ameritrade was a stock that tripled almost overnight... and I had hit it hard, and more than doubled my equity. That single trade was 10 times more profitable (and risky) than my best sample trade here to date.

Since it's the end of the month, I just received my monthly statement, which totals $48,500,000 in trades. Figure the spread on that's between $9,700 and $19,400 in spreads. I don't know what percentage the house gets of the spread, but since this one owns their banks I'd bet it's significant… which means the house is doing just fine without transactions fees or Margin Interest. By comparison, Ameritrade would have made $320 on the 32 transactions.

Also, I found the rules, and you are wrong on both counts. Not only is there no transaction fees, but there's no interest on the Margin either. The house makes their dough on the spread… and as you can see above, that's not peanuts.

The ask - what someone is offering to sell something for
The bid - what someone is offering to buy it for.

If they are making money on the spread then you are paying more than the market ask and selling for less than the market bid. Since they don't tell you what that % is you have no way of knowing how much the actual market itself has to move to make money. They don't make money from nothing. That is a horrible way to pay for the trades.



http://en.wikipedia.org/wiki/Scalping_(trading)

The larger spread means the market has move quite a bit in your direction for you to make money and not at all for you to lose money.

Huh? In your example; the actual spread is .0001 for the bank, and .0012 for the client. That would be a horrible spread. As I said; they only very between .0002 and .0004 at the site I'm using. That ain't bad. Assuming .0001 is typical of the true spread; figure a trade of $10,000 costs an extra $1 to $3, and that includes the margin fees so I could execute such a trade with only $100 available. That strikes you as a bad deal? On Ameritrade, that would cost $10 plus I'd have to have $5K on a $10K position, plus I'd have to pay interest on the other $5K for as long as I held the position (If I margined it, which I never do with stocks). Seems like a tremendous bargain to me.

Actually, I appear to be wrong about the spreads. If you look at the window in the upper left hand corners of the screen shots I posted; you'll see the spreads and it looks like they're consistent, which strikes me as true because it seems like it's always .0002 on the EURUSD and .0003 on the USDJPN. Anyway, they are all consistent up there and I'll varify that they don't change later to today or tomorrow. I see that the AUDUSD AND USDCAD pairs are at .0005 and the GPBCHF is actually at .0007... but per my example above... that still beats the snot out of Ameritrade. I'll figure out this week if those levels are fixed or if they're hinged to volume, volatility, variance or whatever.

Forex scams

So far I'm finding mixed reviews, but there seems to be too much of a presence for it to be a scam. I'll of course do a far more thorough search before sending money.

There is nothing illegitimate about the platform I'm using. Complaints are the products of sore losers. It is entirely possible that unscrupulous scumbag salesman exaggerated the potential or brushed over the enormous risks associated with enormous potential... but frankly... that could only affect an idiot that has no business trading in the first place. No effect on me.

Last night I logged on to learn a couple positions had lost about 5K over the weekend, reflected instantly when the system went back on line. Rather than study and spread out a new strategy; I opted to shoot from the hip and just 'trust my instincts' based solely on the charts, without even plugging in automatic stops. The results are
Let this be an installment lesson on what not to do.



Unfortunately; I've already blown my load, or I'd be shorting all the GBPCHF I could get my hands on right now. As it is; I'm hog-tied and I'm opting to ride this out rather than accept defeat for now. Let's see what happens...

After forfeiting all of the gains I had made; I stubbornly refused to sell at the loss point... and there appears to be some light at the end of the tunnel. Pity I opted not to rebuy when I did free up some dough (as I suggested I would), or recovery would by now be complete. But this is manageable.
I may just accept the balance of my lumps, and go back after the Yen!

Bill, I have recently become interested in FOREX trading as well. However, I am coming at it from a completely different perspective...basically, I see it as a mathematical and statistical problem, because I have no interest in gambling, guesswork, or emotional decisions.

I won't be sharing the results of my analysis publicly, which is a shame because I think it would make a very nice publication, but it wouldn't be useful if word got out, so I'm just too greedy to let that happen! Suffice it to say that I have come up with some exceptionally good predictive models, so good that I have taken it upon myself to design and build my own client program for automated trading (personal use). I can show the splash screen I designed...yes that is Tom Cruise from MI:2

Let me know how it works out. There are dozens of predictive programs out there, and as near as I've been able to determine; none of them work... much to my dismay, because I could easily make a small fortune selling one of them, if I believed it worked. There are more than a few tools available to test your theories against past performance, if you haven't already found one. Good Luck!

There is only money to be made by selling such a program if it doesn't work. It means that you think you'll get more revenue by shelling out a few copies then you would by using the program yourself. If the method actually worked, then distributing it to the masses would cause them all to start using the method, which would ruin the method because everyone would be trying to buy and sell at the same time as you! I believe there are others who have good proprietary methods which they are keeping secret.

If you think about that a bit longer, you'll see the error in your thought process. Take the Strong Fund for instance. Mr. Strong did very well in the market, did much better with his fund in general, but it was he and the other insiders that knew what the pool was going to do, who profited the most. They were, of course, eventually found guilty of insider trading, but not every incident of profiting off market manipulation is illegal. By and large; I'd love it if thousands of people followed my moves; think it through. :wink:


I would agree there are basic strategies that prove winners over the long haul, but I'm not at all convinced a program can be written to replace human input. There is plenty of Forex software that allows you to test your theories against past performance these days, and one can only assume some computer genius would have found and exploited what you seem to be suggesting. I think you drastically underestimate the value of such a program on the open market, compared to working with your own capital. The problem is; no numeric formula accounts for weather, politics, treaties, business failures or any of a dozen other factors that alter the typical behavior of the markets. I do believe an astute person, such as yourself could design strategy of how to trade based on up to the minute news, simply anticipating and beating the rush; but don't spend a lot of money trying to let simple or not so simple math try to make the decisions for you... at least not until you've built a model that will work against past results. Even then; keep in mind that working backwards from the available data has yet to produce a system that doesn't fail within a relatively short period of time (as far as I know).

Risk very little money; because if you succeed; it should matter not at all what your initial investment was. :wink: