Currency Trading (FOREX)

[cramnhoj]

Hmm.... I think they're legit as far as they have corporate papers and all, but you might want to read up on how the business operates. You could search for the past threads about local forex brokers and their money manager business model then judge for yourself. As even if they don't really have much of qualification requirements only few really become successful in it.

[budiluvsbak]

Beware of Foreign Currency Trading Frauds

[manong_bert]

PFEC is a legit company pero diba wala ka namang sweldo mga brokers nila? Dependent sa comissions per transaction per lot. Profitable maging broker dun pero in the business of FOREX trading, madaling maubos lahat ng pera mo lalo na if you're using 1:100 margins tulad ng sa PFEC.

Pero sa PFEC, ikaw maghahanap ng clients mo. Most likely, yung i-invite mo mag-invest mga kakilala mo. Paano kung maubos lahat ng pera nila, lalo na kung ikaw ang nag-ttrade para sa kanila?

[PingGarcia]

forex hedging, anyone in the know about this technique?

[cramnhoj]

Why, what'd you want to know?

[lucky9]

anyone here using VT trader software?

[cramnhoj]

Tried it last year, programming's similar to metastock/amibroker but VT has no backtesting features.

[lucky9]

Tried it last year, programming's similar to metastock/amibroker but VT has no backtesting features.

cramnhoj, are you a full time FX live player?. .i'm comportable using VT,
tried oanda but don't like it..i'm still on a paper trade/demo
for about a month and hopefully go live if i can make 200% profit
in my demo account.

Meron ba nanalo sa FX?

[cramnhoj]

I'm on live account but not as a full time job.

Let's put it this way, Buffett and Soros have records of around 30% profit per year in the span of their careers. This is a lot less than what a lot of people expect of instruments like forex or of the gains of daytraders a decade ago. But unlike those others who had more profit, Soros and Buffett haven't blown up (they have made a couple of bad calls of course). In short, the methods that give those very large gains are also very likely to have large losses. In my opinion, it's more or less just overleveraging a position to try to gain more out of a little volatility in the markets.

Compared to a normal distribution, markets have lots of small upward movements and then fat tails on the negative side. These are the multitudes of market participants buying every now and then. And then liquidating at all costs at the onset of a crash. This is where the saying "work on your downside, the profits will take care of themselves" comes from.

Also, in my opinion, a person starting out can't just replicate their performance on a demo account on a live account. After learning on a demo, they'll be learning on a live account.

[lucky9]

cramnhoj, can you disclose your online broker?

i been reading a lot of reviews about fx broker but
it sad to knw that a lot of them has their own flaws
such as bad execution of trade,limit/stops didn't work,
slow/disconnects during high volume trading and pips
spreads on news just keep getting wider particularly
oanda.

and do you think using higher leverage(400:1) would
provide flexibility and advantage for the players?

my friend is using cmsfx.com but they had poor
execution on stop/closing the open position.

[cramnhoj]

i been reading a lot of reviews about fx broker but
it sad to knw that a lot of them has their own flaws
such as bad execution of trade,limit/stops didn't work,
slow/disconnects during high volume trading and pips
spreads on news just keep getting wider particularly
oanda.

There are brokers that don't have this, but they exact a different type of "price " for it.

For you to open a position, someone else has to take it. With the practically uncountable number of participants in a market this usually isn't a problem, and you'll see this in whether an instrument is liquid or not. There are times though when market participants exhibit what behavioral finance calls "herding", wherein nearly everyone acts like lemmings and does the same thing as everyone else is doing. In forex, you see this when the spread widens, as no one is willing to take the other side of the trade at a certain price (they're only willing to do it at a farther price hence the widening of the spread).

So how come there are brokers that are able to offer spreads that don't widen/contract? Since someone has to take the other side for a trade to execute, it's the broker who takes the other side for you. Now since you opened the position, you believe it'll go the way you opened it, why would someone take the other side...meaning they'll lose so you can gain (the zero sum game wherein no wealth is created, merely transferred between losers and profiters). The answer is, like any other market participant, they're not doing it for someone else but for themselves to profit. How you might ask, well as much as the forex market is worldwide, each broker is usually only connected with one or a few market makers, meaning if they want to they can swamp their "local market" with so many orders in that the price moves where they want to. And where will they make the market move...to you stop, so you'll end up closing at a loss. Mind you they don't do this with each specific client of theirs but on the broad stops placed by the majority of clients, and since they are the brokers they can see your stops. I believe someone even hacked into oanda's network and have a program where you can see traders' stops. In short, you'll see your nice execution...only to see your position hit your stop then go the way you thought it would afterwards.

Another thing of slippage, it affects different trading strategies differently. Scalpers for example are trying to profit in say 10pips or so, while long term traders only look at opportunities in the range of hundreds of pips. Since it practically takes both types of traders the same time to open a position, they're open to the same amount of slippage. A slippage of 10pips is possible, to the scalper being off by 10pips means 100% loss in profits, however to the long term trader looking at say a 500pip opportunity, losing 10 pips is merely...a 2% loss. Add to that, a scalper looks into say a dozen positions in a day (each subject to that slippage costing 100% profit), while a long term trader looks into a position say once a week (and it'll only be a small percent of slippage he's looking into). The way I see it, given a problem you can either whine about it or work on it so it won't affect you. And that if you work on someone else's rules you're already screwed, as everyone makes rules to profit themselves. A lot of brokers are appealing to the scalping/dayrtading crowd, but the problem is with the way it's structured, those strategies end up like a casino..something rigged to profit the house.

As the saying goes "If there's a will, there's a way", one can add to that "If there's no will, there's an excuse". I see a lot of people whining on the net about spreads and slippage.

and do you think using higher leverage(400:1) would
provide flexibility and advantage for the players?

I for one consider the more leverage the better, but this would be open to a lot of misconstruing, so I'll explain. Since my position sizing isn't determined by how much my account can open, but on how much risk I can take on a position, adding more leverage simply means I'll give out a lower amount for margin and since I also carry trade the rollover isn't an issue either. Other people though might see the extra leverage as a chance to open bigger positions...wherein they end up taking more risk than they can take, leading to their downfall. And so these people end up avoding leverage like the plague, the same way people who can't control their spending avoid credit cards, and businessmen who can't control their finances avoid taking loans.

[tekton12]

Hi guys,

Nice thread. Just a quick question (especially to the active traders): do you have any audited track records to show how much money you've actually made over a certain period of time...say 5 years? The reason I ask is that it is very possible that the huge gains you say you've made were merely offset by huge losses....and once you average them out, the annualized returns may not look as spectacular some would like to suggest. Perhaps 5 to 7% annualized. This is just slightly better than putting your money in a stable money market account or bond fund. Yet, you achieved this with a lot of volatility, not to mention incurring lots of trading fees and taxes which reduce total returns. I think it is important when investing (whether in stocks, commodities, precious metals, currencies) to always look at the bottom line. What was the real after-tax, after-fees, risk-adjusted return? Was it all worth the frenetic trading? After all, if you reached the same final amount of money as the guy who simply parked his money in some money market account or safe T-bills, then what's the point of all the churning? I'm not saying that you failed this test; what I'm saying is, show us your audited returns and then we can talk. This is what I always require of any investment advisor or broker who approaches me supposedly to help me make money in the market: what is your track record? What is your net worth? If your track record and net worth are much less than mine, then why should I listen to your advice?

[cramnhoj]

Well, the fortune sellers that were once here don't seem to be around anymore so I don't think there'll be anybody answering your question.

[lucky9]

piece of advice about forex.don't treat this as your full
time job and only play with your extra money not your
savings or family money.i think forex is extremely risky
investment than stock market.

as for me,i'm planning to put 10k-15K USD initial
capital.my friend started with 10k capital and he
is earning a minimum of 400US$ a day.

[tekton12]

Another way to take advantage of currency movements if you are based in the US is to buy foreign stocks or stock funds that don't do any currency hedging of their portfolios. If the US dollar depreciates relative to, say, the euro, your European stocks will gain, even though in local currency (or euro terms), the stocks did not really move. One doesn't have to buy or sell the actual currencies to benefit from a weakening (or appreciating) dollar, as the case may be).

[javyfx]

Like any other business and invesment ventures, there will always be risks involved. Like in any other day-to-day activities, big or small risks will always exist. Thats life.

But why do people always relate to Forex Trading a gamble?

Then let us analyze this issue shall we? There are only 2 directions in the Forex Market. Up or Down, Long or Short, Buy or Sell. By any means, you only get to have 1 position at a certain point in time. With this in mind, its either you go WITH or AGAINST the market. Go WITH the market and you make money, go AGAINST the market and you loose money. That being said, it gives us a pattern of a gamble.

Gambling (or betting) is any behavior involving risking money or valuables (making a wager or placing a stake) on the outcome of a game, contest, or other event in which the outcome of that activity depends partially or totally upon chance or upon one's ability to do something.
source : en.wikipedia.org/wiki/Gamble

Based on the definition above, should we say that everything in business is partially or totally a gamble?

I've been in Traditional Business and Forex Trading long enough to understand the differences of both in terms of risks and I say there is NONE. For the purpose of this discussion, let me lay down the facts so that I may shed some light on why people see Forex as a gamble.

Lets just say that you are the most incompetent trader in the whole universe, so i would rather suggest that you rely your chances on a toss-coin method. Your chances then would be 50-50. Go Long if its a head and go Short if its a tail. Now that is a gamble! But what if there is RISK MANAGEMENT? All businesses have one, why not in Forex Trading? If you limit your losses on a traditional business, why not in Forex Trading? Lets just say that RISK MANAGEMENT would comprise 10% of your business operation, add this up on your chances and this already favors the odds on your part. Now you're on a 60-40 chance of making it right. Now nobody goes into business without analysing the market place. Just like in traditional business also one makes fundamental and technical analysis of the business arena. Your fundamental analysis would cover the nations economy, competition, location, raw materials, products, by-products, suppliers and customers. Your technical analysis would cover your financial statements, receivables, payables, cashflow and balance sheets. On the other hand, in Forex, fundamental analysis would cover the study of news, current events, acts of wars, terrorism and the economic indicators (GDP, Interest Rates, Unemployment Rate, Imports and Exports, Housing reports, Manufacturing reports, etc) of a certain nation. Forex technical analysis would cover the price history of a certain currency applied with technical indicators and marking of significant tops and bottoms to get the picture of the existence of a trend. Now lets just say that fundamental analysis gives you a 10% chance and technical analysis another 10% chance in favor on your part. This would give you 80-20 chance of making it right. Surely this doesnt mean that you'll always profit from your trades, but in general, you made money on your invesment on the long run. In traditional business, these are the seasonal ups and downs of your returns and revenues (try selling jackets this summer against selling it during the rainy season).

As you can see, both traditional business and Forex Trading have nothing to differ when it comes to risks. The gambling part only comes in when:

1. You have no discipline in business/trading
2. You dont know how to analyze fundamentally
3. You dont know how to analyze technically

The market place (Traditional Business and/or Forex Trading) is in constant motion. Trends and fads appear, stay, and change in a certain period of time in which case no single entity can control nor influence. Successfull businessmen know this and they either ride this trends or forecast on it. Go opposite of a trend and surely you'll loose money both in a traditional business or Forex trading. Imagine yourself doing business by selling pagers at this time of age. Do you think you'll make it big? I think not! Just like also in Forex Trading, go against the market trend and your money goes bye bye.

I hope this article sheds some light on your concerns.

Happy trading guys!!!

Related Articles :

• Fundamental Analysis
• Technical Analysis

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javyfx.blogspot.com
javyforex@gmail.com

[Naruto Kun]

Why people refer to it as a gamble? Because it is. IN the casinos, your money can double or disappear in seconds. The same goes with Forex. NO matter how good you are with fundamental or technical analysis, you can win or lose. It is the reason why mostly those who invest in Forex invest only with their excess funds.

[tidus1203]

Almost all of us here talk about stocks, I am surprise not a lot of people invest in currencies. Right now I am LONG in Euro and SHORT US Dollar. I am a believer of the long term decline of the greenback thus I am heavy in Euro believing it will be the beneficiary of a weak dollar.

[joshua69]

Almost all of us here talk about stocks, I am surprise not a lot of people invest in currencies. Right now I am LONG in Euro and SHORT US Dollar. I am a believer of the long term decline of the greenback thus I am heavy in Euro believing it will be the beneficiary of a weak dollar.

How??
buy Euro, then save in a bank, or euro TD, or euro mutual funds...

[coldrockster]

Almost all of us here talk about stocks, I am surprise not a lot of people invest in currencies. Right now I am LONG in Euro and SHORT US Dollar. I am a believer of the long term decline of the greenback thus I am heavy in Euro believing it will be the beneficiary of a weak dollar.

With what company are you trading currencies? I believe all are based abroad right? I have tried trading currencies using their different platforms, however, since the currency market is very very volatile, you cannot go negative in your capital right? If you go negative, they will just automatically buy/sell your position. Unlike stocks, which allow you to have a negative balance.