Forex vs. NYSE

I recently was in seminar of Alex Gerchik ( Wall street warriors 1 season), and he just told about chances in forex vs stocks. So.
1. In forex you can't see volume
2. You can't see open book
3. You don't know your rival
4. There are ten times less permanent winners in forex than in stocks.
5. Moves in stocks are bigger and clearer.
6. In forex there is no clear trend, because governments are fighting each other.
7. You can't pick accuratly entry for trades.
8. In forex you have no what to scale.
9. This is brokers bussiness, not yours.

Hi Vidas, I won't argue those points but, in Forex you have 120 hours of trading per week!!! Compared to 32.5 hours in Nasdaq and NYSE (extended hours volume is a joke so don't count those). Maybe you don't have banks, but you play against other big sharks like market makers, investment banks, etc that manipulate prices more freely. Even volume is fake because of black pools with dark liquidity. Bottom line: there is no easy market.

Some traders are great at the market they focus on, but can't adapt to new markets very well.

Trading consistently and profitably throughout a career is hard enough in one market, so I understand their aversion to doing it all over again in another... but I have a hard time reading their remarks when they speak out against trading other market without giving us reasons we can directly measure.

For instance, I'm no fan of CFDs that track commodities or equity indexes.. but my tangible reason is simple: they are expensive and trading the underlying future is a lot less costly for the same leverage. (For example, most SP500 CFD's have a 0.50-075 spread, yet the spread in futures (ES) is 0.25 nearly all the time. With intraday margins in future for ES ~500 a contract, you can get insane amount of leverage without having to go CFD.)

Seasoned and vetted traders who have a hard time adapting are usually the same kind that complain about HFT, decimalization, the advent of computer trading, etc.. etc... they say it's impossible to make a buck with how things are now, but all I have to do is look at my own performance, and the performance around my office (full of equity traders) and laugh aloud.

So really, I accept practical reasons why something is better/worse, and OP's quote isn't listing a lot of practical things..


Let's break it down:


Largest institutional exchange between banks and corporate entities is EBS and Reuters, both post volume.. both post billions worth of volume to track each day.

Ok ok, maybe this isn't accessible to retail traders. But a good substitute is currency futures volume, since quite a bit of real volume goes off there from firms that are both hedging and speculating... anyone who wants to see this volume can sign up for a future broker's demo and follow along. This method works well for the majors, but maybe not as well for crosses and exotics.

Lastly, one could simply not employ strategies that rely on monitoring volume. Even the banks know that volume isn't a perfect indicator in spot since it's not centralized, and they are trying to game each other pretty hard so they can assume volume is going off in dark pools they have no idea about just to bluff the market. This is actually the basis of why I got into Forex trading, since it's far more likely to be technically traded than just momentum/volume flows. Sure fundamentals come into play, but more people lean on technicals and technicals are referred to as the self fulfilling if the dominate force in the market is trading them.



Firstly, that's like suggesting that seeing an open book in equities is going to help you. Games get played there all the time. Plus, in equities a larger order is noticed since it often stands 10+ feet taller than the orders around it (figure of speech,) but forex has such liquidity even a huge order wouldn't make much of an impact past a few pips..

That aside, more and more brokers are displaying their books to the market now. So this point is kinda dated.

In the end, the book in forex is really most useful to see if your size can be executed at the price you see or if it will be slipped and blended between price levels. Most retail traders don't really have to worry about this on the majors since they don't toss around multi-million dollar orders too frequently (or at all in most cases.)



You don't know your rivals in futures either. It's anonymous. You just see size on the book. Unless you're in the pit of course, but even then your 'opponent' might be executing an order for someone else.

You also don't know your rivals in equities. You see different venues, different ECNs, and different executing brokers/banks, but again you have no idea of their intentions or which client they are representing.

So I don't get his point here.


He's right on this. I contribute this to the lower barrier to entry with forex. Anyone with $50 can open an account and the shitty brokers who offer all kinds of sales bonuses and such tend to advertise the most to people who have no business trading.

But like with anything, buyer beware.



So unless this is just his opinion, he gives no examples to go by. I find both markets have clear moves, and both have choppy moves. You set how "big" they are by your leverage.

In terms of pips, some pairs have daily and weekly ranges that would make an equities trader's head spin, especially if they only focused on blue chip stocks.



His opinion again. Pull up any given daily chart, tell me there's no 'trends'.. I'll call you a liar.



It's starting to sound like the guy just had no success in FX... I could point out many systems that deal with precision entries, and I know a few traders who put on trades that boggle my mind in how well they pinpoint entries (friend of mine shorted EURUSD once for 1400 pips over a few months and got his entry within 50 pips of the top at the time.)

Or, put another way, equities can be hard to pick entries just the same. I see no difference.


And you don't for any other market? It's called a trading plan, you map out what your plan is for scaling into or out of a position BEFORE the trade. Also, you know where you're wrong on a trade and set that stop before you get in, just like any other market... you don't just choose to scale into trades after they are already on.. Maybe the guy like averaging down in his stock holdings. Pfft...


Yes, broker do make quite a bit from FX trading, and it doesn't help that so many shitty brokers take advantage of new traders, but I don't blame the market as a whole when good and respectable brokers are around to service clients. Just saying.


Anyhoo.. I found that flustering to respond to.. adaptability is huge for a trader looking to make a career out of the market, and it's clear that some traders (even well known ones on TV) struggle with this.

Remember, it's human nature to externalize problems, just like this guy is doing with forex (it's not his inability to adapt, it's the market's fault for being not like what he's used to.) Gotta beat what makes us human to really do well in trading.

sorry for being off topic, but what trading office are you part of?

It's a smaller private firm here in Toronto, so I don't disclose the name online.

great post Jack_Larkin ! much appreciated

10. In stocks it takes longer than in the forex to lose all your money

jack,

i'm surprised you've taken such a stance. i'm surprised when anyone tries to argue that forex isn't totally busted compared to equities.

stocks :

you can BE the spread, not pay it.
the commissions you pay don't scale as you increase size. commissions become a decreasing percentage cost as you increase size.
there are a concentrated number of hours to "get shit done"(TM).

nothing more comes to mind, but i'm sure there is other advantages. every angle of forex is a disadvantage compared to equity trading. i honestly don't understand how anyone can defend forex.

edit : that's not to say that forex has no plus points, but they aren't anything worth writing home about.

Oh, don't get me wrong, I'm not defending forex as if it was 'better' than equities, I'm attacking the guy's reasons for disliking forex over equities. I think the points he makes are more of excuses as to why he can't find success in forex and sticks to equities instead. It resonated that way to me since I've seen a lot of veteran traders get set in their ways and start to dislike new markets or change to their existing market. . . and I'm rather turned off when I see it happen to good traders. I hold a trader's adaptability to change has a required skill to last a career worth of trading.

Attacking his points was why I gave an example of a critical point against another market that I felt was actually tangible... I'm all for measurable reasons why one market might have a preferred feature or advantage over others, and if we're going to start comparing and contrasting markets then we should stick to the tangible things that have the greatest impact as such.

And yes, there are some clear (tangible even) features of the equity markets that makes them stand out over forex.. I'll attest to that first hand. Not just what you mentioned but once you go DMA in equities with a active trading focused broker (such as IB, lightspeed, etc...) or a prop firm / institutional trading house, the perks start to really stand out. For instance:

Being paid to take a trade instead of being charged commission. With ECN fees and credit pass-through, there are times that you can reduce or even eliminate your commission costs for a trade by netting ECN credits on the transaction itself. In most cases, this is done by providing liquidity with limit orders sitting on the ECN or exchanges book, where should the order be hit by someone removing your liquidity, the trading venue will forward you a credit for the trade. If your commissions are low enough, this can actually net you a positive difference in fees to be in a position you'd have taken otherwise.

ECNs and exchanges, after all, make their income from charging a spread difference between the liquidity providing side of the transaction and the liquidity taking side. It's a shame more brokers don't pass this through to the client... but for simplicity sake (and it does get rather complicated with 8+ different ECNs/exchanges on a stock in the US equity market all with a different fee structure) they just charge a higher commission rate (to cover the ECN charges for removing liquidity) and keep the credits.

Anyway... I don't think that forex is broken, even compared to equities.. I just think that forex is 'different' and what you expect from one market can't directly be applied to another. I could sit here all day and write pages on the advantages of both markets (and there are a lot for forex over equities too.) without really defending either of them or showing a bias.

I'll happily go over any concerns someone identified that make material impacts on one market over another (read: the tangible type facts I was stressing before.) And I enjoy the conversation in general since I have a lot to contribute when it comes to equity markets knowledge (work with them every day in a direct access fashion. Equity market mechanics are known to me like the back of my hand.)

"10. In stocks it takes longer than in the forex to lose all your money" nice point

i would also add : higher time frame = longer time TO LOSE ALL YOUR MONEY ,talking forex...maybe few % would win in total

Well said, Jack!
It's like to give all wrong reasons to say be a professor is better than a school teacher, or a pilot is better than a truck driver

Jack and Catador4255,

Very good comments in your posts in this thread. You demonstrated some essential knowledge and thought processes that are essential.
Many new traders "buy the dream" but never learn and do what is necessary to make the dream come true.

The ramifications of that observation are far from this thread so I'll stop.

Best wishes to all.

Not again this silly debate. Nobody cares what other traders say about it. Either you can make money trading FX or you suck.

[quote = catador4255; 6371164] [/ Quote]


It is best to trade on the NYSE on daily and weekly charts.

For me, Forex is the best! Because, my trading is all about Forex pairs; and I have no plan on others trading sector.