True, he is a hedger,
So now that I think of it, if Honda of America is a local deal, and they are sending their dollars back to Japan.....I guess the carry trade is coming out of the Columbus, Ohio area?
Huh....go figure, and the banks all think that it's Japanese retail guys are doing it.....
A little background on myself....
I am a painting contractor by day, and part time Forex trader. I speak 4 languages, play 6 instruments, and once tested completely out of all required history courses for the college I attended.
And I still SUCK at Forex.
A typical play in Forex is this: Two good weeks, one bad one. It comes out to flat even.
However, I recently met someone who makes a living trading Forex. He trades for Rubbermaid and before that traded for Scott's (The lawn care supply company.)
He lives in a 400k house. (I painted it, saw it, so it's true.)
He explained to me, at any given moment, he might be selling anywhere from 20-200 million Euros......or buying them. He also has to deal with the Brazilian Real. (Main currencies that Rubbermaid has him working with.)
Sometimes, they are buying Euros on the cheap, to pay workers over there. Sometimes its also speculation, but the latter is rare.
More often than not, he is buying because he NEEDS to, and the price doesn't matter. They have to pay German workers for example.
So yes, he makes a living. Oh, and here's something EXTREMELY IMPORTANT: He does NOT trade Forex for himself. He trades stocks. This says a lot I would think. (Certainly he knows when his company is about to dump 200 million, and still couldn't be bothered with it.) He told me I was crazy to do it. And that he never would.
When I asked him about indicators, he said "Price."
I then asked about Fibonacci, he said "If it works for you. But let's put it this way: Which time frame? How do you know to follow the 15 minute, or monthly?".
As for the rest of the market, I don't know. I really don't know if it is possible to make a living. When you have him buying 200 million EUR/USD, it will throw things out of wack. Is it really possible to trade against that?
The truth that you will never hear: most substantial forex transactions are out of necessity, not because John in Cleveland thinks the CAD is going to tank.
And even if he thinks that? Why? What does he know that a major firm or bank like Barclay's doesn't?
The truth is that this game was never meant for retailers to get into. If you want to see what forex is really about in its purest form, check out some historical charts from the 1970's for example. (Before we came in and killed REAL movement.)
However, I must admit I believe that you need a large account to do this. There is a theory (paper) going around from a much loved trader here in FF, and it states that if you only make 5 pips a day, in 18 months you will be at like 250,000 dollars. (starting with something like 1000 dollars.)
Ok, so where do we find our 5 pips? By the way, the pseudo-system prescribes a 20 pip stop-loss to get your 5.
Oh, and there are others making a living at this, I have no doubt. The "gurus" do well.
However, I suppose in theory it's possible. But trust me on this, MOST people bragging about making a living doing this, or the great trade they made yesterday, are flat out lying.
The stats don't like, most estimates are that 90-95% of all traders fail. So since there are so many successful traders at FF, either the learning curve has been sliced in half, (God I wish that were true.
However, if you want to do this, please start SMALL. That way, you will only lose time, and not money. I assume that with your background you must have made money in stocks, which is why I don't understand why you would play with this. (Forex behaves nothing like stocks. When's the last time you heard someone selling Walmart stocks to pay someone in Kansas?)
The truth of the matter is that banks are making more than ever in this market, wonder where they are getting the money from? You and I.
And I for one don't think that 5th/3rd doesn't need more money from me.
But, I treat it as a hobby, that way it never really upsets me. I took it serious once, and learned that there isn't a lot to learn. Just read through the posts, you will get 5 million different ideas.
But, there is also brokers killing their clients positions, lying gurus, panic trading because Trichet farted in the general direction of England, etc.
I think there are trends out there, but smaller time frames will kill you, and if you are trading a daily chart, you need like 200 pips leeway, so you can't trade much money in that. (Unless of course, your account is big enough.)
However, there may be some hope on the horizon. CME/Reuters are in the process of offering a centralized exchange. It's not for us of course, but in theory, some brokers will jump on board.
A lot of "successful" traders will tell you not to use more than 10:1 leverage, and less if you can. So in reality, you need to trend trade, and might get a positive return of 20% in a year. Sounds like the stock market to me. But again, money, money, money, is what you need to have, in order to get it out of this market.
Just my observations, and I hope they are wrong......
This is a topic that is dear to my heart. My ultimate goal is to trade for a living. Since I’ve found FF, I am glad to say that I’m on my way. My goal to start trading for a living is 5 years. I spent (year 1) 1st year learning all I could and (year 2) 1st year live struggling and (year 3) 2nd year live do very well at this point. So now I’m in my 3rd year and I actually should be ready to trade for a living by the end of this year, but I will wait and continue to work on my trading consistency, capital preservation and mental makeup. Just like everything else in this game … you have to take steps to get to the next level.
Happy Trading 2 All ….
