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Some Questions about Stocks VS. Forex

  • #1
  • First Post: Oct 8, 2009 1:34pm Oct 8, 2009 1:34pm
Im failing to see the order in forex charts. When a stock like AIG for instance Breaks price support it moves due to order flow. Im not seeing the Corrective and impulse moves in forex. Does price mean nothing to forex traders.

Is Forex to impulsive of a market to trade with continous profits.
I have tried to trade on higher time frames but the trends seem to take turns between lower and higher frames.
  • #2
  • Oct 8, 2009 5:32pm Oct 8, 2009 5:32pm
Pairs have personalities something like stocks but much more distinctive. Once you become more familiar with the distinctions between them you will be much more comfortable. I can see the same patterns repeating time after time (on the left side of the chart, unfortunately). Openings are especially interesting and of course news events.

A good pair to get started with is the GBPUSD, but that means being able to watch the European session. I like the JPYUSD because I can monitor it in the evening.
  • #3
  • Oct 8, 2009 10:35pm Oct 8, 2009 10:35pm
Price is everything in all financial markets!

You are missing something if you can not recognize the Opportunities in this chart.

See chart
Attached Image (click to enlarge)
Click to Enlarge Name: gbpjpy100809.png Size: 45 KB
  • #4
  • Oct 9, 2009 1:54am Oct 9, 2009 1:54am
Quoting Fuzzyzc
Im failing to see the order in forex charts. When a stock like AIG for instance Breaks price support it moves due to order flow. Im not seeing the Corrective and impulse moves in forex. Does price mean nothing to forex traders.

Is Forex to impulsive of a market to trade with continous profits.
I have tried to trade on higher time frames but the trends seem to take turns between lower and higher frames.
Think liquidity and size and you will have an answer to that question.

Trends are in all timeframes. It is really a personal choice on how you trade them and it is really only relevant to the time frame that you are going to trade. for example Day and week traders dont care much for 5 Min trends or hourly trends just as scalpers will not care too much for daily and weekly trends.


Razor
  • #5
  • Oct 9, 2009 9:43am Oct 9, 2009 9:43am
Quoting CrudeCraig
Price is everything in all financial markets!

You are missing something if you can not recognize the Opportunities in this chart.

See chart
I do see the order in a daily but you see the lines you have drawn they are passed and revisited maybe ten times before a market direction decision is made. With the stock market Price is not passed unless it is important. Forex price is a generality. That is what i see different.

Attached Image (click to enlarge)
Click to Enlarge Name: AIG.JPG Size: 30 KB

The Price was bound by counter trend traders and market Specialists above 45.00 that bar that looks closer later had a low of 45.01 There were thousands of stop loss trades filled at 44.99 and new Shorts as well. This order flow creates pockets of momentum where a trader can easily take advantage of low risk scenarios.

Im looking for the similar in forex that is my dilemma. Maybe it doesnt exist do to the nature of the this market. Forex just seem like a prey market for running stops and flimsy ideas of support and resistance.

More market participants, more conflicting ideas, Extreme leverage
  • #6
  • Oct 9, 2009 11:47am Oct 9, 2009 11:47am
Rarely is any level of S/R Exact! whether it is a stocks OR Forex.


These levels are zones and can be 100 pips on a Daily TF. Our stops must be positioned so that these impurities in the market will not take us out of a good position.


I suggest you start studying Price Action here at FF, There are many great threads to help you.
  • #7
  • Oct 9, 2009 12:25pm Oct 9, 2009 12:25pm
Quoting Fuzzyzc
I do see the order in a daily but you see the lines you have drawn they are passed and revisited maybe ten times before a market direction decision is made. With the stock market Price is not passed unless it is important. Forex price is a generality. That is what i see different.

Attachment
The Price was bound by counter trend traders and market Specialists above 45.00 that bar that looks closer later had a low of 45.01 There were thousands of stop loss trades filled at 44.99 and new Shorts as well. This order flow creates pockets...
That is one chart that you have pulled up to support whatever case you are trying to deliver. Im sure I could find hundreds of charts that show either the same thing or the opposite. Im not sure why you need to find such definition in order to trade. On the other side of the boat, looking back on the chart is really hindsight. Had you been active (you may very well have been) how would you have approached it. Would you have known that area was a minefield of orders, both pending and ending and as such taken the trade?

I think you are diving deeper than you need and for some reason it is leading me to the thoughts of you looking for perfect setups with little risk to avoid losses...
  • #8
  • Oct 9, 2009 1:50pm Oct 9, 2009 1:50pm
Quoting Fuzzyzc
I do see the order in a daily but you see the lines you have drawn they are passed and revisited maybe ten times before a market direction decision is made. With the stock market Price is not passed unless it is important. Forex price is a generality. That is what i see different....
Take two of your stocks, calculate and chart the pair price A/B. Then you'll have something more like an FX chart. The two currencies can move independently so horizontal lines are not a good way to find S/R, IMO.
  • #9
  • Oct 9, 2009 2:12pm Oct 9, 2009 2:12pm
Quoting Fuzzyzc
Im failing to see the order in forex charts. When a stock like AIG for instance Breaks price support it moves due to order flow. Im not seeing the Corrective and impulse moves in forex. Does price mean nothing to forex traders.

Is Forex to impulsive of a market to trade with continous profits.
I have tried to trade on higher time frames but the trends seem to take turns between lower and higher frames.
The FX market is highly efficient and very opaque, anybody who tells you any different...
The breaking of a wave cannot explain the whole sea.
  • #10
  • Oct 10, 2009 1:41am Oct 10, 2009 1:41am
I trade both stock/index options and currency and have found that they all lend themsevles equally to technical analysis. But if I had to chose the easiest to predict on a short term basis, it would be currency. A stock or index can be poised to move a certain way the next day when after-hours news or analysist comments or earnings can cause a complete turnaround and you can not do a thing about it because the market is closed. Currency trading, on the other hand, is less subject to those out-of-the-blue moves because it trades 24 hours a day when open and news releases are known well in advance. For those reasons I believe that currency is more forgiving than the stock market.

In my opinion, if you use technical analysis to trade the stock market, you should be able to use technical analysis to trade currencies with equal results.
  • #11
  • Oct 10, 2009 2:28am Oct 10, 2009 2:28am
Quoting Razor_trader
That is one chart that you have pulled up to support whatever case you are trying to deliver. Im sure I could find hundreds of charts that show either the same thing or the opposite. Im not sure why you need to find such definition in order to trade. On the other side of the boat, looking back on the chart is really hindsight. Had you been active (you may very well have been) how would you have approached it. Would you have known that area was a minefield of orders, both pending and ending and as such taken the trade?

I think you are diving deeper...
Im not cherry picking these setups happen constantly all day in stocks

this isnt an attack on forex!!!! Some are getting a bit hostil and yes i was short on AIG that day. It was not hindsight yes there is no way to prove that. Watch a stock like AIG on open watch how it behaves. Watch the Time and sales and tell me it isnt ridiculously predictable.

Yes i did know there were order pending and ending at 44.99 Because most traders would have stops below where it made a bottom. People are suckers for counter trend and the specialist know how to manipulate them to believe they are getting AIG at a great price after a day of selling. When all their buying is done and people dont get profit out of their longs there is only one thing todo they sell hand over fist and guess what they place there stop losses pennies below where they believe "accurate support lies". Simple market mechanics.

I have been watching stocks for years
less market participants and specialist guided movements create very orderly markets.

I trade where others fail. I enter where the masses have taken losses. From what i have found there is no other way to make money.

Im trying to be as sucessful as i am in stock with the Forex. I dont see the same setups.

I guess its a different beast than the american stock exchange. I have to adapt a different trading style. That my friends is where you come in im not trying to be little or talk down about forex. I do very well in the american stock exchange. I like it its a little more fast paced, more market depth has specific hours.

I would love to trade the forex 24 hour though.

The root of this discussion is to get a feel for how its different. How do you all trade? Are your stop enormous are your time frames large? Im basically getting the picture that most people are secretive and that forex doesnt carry the same mechanics as stocks.
  • #12
  • Oct 10, 2009 5:11am Oct 10, 2009 5:11am
[quote=Fuzzyzc;3134941

The root of this discussion is to get a feel for how its different. How do you all trade? Are your stop enormous are your time frames large? Im basically getting the picture that most people are secretive and that forex doesnt carry the same mechanics as stocks.[/quote]

For me it is a larger timeframe and because of that yes stops are generally further out, but all the same the risk is equal for a 30 pips SL as with a 300 pips SL.

Forex is no more secretive than any other market. People just need to know where to look. In regards to finding Support and Resistance, there are just no real hard defined levels, and that goes for all markets. You could quite easily find the same setup in AIG, in which the market has travel, rejected then come back for a second attempt and subsequently broken through, in the forex market. I could also find support for the other side in which the area failed to break the second time. I guess what my understanding of your question was, why isnt forex so blatantly obvious as your AIG chart, to which I replied that that chart was particular to your argument and hence I could easily find more that both support and reject. Sorry if there was any confusion and I didnt mean to sound anything other than sincere.

Razor
  • #13
  • Oct 10, 2009 12:57pm Oct 10, 2009 12:57pm
Thank you razor. I also see that smaller time frames have far more noise. When i look at the same time frames that i normally trade i see alot more noise.
Yes your right regardless of size of stop loss, position sizing should be appropriate for the situation.

This is what im coming to learn Large time frames in forex have better setups.

As we all know trading is not about certainty, But from what the years have taught me about stocks these setups have good probabilities 80% give or take. You just have to be patient and let them setup perfectly.

I guess i was too hopeful for smaller time frames to be profitable i have to adapt how i trade to larger time frames. I was just a little disappointed when i tried to adapt how i trade stocks.

Thank you again razor for all your input.
Steven
  • #14
  • Oct 10, 2009 6:31pm Oct 10, 2009 6:31pm
Quoting euclid
Take two of your stocks, calculate and chart the pair price A/B. Then you'll have something more like an FX chart. The two currencies can move independently so horizontal lines are not a good way to find S/R, IMO.
I've seen little and traded even less of forex; however, price on the lowest TF's seems to me to center around horizontal lines, such as 00/50, and angled lines, linked with unusual patterns, with resistance/support happening as a secondary feature to centering.

Forex news sometimes has a story ranking with stocks' usual, which'd help predict direction.
  • #15
  • Oct 11, 2009 5:07am Oct 11, 2009 5:07am
Quoting Fuzzyzc
Im failing to see the order in forex charts. When a stock like AIG for instance Breaks price support it moves due to order flow. Im not seeing the Corrective and impulse moves in forex. Does price mean nothing to forex traders.

Is Forex to impulsive of a market to trade with continous profits.
I have tried to trade on higher time frames but the trends seem to take turns between lower and higher frames.

hi,

1) forex is faster moving and it is a much more global market ..

you have central banks, big companies, funds, retail traders etc etc

2) it can be very reactive to global events and economic releases too

3) due to the leverage 1:100 or 200, a simple move may be ALOT to the account..

personally, for stocks, if things you go wrong for now, you can hold on to it... ride it out.. and perhaps get some dividend in the meanwhile..

for forex, if things go wrong, the leverage may clear the account.. a very good exit and take profit plan must be there.. but of course the "potential" to earn more in shorter time is there...

i will like to invite you to my blog to read more on forex.. www.thegeekknows.com

hope u have good trading
  • #16
  • Last Post: Oct 11, 2009 7:37am Oct 11, 2009 7:37am
Quoting trading801
hi,

1) forex is faster moving and it is a much more global market ..

you have central banks, big companies, funds, retail traders etc etc

2) it can be very reactive to global events and economic releases too

3) due to the leverage 1:100 or 200, a simple move may be ALOT to the account..

personally, for stocks, if things you go wrong for now, you can hold on to it... ride it out.. and perhaps get some dividend in the meanwhile..

for forex, if things go wrong, the leverage may clear the account.. a very good exit and take profit plan must...
Absolutely true and it rings bells on a piece I wrote about risk and reward. The fact the leverage plays a massive role in forex, because you can leverage yourself up to 500:1 these days, the small moves can be absolulty devastating if they go wrong. Stocks, if you are down by 20/30%, you can usually hold and as you say depending on the amount you hold and the dividends (if they pay) you can still make a small income out of it. Forex, a leverage position that is down can cost you more on a small % down while perhaps costing you an interest spread aswell.

Smaller Timeframes can be absolultly smashing if you get a great position with a small risk (pip risk ie you can have a large position size) because you can make a great deal if you can hold out, far more than stocks because of the leverage and the swings that can happen, and do happen quite often. The other side of the coin is quick losses on small TFs when you get it wrong.

Razor
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