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Do you guys find that forex trading sucks?

  • #41
  • Dec 18, 2011 9:34pm Dec 18, 2011 9:34pm

Market Participants
Unlike the equity market - where investors often only trade with institutional investors (such as mutual funds) or other individual investors - there are additional participants that trade on the forex market for entirely different reasons than those on the equity market. Therefore, it is important to identify and understand the functions and motivations of the main players of the forex market.

Governments and Central Banks
Arguably, some of the most influential participants involved with currency exchange are the central banks and federal governments. In most countries, the central bank is an extension of the government and conducts its policy in tandem with the government. However, some governments feel that a more independent central bank would be more effective in balancing the goals of curbing inflation and keeping interest rates low, which tends to increase economic growth. Regardless of the degree of independence that a central bank possesses, government representatives typically have regular consultations with central bank representatives to discuss monetary policy. Thus, central banks and governments are usually on the same page when it comes to monetary policy.

Central banks are often involved in manipulating reserve volumes in order to meet certain economic goals. For example, ever since pegging its currency (the yuan) to the U.S. dollar, China has been buying up millions of dollars worth of U.S. treasury bills in order to keep the yuan at its target exchange rate. Central banks use the foreign exchange market to adjust their reserve volumes. With extremely deep pockets, they yield significant influence on the currency markets.

Banks and Other Financial Institutions
In addition to central banks and governments, some of the largest participants involved with forex transactions are banks. Most individuals who need foreign currency for small-scale transactions deal with neighborhood banks. However, individual transactions pale in comparison to the volumes that are traded in the interbank market.



Read more: http://www.investopedia.com/universi...#ixzz1gwprT7qC

Time turns trend. - W.D. Gann
  • #42
  • Dec 18, 2011 11:40pm Dec 18, 2011 11:40pm
Quoting erock
I've traded forex for the past year. I trade on about $100,000 account and normally trade futures and equities.

Normally if I trade a currency I trade it through a futures contract. I decided to incorporate forex into my trading but was greatly disappointed.

There is too much volatility and the markets don't adhere to any trading theory or indicator. Forex markets don't even adhere to basic psychology that most markets adhere to.

You also can't write covered calls or puts that help to add income to your positions. It just seems like the forex...
It's boards like these that make me worry about getting into Forex too much.
  • #43
  • Dec 19, 2011 12:26am Dec 19, 2011 12:26am
Quoting erock
I've traded forex for the past year. I trade on about $100,000 account and normally trade futures and equities.

Normally if I trade a currency I trade it through a futures contract. I decided to incorporate forex into my trading but was greatly disappointed.

There is too much volatility and the markets don't adhere to any trading theory or indicator. Forex markets don't even adhere to basic psychology that most markets adhere to.

You also can't write covered calls or puts that help to add income to your positions. It just seems like the...
I do agree with you Erock.

Once I found CL futures I wound back my forex trading I still trade but on a mini acc more for fun then anything else, could never see myself make a living out of fx. Started to trade Gold as well now. Looking to start ETOs again this year over the Aussie XJO index and some top 50 stocks.

you make valid points, I also find Futures much more tradable with the patterns being more reliable. That being said any market can become harsh to a trader.

good trading...........
  • #44
  • Dec 19, 2011 12:53am Dec 19, 2011 12:53am
Nobody can make money in forex? Not true, about 1% of traders make a lot of money out of it - and according to a recent poll here in forex factory, about 60% of respondents are in that 1%. You are right to be suspicious of anyone who claims to be a successful trader, most of them are lying. Having said that, I am also up over 100% for 2011. You shouldn't believe me though, the chances are high that I am full of shit too.


Trading forex is nothing like other markets, you really need to start from scratch. The most profitable way to trade is to ride long term trends which takes enormous, almost superhuman, patience and discipline. The key is reading market conditions to know when your methods will be profitable and when they wont. Trade only when the market suits your style of trading, sit on your hands when it doesn't. Too many people want to trade on their own timetable rather than at the markets pace.

I spent a good chunk of 2010 thinking the same way you are, that the forex market is random and profits/losses are nothing more than streaks of luck. I think it is something every trader needs to get through before they can gain enough confidence in their methods to be profitable.
si hoc legere scis nimium eruditionis habes
  • #45
  • Dec 19, 2011 1:13am Dec 19, 2011 1:13am
Fx market is different game compare with future or comodity.

If you can be successful in fx market, you have good opportunity to be cussessful in future or comodity too.
BUT not vise versa.

Because fx has a higher leverage, higher volatility, mush higher liquidity, much more active market, 24 hour around, much more trader in trading fx than como/future.

Market is market, always has same behaviour, repetitive behaviour.

It is up to you. you want to surf in big ocean, medium or calm ocean. The excitement and gain is different. We can not compare. Even not necessary to compare them. So decide, which one is more suitable for you.

Like convensional business, you like mining business or shop busines (open a shop), both are profitable if you can do it well. of course mining money is much much bigger (the risk too) than shop business.

This is just my experience and opinion.

Thank you,
Anton
  • #46
  • Dec 19, 2011 1:19am Dec 19, 2011 1:19am
Quoting >Apocalypto<
I do agree with you Erock.

Once I found CL futures I wound back my forex trading I still trade but on a mini acc more for fun then anything else, could never see myself make a living out of fx. Started to trade Gold as well now. Looking to start ETOs again this year over the Aussie XJO index and some top 50 stocks.

you make valid points, I also find Futures much more tradable with the patterns being more reliable. That being said any market can become harsh to a trader.

good trading...........
It really makes me wonder why anyone would trade forex. I mean people must be making money if they are trading it. Then again why do people gamble? If you do forex correctly I think you can make a little bit of money.

I guess it's good if you have a small amount of money and can't trade futures or equities. To really trade futures or equities correctly I feel you need 100k.

I just have a lot better luck in other markets with other opportunities to make money, like I mentioned earlier with covered options.

Live an learn at least in my case. I'll never trade forex again. It seems like it's just for banks for currencies and not for the speculative trader, that's just in my opinion.
  • #47
  • Dec 19, 2011 1:25am Dec 19, 2011 1:25am
Just remember who all is in involved in the Forex market. Also, leverage effects.

Technical analysis vs. Fundamentals. Most are TA traders in Forex. If you focus on fundamentals (longer term), you should be making money (e.g. US dollar devaluation), recent Aussie drop could been seen well ahead of time if you follow iron ore and coal prices, their commodity prices YoY were slowing down, etc.

Yes, I like individual stocks personally because I can use options to hedge, earn income on my positions.

All depends on your treading style, timing, and outlook.
  • #48
  • Edited 1:37am Dec 19, 2011 1:26am | Edited 1:37am
Quoting antonsatu
Fx market is different game compare with future or comodity.

If you can be successful in fx market, you have good opportunity to be cussessful in future or comodity too.
BUT not vise versa.

Because fx has a higher leverage, higher volatility, mush higher liquidity, much more active market, 24 hour around, much more trader in trading fx than como/future.

Market is market, always has same behaviour, repetitive behaviour.

It is up to you. you want to surf in big ocean, medium or calm ocean. The excitement and gain is different. We can not compare....
Very good point. It's kind of what I'm saying about top hedge fund manager, the top 10. They don't trade forex. There's a reason why they don't, it's just too tough.

It really shouldn't be traded on for profit
  • #49
  • Dec 19, 2011 1:30am Dec 19, 2011 1:30am
I'm not sure what you mean by "FX has higher leverage". Last time I checked it was the trader who decided how much leverage to use - not the broker With futures the minimum trade size is 1 contract - so basically forex is much more flexible ... especially when trading a small account.
  • #50
  • Dec 19, 2011 1:36am Dec 19, 2011 1:36am
Quoting fido
I'm not sure what you mean by "FX has higher leverage". Last time I checked it was the trader who decided how much leverage to use - not the broker With futures the minimum trade size is 1 contract - so basically forex is much more flexible ... especially when trading a small account.
The leverage determines the volatility of the market overall. High leverage makes it too volatile.
  • #51
  • Dec 19, 2011 1:52am Dec 19, 2011 1:52am
Forex is a scalpers and very short term intraday traders paridise. So many oppertunities every day, it is a highly technical market and cost of trading is extremely low. As far as long term strategies go however, I think forex is a hard market to trade. Lots of whips, stop hunts and manipulation. Not saying it can't be done, but it will take a different way of thinking compared to the other markets you have mentioned.
  • #52
  • Dec 19, 2011 1:56am Dec 19, 2011 1:56am
Quoting Agro
Forex is a scalpers and very short term intraday traders paridise. So many oppertunities every day, it is a highly technical market and cost of trading is extremely low. As far as long term strategies go however, I think forex is a hard market to trade. Lots of whips, stop hunts and manipulation. Not saying it can't be done, but it will take a different way of thinking compared to the other markets you have mentioned.
this is very true, and something ive recently learned, ive now decided to focus my attention on the smaller time frames, and im having better success now.

twiggy
  • #53
  • Dec 19, 2011 4:18am Dec 19, 2011 4:18am
Quoting erock
major difference between currency futures and forex. One being currency futures all are paired with the dollar.

You are trading them through a futures contract which is paired with the dollar, everything through a futures contract will pair with the dollar. This has more stability.

You don't have the wild swings in currency futures that you do with forex.
If you're telling me that currency futures are running at different prices to spot, screw Christmas, I'll spend the rest of my days arbing it to the hilt. Whether Soros traded spot or futures (and given the volumes, I'd imagine it wasn't through CME) makes not a jot of difference, but I'd agree he's not a great example of an FX trader. Outside of the baht and pound runs, he usually lost on currencies.

All hedge fund managers are in FX, some explicitly, others not. Especially in the past few years, every asset class is hugely exposed to currency rates. Even your auntie miggins with her pension is involved in currency speculation, the only difference is she's not aware of what's going on.

I don't trade anything other than fx, but I'd imagine the principles are exactly the same - predict what you can, follow what you can't. You can trade retail options too, though the market is pretty immature at the moment.
  • #54
  • Dec 19, 2011 4:33am Dec 19, 2011 4:33am
Hi Erock,

Do you have any prove that hedge fund manager dont trade forex?

We should understand what is the nature business of hedge fund manager. What is their really money making side, They make money based on fixed fee charged on the client. They play safe, they dont fight to gain max. Averagely they formal gain is 10 to 30% per year (if they making money).

If you make money 10 % per year by Como or future and you are happy yet, its ok. BTW, if you can make 100 or 200% per year, you want it???
Making 10% Per year in forex is easy. Even very easy, if you know the market behaviour well.

Ask yourself, where the collected money been investing by the insurance, banker, etc. In stock? too slow. in gold for safety backbone balancing. in future?
You answer: are they happy with 10 - 30 % per year? find this answer, the secret openned by itself.

Thank you,
Anton

Quoting erock
Very good point. It's kind of what I'm saying about top hedge fund manager, the top 10. They don't trade forex. There's a reason why they don't, it's just too tough.

It really shouldn't be traded on for profit
  • #55
  • Dec 19, 2011 4:46am Dec 19, 2011 4:46am
It is funny world if saying leverage is bad.

Leverage is very very very GOOD thing to take.

I am asking you, if you have a great business that you can do well and this business need $ 1million to run and potential profit 200% per year. YOU ONLY HAVE $100,000 equity. What are you going to do? FIND a loan to finance it, right? THIS IS LEVERAGE!

So, Why are you so afraid with it.

The challanging thing is: are you good enough or not in running the business? IF yes, LEVERAGE as much as possible WHEN the momentum in place.

It is just what I am doing in trading and conventional business.

There is a very good book by Mr. Donald Trump "Think Big".

Buy it, read it. And you understand what I say. Hopefully, you apply it, you will be successfull.

Thank you,
Anton
  • #56
  • Dec 19, 2011 4:55am Dec 19, 2011 4:55am
Quoting antonsatu
It is funny world if saying leverage is bad.

Leverage is very very very GOOD thing to take.

I am asking you, if you have a great business that you can do well and this business need $ 1million to run and potential profit 200% per year. YOU ONLY HAVE $100,000 equity. What are you going to do? FIND a loan to finance it, right? THIS IS LEVERAGE!

So, Why are you so afraid with it.

The challanging thing is: are you good enough or not in running the business? IF yes, LEVERAGE as much as possible WHEN the momentum in place.

It is just what...
I think the point about leverage that he was trying to make was not that it was a bad thing or that he was afraid to use it, his point was that highly leveraged markets (such as forex) are more volatile, which is spot on.

Even way back in the day when elliot was forming his wave theory he stated that wave 4 will never sink into wave 1's span EXECPT IN HIGHLY LEVERAGED MARKETS. Leverage allows thing to happen that were not "supposed" to happen. Random noise is exaggerated much more in highly leveraged markets.
  • #57
  • Dec 19, 2011 5:03am Dec 19, 2011 5:03am
Quoting antonsatu
It is funny world if saying leverage is bad.

Leverage is very very very GOOD thing to take.

I am asking you, if you have a great business that you can do well and this business need $ 1million to run and potential profit 200% per year. YOU ONLY HAVE $100,000 equity. What are you going to do? FIND a loan to finance it, right? THIS IS LEVERAGE!

So, Why are you so afraid with it.

The challanging thing is: are you good enough or not in running the business? IF yes, LEVERAGE as much as possible WHEN the momentum in place.

It is just what I...
Mr Donald Trump filed for bankruptcy twice. Just saying..
  • #58
  • Dec 19, 2011 5:10am Dec 19, 2011 5:10am
He is tough businessman. almost bankrupt, but not. The fact: he is more successful. It is very seldom businessman can turn very difficult situation into successful.
He is one of the men.
Thank you


Quoting zamfir
Mr Donald Trump filed for bankruptcy twice. Just saying..
  • #59
  • Dec 19, 2011 5:12am Dec 19, 2011 5:12am
Quoting antonsatu
It is funny world if saying leverage is bad.

Leverage is very very very GOOD thing to take.

I am asking you, if you have a great business that you can do well and this business need $ 1million to run and potential profit 200% per year. YOU ONLY HAVE $100,000 equity. What are you going to do? FIND a loan to finance it, right? THIS IS LEVERAGE!

So, Why are you so afraid with it.

The challanging thing is: are you good enough or not in running the business? IF yes, LEVERAGE as much as possible WHEN the momentum in place.

It is just what I am doing...
No leverage in my opinion is very bad. Too much leverage is too much risk. To truly make money in finance you need steady years of compounding interest, not leverage.
  • #60
  • Dec 19, 2011 5:13am Dec 19, 2011 5:13am
Quoting antonsatu
He is tough businessman. almost bankrupt, but not. The fact: he is more successful. It is very seldom businessman can turn very difficult situation into successful.
He is one of the men.
Thank you
He never filed for bankruptcy, his companies did. He's listed on Forbes list of wealthiest people in the world at 2 billion
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