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08-12-2011, 06:10 AM
| #2 (permalink) | |
| Senior Member Join Date: May 2011
Posts: 440
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Forex Training Online: Learn Foreign Exchange (FX) Currency Trading | |
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08-12-2011, 12:49 PM
| #3 (permalink) | |
| Family Member Join Date: Nov 2006 Location: Berlin, Germany
Posts: 8,749
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It allows you to make money if you get the risk assessment right. People who don't want to be subject to any risk shouldn't trade. | |
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08-12-2011, 01:36 PM
| #4 (permalink) |
| Family Member Join Date: Feb 2010
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FX is not a risky market any more so than most others. In fact, the arbitrary position sizing for ECN/bucketshop spot FX makes it much less risky than most futures markets. The 24 hour liquidity helps too since it makes stops a more effective means of risk control. The only downside of the market from a risk perspective is the poor availability of exchange-traded options for hedges. The issue with FX is that the majority of the business takes place where the typical retail trader can't see it. Most FX transactions are interbank, and many retail FX platforms provide essentially no volume information whatsoever. Combine that with the standard bucketshop tendency to mess with the price quotes, and the data feed situation is very bad. |
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08-13-2011, 02:57 PM
| #5 (permalink) | |
| Senior Member Join Date: Jul 2011
Posts: 626
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- Positive cost of carry - Only using leverage to cost average down - Only selling at a profit - Keeping a clear understanding of how much volatility your leverage can handle - Keeping a clear understanding of what the central banks can and cannot do to influence the currency - Keeping an insurance fund just in case - Not expecting to make 100% a month - Realizing this is a long term game and that your equity will never remain stable and should never be taken seriously. You'll do fine. | |
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09-03-2011, 11:57 AM
| #6 (permalink) | |
| Junior Member Join Date: Sep 2011
Posts: 4
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I can't work out if you're currently trading or thinking about getting into forex. I'm going to assume you're thinking about it so that my advice is more applicable to others too I wouldn't say it's risky, you can easily manage your own risk levels But I would say thought that despite how it looks like easy money, you are going to get pwned. You're competing with people who literally do this for a job. It's all they think about all day. You're competing with really smart people who write automated trading programs which stay ahead of the automated trading THEIR competitors wrote last month. You're competing against firms who are so cutting edge they (I'm not making this up) install servers that are physically closer to the exchange so that they get an advantage by trading microseconds faster then other firms. Microseconds! Meanwhile you're going 'hmm will it go up or down?? maybe I should consult my astrology charts" Run away from forex, absolute waste of your time. You're 1,000,000,000x better off thinking about ways you can leverage off your unique personal skills and add value to peoples lives. | |
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09-03-2011, 04:22 PM
| #7 (permalink) | |
| Family Member Join Date: Sep 2008
Posts: 2,950
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Typically, with higher risk, comes the chance for higher rewards. Or rather, vice versa. But still, high risk is a great environment for some people to invest in. | |
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09-04-2011, 03:30 AM
| #8 (permalink) | |
| Junior Member Join Date: Aug 2011
Posts: 20
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In any market there IS risk involved. That's a given. With the right strategy you can make money. An easy example would be playing poker. There are people that make money playing poker every day. BUT they take time to learn the game. FX is the same thing. You have to learn how f/x trading works. If someone were to tell you that there is NO risk, run. You are putting money into something that is outside of you control. So my question for you is are you looking to get started? What level of understanding do you have with forex trading? Hope this helps. | |
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09-05-2011, 02:44 PM
| #9 (permalink) |
| Senior Member Join Date: May 2011
Posts: 440
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Forex is a high risk instrument. If it suits you personality and goals and you're prepared to put the time in to learn it then it can be very lucrative. Like everything else it has a risk/reward element which in this case is very high on both sides of the coin. You get out what you put in |
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12-13-2011, 04:11 PM
| #10 (permalink) | |
| Junior Member Join Date: Dec 2011 Location: Singapore
Posts: 2
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1. Too big for a small capital. 2. Earn $100 per day. Provided you have a minimum capital of $10000 3. Scalp the market for a few pips but your stoploss is like 1000pips away. 4. Brokers fk up live feeds with inconsistent connection. What about mortar and brick shop? The ROI is like like 2 to 5 years and your monthly overhead are high. What about working for other people. Are you replaceable? You are nothing then a commodity in this globalization world where freelancer.com, fiverr.com and elance.com can easily replace you. Toto and 4D in Singapore is a craze and its ROI is like in the hundrends thousands to one but every week people pour $50 to $100 into it. Wall Street over publicize its rewards and risk and downfall. Overleverage is the downfall of many brokers and banks. With the above myth do I still wanna trade forex for a living? Hell yes if I take care of my downside my profits will take care by itself. Beside I want to take money from forex like cash from ATM and travel the world. Right now working hard to accumulate my grubstake to at least $50 000 to quit my business and trade full time. | |
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12-15-2011, 12:06 PM
| #11 (permalink) |
| Senior Member Join Date: Jul 2011
Posts: 626
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Forex trading is not hard. Forex trading is not risky. Forex trading is not profitable and consistent enough for you to rely on it as your main source of income/capital appreciation if your working capital is only 50k, unless you live very modestly. You can make a lot of money trading forex but you simply cannot predict when the money will come. That is a rule of nature. People who think they can are gamblers relying on luck, they are not traders. You might hit a lucky streak at the start of your trading or you might take a year (or more) to average your trades into profit. That is what traders get paid to do, take the risk of losses. More specifically they get paid to average the risk of losses in a rational manner. Traders are like insurance companies, in a sense. As a rule you shouldn't take more than 1% of your capital as income. You can grow your funds faster than that, meaning that 1% will become larger as time goes on, but you shouldn't expect reliable income. Now, yes, there are some more sophisticated traders that can do better than others by doing more indepth thinking/analysis (by working harder). And there are also some traders who think they are sophisticated and get in their own way. The key is to remember that traders are like insurance companies. If you can make a more accurate analysis of risk, you can trade in a more rational and therefore more profitable (in the long run) manner. Assuming you are actually right. And you are probably not. A basic analysis is sufficient and usually better than overthinking it. So no, forex trading is not hard. And it is not "risky". But trading, all trading, is inherently risk management. If you are not a good risk manager, doesn't matter what kind of trading you do, you'll fail. In a sense, trading (forex included) is a form of gambling where you have the chance to be "The House"... but not the guarantee. I could be biased because finances were my obsession so to me it doesn't feel hard, it feels natural. To someone that has not spent the time I spent, in the way I spent it, it may feel overwhelmingly hard. Last edited by lycan; 12-15-2011 at 12:27 PM. |
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12-15-2011, 11:17 PM
| #12 (permalink) | |
| Junior Member Join Date: Dec 2011
Posts: 24
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You really want to trade, don't put more than 5-600 dollars in an account, hell, go as high as 1,000. Use 1:100 leverage and be happy with 20-30 dollars a day on average (that's 1 dollar/pip at a 10,000 k lot) which is pretty doable. Say you manage to make 20 dollars a day, that means 400 dollars a month, that's 40% on your initial thousand (beats the crap interest rate in the US). All while the rest of your money is secure in the bank. There's nothing like peace of mind when trading, if you really want to go down this road, then the one you get by knowing you can't lose more than is in your account is priceless. Although I am beginning to have doubts about whether one can win long term. Bucket shops don't like it when you win (and make no mistake, every last one of them is a bucket shop, even those who claim your order goes straight into the interbank market - retail orders are too small to be accepted in the market, so usually it's your broker who is your counterparty). When I was doing carry trading, they let me do it at first and then they cut the interest I was earning to basically nothing, only to put it back to what it was after I washed out). Another time, when I was looking to go back in the saddle after my demoralizing loss, I started looking for other carry trade candidates, I saw they had raised the interest they paid on the EURO/Turkish lira to an eyepopping level. Being once bitten, twice shy, and since I am distrustful by nature, I became a little suspicious as to why they would all of a sudden pay such high interest on that pair. Turns out it, soon after that it starting going in the opposite direction. Had I shorted it in an attempt to collect interest, it would have depreciated by 37%, which meant a loss of more than 3,500 dollars on a lot of 10,000 units, a loss which the interest earned would not have been able to cover (while successfully picking the absolute top, or bottom if you will). Another thing that happened to me with the same broker. They said they needed to truncate my trade history (and that my full statement would still be available for a small fee). In the process of truncating the trade log, a software error caused my account to be credited with the equivalent of 3,000 dollars (I trade in my national currency). This happened after the aforementioned loss. I should have taken the money and run so to speak, especially since what I made them in fees would have more than amply made up for that amount, and after all it just goes to show that nowadays money can indeed be created out of thin air. However, since I was worried they had actually credited the wrong account, I actually called them on the phone and told them they had made a mistake (yes, I'm a schmuck, anyone else would have taken the money and kept mum). I swear, when the girl who was my account representative heard me on the phone say "I think you made a mistake" you could tell from her voice she'd gone white in the face. I told her how they had mistakenly credited my account, and she said "well, ok we'll see how to fix it". Guess what, I was unable to connect to the server for 30 minutes while they "figured out" how to reverse their blunder. They fed me some line about how it happened to all their clients. I'll bet it did, especially if everyone received a lot of money. But the fact that brokers have the ability to unplug you or to delay your execution (which they frequently do - that's what requotes are, actually) is really worrisome. You'll probably say I must have traded with some unregulated brokers. Not so: I was extremely paranoid (I am about everything, as I am very distrustful due to my life experiences) so I checked them out: they are regulated in several countries, they were even among the few forex brokers that were regulated by the Securities Commission in my country. They entered the market by offering a Porsche Cayman as a prize, to whoever won a virtual trading contest. Some obscure guy won, god knows how. I looked at the Metatrader Statement: the numbers didn't add up. Somehow I think they doctored the statements after the fact, since the statements weren't audited by anybody, you can imagine that would have been pretty. Another thing that was funny with the same brokerage: they used to invite prospective customers to meet their team for coffee in a coffeeshop. Everything paid by the firm of course. I met a guy there who acted like he was very knowledgeable about forex (not employed by the firm). He claimed he was an independent trader (you know, that thing many people wish to be). He claimed he was making about 2,300 dollars a month, which let me tell you in my country is a really big deal, if you make that much money you're basically a god, to decent people anyway). Well, upon hearing I had 12,000 dollars in my account, he started pressuring me into "working with him". Which meant, he "had an infallible method" but of course, he "could not share it with me for free". Because, you know, that would have been "unfair" and "impractical" (his words). The more he tried to convince me to work with him, the more I was skeptical. My skepticism became even more pronounced when I saw his car. It was ages old, one more day and the wheels would fall off. I mean if he had such an "infallible" method, why the hell couldn't he afford at least a second hand shiny BMW? I actually found out later he was divorced, and his second wife was the only one working in the family (lucky bastard) while he "traded" everyday. Of course, all the little money that he had went (and he once invited me to his place to have dinner with him and his wife) and on the way he told me not to tell her that he had lost the 3,000 Euros he had in one account with Oanda. The story ends like this: some time later, the forex brokerage in question called me to tell me they were hosting a (very expensive) seminar about trading techniques at a luxury hotel at the seaside. Guess who was one of the speakers on the panel? None other than my old loser "buddy" with the "infallible" trading method. His speech was called: "Myth and reality in trading". How very appropriate? Like Gordon Gekko said in "Wall Street": "I guess he's giving lectures on how to lose money". I mean, really: "The myth is that I am a succesful trader, but in reality, I am mooching off of my wife". As you can tell I am pretty ambivalent about this, and this industry is filled with half truths, snake oil salesmen and unscrupulous characters. Perhaps you can make money with it, but you really should go into it with both eyes open and be extremely cautious. I strongly recommend some reading about this before you start if you're really serious: Edwin Lefèvre - Reminiscences Of A Stock Operator (not a forex book but very good advice for a wannabe speculator) it's a book about Jesse Lauriston Livermore - Wikipedia, the free encyclopedia Agustin Silvani - Beat The Forex Dealer.pdf 8 Reasons Not to Daytrade Altucher Confidential Jason Alan Jankovsky - The Art of the Trade - What I Learned And Lost Trading the Chicago Futures Markets.pdf I can recommend some more if you're interested but these four are a must because they tell you some of the not so pleasant things about the game of speculation. Most of the books written about forex aren't worth the paper they're printed on. Friendly advice: just because you can use 1:500 leverage doesn't mean you should. I'd suggest going for 1:10 or even 1:5. I am even considering trying no leverage at all, to see how it goes. You must have heard about the recently bankrupt brokerage firm MF Global. They were using 1:40 leverage. Which to me seems crazy, even though I traded with 1:100 myself. Last edited by thehawkman; 12-15-2011 at 11:28 PM. Reason: spelling mistakes | |
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12-15-2011, 11:31 PM
| #13 (permalink) |
| Junior Member Join Date: Dec 2011
Posts: 24
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And if you're an American, from what I see, salaries in your country are huge. I doubt you can make a decent living trading just 50,000 dollars which like I said in the beginning, I doubt would even be a good idea in the first place. When you put all your savings on the line, you lose your clear judgement and you become emotional. Which is fatal, as proven by what happened to me. Also, trying to make the rent will cause you to force trades where there aren't any, lead to revenge trading and so on. I'll stop here, before I write a novel. Think what you will of what I wrote, but do take it into consideration. Had to break down the original post into two parts, because after editing it, it exceeded 10,000 characters. |
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12-16-2011, 12:03 AM
| #14 (permalink) | |
| Family Member Join Date: Nov 2006 Location: France - Japan - Korea
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12-16-2011, 12:31 AM
| #15 (permalink) | |
| Junior Member Join Date: Dec 2011
Posts: 24
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But since from what I've seen a nurse makes about 3,000 a month in the US, which I assume is a pretty low wage, him having 50,000 dollars and trying to make 36,000 a year, which is about 62% a year doesn't seem feasible, not without crazy risk, meaning he'd be likely to blow his account just like I did. Last edited by thehawkman; 12-16-2011 at 12:36 AM. Reason: corrections... | |
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12-16-2011, 12:45 AM
| #16 (permalink) |
| Family Member Join Date: Nov 2006 Location: France - Japan - Korea
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I'm not from the US either (although I did live there briefly), I am from France. But same difference: the French minimum wage may be 1350 euros, but once you know that it is virtually impossible to find an apartment in Paris for under 1000 euros a month, it's easy to see that most people have no hope of saving 50,000 bucks in their life time. Lawyers making $130,000 a year, sure, but you need to balance that number with the starting salary of $60,000 for over $100,000 of average student debt. |
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12-16-2011, 12:49 AM
| #17 (permalink) | |
| Senior Member Join Date: Jul 2011
Posts: 626
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Last edited by lycan; 12-16-2011 at 12:58 AM. | |
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12-16-2011, 01:13 AM
| #19 (permalink) | |
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12-16-2011, 01:16 AM
| #20 (permalink) | |
| Senior Member Join Date: Jul 2011
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Traders who use stop losses are selling their losing positions to traders who actually know how to turn them, on average, into winning positions. If such traders did not exist and had lots and lots of cash to finance their trades, markets would crash constantly. Every trade has two sides, by definition. Both sides always believe they are right. If there is not someone who disagrees with your stop loss, it is useless. If there is, maybe you need to rethink your trade. Last edited by lycan; 12-16-2011 at 01:21 AM. | |
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12-16-2011, 01:22 AM
| #21 (permalink) | |
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12-16-2011, 01:26 AM
| #22 (permalink) | |
| Family Member Join Date: Feb 2010
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Answer: you lose everything. Averaging down produces only the illusion of profits - long strings of marginally profitable trades followed by one huge blowup. It's like a reverse lottery for the misinformed. | |
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12-16-2011, 01:47 AM
| #23 (permalink) | |
| Senior Member Join Date: Jul 2011
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I understand what you are saying but the fact is, the kind of blowup necessary to destroy the account of a serious trader would be so severe that the only security against it is learning survivalist skills. You are more likely to lose the money through non-trade related matters. The only serious barrier to this is capital. If you don't have enough capital, lot sizes will force you to risk too much in any given trade. Last edited by lycan; 12-16-2011 at 01:49 AM. | |
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12-16-2011, 02:18 AM
| #24 (permalink) |
| Senior Member Join Date: Jul 2011
Posts: 626
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Full disclosure: I do not currently trade and have lost two forex accounts with around 1k USD worth of cash each. Both accounts doubled before they crashed but they did crash. However, they didn't crash because I didn't know what I was doing. They crashed because I accepted that risk when I started trading them. I accepted that risk because I was in severe depression and suicidal and did not have the capital necessary to make any significant return (in USD terms) so I made a bet, knowing it was a bet, hoping to acquire the capital necessary to not have to make such a bet. If you don't need the money, you can do okay with 1k USD by trading a micro account. The equivalent for a regular account is 100k. This is the absolute minimum you need. If you are willing to leave it untouched you can even grow this 1k into a small fortune... eventualy. What you can't do is believe you can "work" your way into reliable extremelly high yields. If your goal is to beat the game, you would be better off as a professional poker player. Then again, maybe I'm wrong about being able to outsmart the market. Maybe all you need is some NZT. Last edited by lycan; 12-16-2011 at 02:27 AM. |
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12-16-2011, 10:00 AM
| #25 (permalink) | |
| Junior Member Join Date: Dec 2011
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Plus, the so-called problem of averaging down is only one when you're leveraged. If you were to average down the EURUSD by buying 5 lots of 10,000 over time at 1:1 leverage, all you'd have is a paper loss. Let's say your average price you bought those lots at is 1.29. Sure it may go down to 1.10 (that's a 1900*5 pips loss=9500 dollars paper loss) but the price will eventually go back up. Imagine holding that position until the exchange rate reaches 1.45. That's a profit of 5*1600 pips = 8000 dollars, up from a paper loss of 9500. Some brokers may even pay you interest when you're long the EURUSD. On the other hand I did have an automated system that closed trades very quickly and traded very frequently. It had a huge return (about 50% on 5,000 Euros), the only problem was that I didn't know how to optimize for fast quick drops as it would keep trading against the trend. The planned change in Metatrader, which will average the price of your positions instead of keeping them separate, will only compound the difficulties in making a profit trading. Last edited by thehawkman; 12-16-2011 at 10:02 AM. | |
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12-16-2011, 12:54 PM
| #26 (permalink) | ||||
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12-16-2011, 04:10 PM
| #29 (permalink) | |
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Average down in any one of those currencies, and you go broke. Seriously, everything you say in these finance threads is so incredibly wrong and dangerous that I just hope no one ever acts on anything you say. Last edited by SnerpGoodWord; 12-16-2011 at 04:13 PM. | |
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12-16-2011, 04:32 PM
| #30 (permalink) | ||||
| Senior Member Join Date: Jul 2011
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You are also wrong. It did not go to zero. It was converted into a new currency. Quote:
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