Anyone here into FOREX?

[Music_Producer]

Today, or rather tomorrow (jun 29) is a HUGE day for Forex traders.. the interest rate decision comes out at 2.15 pm EST. Who knows how much they'll raise the interest rates by.. 25 basis points is expected.. but there are rumors of hiking it by 50 points. If that happens, buy the USD and sell it off for a quick profit.

 

[Hoef]

Today, or rather tomorrow (jun 29) is a HUGE day for Forex traders.. the interest rate decision comes out at 2.15 pm EST. Who knows how much they'll raise the interest rates by.. 25 basis points is expected.. but there are rumors of hiking it by 50 points. If that happens, buy the USD and sell it off for a quick profit.

Arghh sell your stocks......

 

[Hoef]

There are always winners and losers in investments.

Hi Chip NoVaMac ... I ment it positive. I enjoy ~shards~ posts, we have similar interests

 

[~Shard~]

Please tell more about LP's.... I am very interested in that.

The LPs I'm involved with are real estate ventures - a few local businessmen have been developing and leasing properties, and have been looking for investors in the form of an LP, so it's been a pretty good deal - I can honestly say I have part ownership in many of the buildings around town. Basically all a Limited Parntership is, is two or more partners who join up to conduct a business jointly and in which one or more of the partners is liable only to the extent of the amount of money they have invested. As a limited partner, I do not receive dividends, but instead enjoy direct access to the flow of income and expenses. I've done quite well off these investments so far.

I, too, would love to have a finance/investing/trading sub-forum here.

 

[Curren~Sea]

We all play the game of money, whether we like it or not. Unfortunately, not everyone learns the rules. I'm sure you've heard it before that the public school systems are generally void of any type of real world financial training.

This may sound incredibly simplistic but for most people the keys to growing your nestegg are discipline and planning. Some people have a great idea and become rich from it. Other people acquire highly desirable skills and it makes them wealthy. For the rest of us, we need to be prudent with our money and plan for the long term.

My grandfather, rest his soul, was extremely risk averse. He went through The Depression and WWII and knew about hardship. However, on his modest salary he raised seven kids and managed to invest in a few blue chip stocks here and there that he just hung onto for many, many years. It made him a very wealthy man by the time he retired. +2% a year, +5%, -5%, +8%, etc... with compounding that adds up. The point is that most North Americans can probably afford to save, invest, plan, and be patient.

The stock market isn't the only way to go, obviously. My preference is the currency market. There are many other vehicles, as mentioned. However, just working hard every day probably isn't going to cut it, nor will it allow you to retire comfortably or early.

My plan is to consistently make 5-10% per month in forex and compound my earnings. Additionally, I am investing in real estate when I find a good opportunity. Over time, this should provide good cash flow in the coming years.

 

[Music_Producer]

Just as I had stated in my previous post.. today was a chance to make a huge profit.. and luckily I did. The Feds raised the interest rates by only 25 bps, and there was 100 pip drop in the US$. Made about $800 (80 pips profit) in 15 minutes

Had the Fed raised the interest rates by 50 bps.. the USD would have shot up instead..not for too long though, as that would have signalled the end of interest rate hikes.

 

[Music_Producer]

Hey curren~sea.. whats news alerting software do you have? I envy the Bloomberg users as they get their news rightaway.. and get in on the action much earlier than the rest of us!

 

[Curren~Sea]

Sounds like we had about the same kind of day I was underwater on a YEN sell that ended up being quite nice by the time I closed.

I have news coming up on my trade station (FXCM News Plugin) but it is not reliably fast. I don't necessarily trade the news for quick pips. I tend to setup my positions based on fibo's and the Elliott Wave. Interestingly enough, today matched exactly what my expectations were based on this analysis. A major announcement does not have to make me money during the announcement - it can make me money the following week or two.

My feeling right now, however, is that we are establishing what our summer channel will be. And, we can make a lot of money on a 300-400 pip channel!

 

[Chip NoVaMac]

Can't help to feel that FOREX trading is like the "old" day stock trading. Meaning that unless you devote full time and attention to it, then one can have nothing to show for the efforts.

 

[Counterfit]

You do know why they call it XXXX don't you?



It's because Queenslanders can't spell "BEER."

Let me take a crack at it:


B-U-D-erm, ****.

 

[Music_Producer]

Can't help to feel that FOREX trading is like the "old" day stock trading. Meaning that unless you devote full time and attention to it, then one can have nothing to show for the efforts.

Not true at all Chip, but you might feel that if you're a beginner. Its very easy to get overwhelmed by all the movements of currencies (imagine looking at 10 currecny pairs.. all moving differently at the same time, in real time) , looking at the charts, the news, etc etc.. and of course, people like me chatting

You have to narrow it down to the currency pair that you feel comfortable with.. most of the times I only trade EUR/USD. So there's only one pair on my screen, and one chart. I trade on news releases.. so I almost never look at the charts at all.

And for the full time and attention bit, I logged into my forex account 15 minutes before the interest rate announcement.. took my profit of 80 pips, and logged out. That was it! I don't have my forex account active right now.. I will log in later on tonight, when the UK GBP is released.

Yes, when I was a n00b, I used to sit in front of the computer ALL day.. watching everything, quite bewildered with what was going on. And all those graphics tempt you quite a bit to 'sell' or 'buy'.. but you have to be practical. DON'T listen to your gut feeling.. that never works.

Trust me Chip, I spend more time out here on macrumors and with my Nikon than on Forex

 

[Hoef]

Music Producer & Curren~Sea .... Give us also downsides... you can't make money all the time. A good trade seems to bring in $800... What does a bad trade do and how many positive trades do you have over bad?

 

[~Shard~]

Music Producer & Curren~Sea .... Give us also downsides... you can't make money all the time. A good trade seems to bring in $800... What does a bad trade do and how many positive trades do you have over bad?

That's the million dollar question with a lot of investors I know. They're more than willing to tell you about their wins, however they never seem as eager to tell you about their losses. I'm always honest in all my results if anyone asks, whether it be gains or losses. (Not saying these guys are like that either, btw, just making a general comment...)

 

[njmac]

That's the million dollar question with a lot of investors I know. They're more than willing to tell you about their wins, however they never seem as eager to tell you about their losses. I'm always honest in all my results if anyone asks, whether it be gains or losses. (Not saying these guys are like that either, btw, just making a general comment...)

coincidently, that's the same question gamblers try to avoid. They love talking about their big wins, but losses, eh... they'll make them up next round of course!

 

[~Shard~]

coincidently, that's the same question gamblers try to avoid. They love talking about their big wins, but losses, eh... they'll make them up next round of course!

Exactly - there are many parallels when it comes to investing and gambling. And I have seen similar "tactics" as well, as you eluded to - chasing losses, trying to "make it up", "doubling down" in some cases... quite intriguing...

 

[njmac]

...

 

[Music_Producer]

Music Producer & Curren~Sea .... Give us also downsides... you can't make money all the time. A good trade seems to bring in $800... What does a bad trade do and how many positive trades do you have over bad?

Sure, I've lost about $3,000 (in 2005) and made over $15,000 in Forex. There are always ups and downs, but you restrict your losses with 'stop-loss' limits. Luckily, (or rather, by using my head) I haven't hit a stop loss in the last two months.

I lost those $3000 because I was a newbie, and I didn't have a clue what I was doing! More like "Oh.. today the chart is going up.. so maybe it will go down tomorrow.. let me buy this" or I would buy/sell based on other people's suggestions.. or even 'software alerts' which I would subscribe to for $99/month. ON top of that, I used to "Revenge Trade".. if i bought EUR/USD.. and it went down by 50 pips .. I would get mad and buy more EUR/USD to reduce my losses.. but then the bugger would go down another 50 pips!

I didn't look at the reason why the EUR/USD was going down.. no wonder I made losses. And I didn't implement stop loss limits either.

All these are stupid mistakes which EVERY trader makes. The thing is, once you lose $2000-$3000.. you're scared and you never want to do it again. And I didnt.. for a year.. until I came back, got myself a 'game' account and started trading logically. Since the day I opened my account 2 months ago, I haven't had a single loss.

I can't say the same about the stock market.. I've lost $80,000 in stocks because of Enron/Worldcom like bastards. That doesn't happen in currency markets.. its a currency, not a stock. Its not managed by a bunch of greedy corporate jacks.. and it doesn't go from $30 or whatever to $0.30!

 

[Hoef]

but you restrict your losses with 'stop-loss' limits. Luckily, (or rather, by using my head) I haven't hit a stop loss in the last two months.

Thanks .... good info. So you keep money at stake for longer times (rather than in and out quickly)?

 

[Music_Producer]

Thanks .... good info. So you keep monay at stake for longer times (rather than in and out quickly)?

Oh no.. the maximum amount of time that I spend on a trade is 1-5 minutes. Let me give you an example:

Canadian CPI (Consumer price index) is expected to be 0.6% and the exact numbers will come out at 8.30 am EST. Now if the CPI is >0.6%.. the CAD (canadian dollar) will go up against the USD. If the CPI numbers are low.. then the CAD goes down against the USd.. remember, all this happens really fast. If the CPI comes out to exactly as estimated, then I don't do anything.

Since I'm in California, I'm up at like 5.15 am . and I set up my macbook, and parallels running win xp before the 5.30 am news announcement. By 5.27 am I'm absolutely concentrated in front of the computer, with a trade open (5000 units of USD/CAD).. and my finger ready on the trackpad.. I will hit either 'buy' or 'sell' depending on the CPI number.

At 5.30 am the Canadian CPI on my win xp news screen comes out to 2%. Thats way more than the expected 0.6% .. so I hit 'sell' rightaway(I'm selling the USD/CAD which means sell USD and buy CAD). In the next few seconds, the Canadian dollar goes up by 50 pips (or conversely, the USD goes down by 50 pips against the CAD). I don't want to be too greedy.. so I hit 'close' and I make my profit of 50 pips. Depending on how much money you put, 1 pip = 1 cent or 10 cents or 1$ or 100$ or 10000000000$

Sure, the CAD went up still more by about 20-30 pips after I closed my trade.. but I'm happy with the profit I made. I usually try to make about 5 pips profit (everyday) so a profit of 50 pips is great.

The funny thing is, even before I hit 'sell' I can see on the charts that the CAD went up by 30 pips (at exactly 5.30 am)! Why is this? Did someone get the news before I did? Yup, the investment officers who subscribe to Bloomberg news services ($1500 or something per month) get the news instantly.. and they get to make way more pips than I.. or the average trader does.

Read my earlier post about the US interest rate decision.. I mentioned if they raised it to 50 points.. the USD would rise like crazy.. but they raised it only by 25 points.. which was highly expected. That wasn't good news for the US$ (good news for the stock markets though.. stocks and currencies are quite different in trading terms) The USD dropped by 100-150 pips against other currencies.

This is how I trade.. I'm in a trade for no longer than a few minutes. Other traders use charting, technical analysis.. etc. But honestly, I don't have the time and the patience to read a chart and start plotting. I can never understand the logic behind predicting where a currency is going to go based on charts.

I mean, you can't predict what will happen to oil prices by looking at a chart, right? Atleast I can't. On the other hand, if the US invades Iran, then oil will shoot up to $100 per barrel and all your charting logic will fly outta the window.

When you open a Forex account, you have to be careful about the margin they give you. When I first started, I had a 200:1 margin, and $300 to start with. So I could buy $600,000 with that $300.. and obviously, when the market moves against you.. you lose your money that fast.. and I wiped out my $300 in 5 minutes! Thats because I had no clue what my margin was, what a margin call was.. etc. etc. Now I do, and my account is set at 50:1 margin.

If you have $1000 sitting in your forex account, don't use all of it on one trade.. keep $500 as a backup.. to accomodate a margin call. But you *shouldnt* get a margin call in the first place, thats why you should always employ stop-loss. My stop loss is set to 10 pips.

The best advice I can give you is : 1. Don't trade emotionally.. always use your brains, and know financial terms, or rather economic terms like CPI, PPI, Interest rates, Unemployment numbers, Jobless claims, New Home Sales.. etc.. all these affect currencies.

2. Use a Forex demo or game account.. they give you $50,000 'virtual money' Treat is as though its real.. people have a tendency to bet all $50,000 on a trade.. and then if they make a profit they get excited and open a real account.. and lose their money.

3. Trade with the game account for atleast 2-3 months, and see what mistakes you've made. See how a news release affects the currency. You can have great US job results at 8.30 am EST, but if the news conflicts with some news regarding terrorism (e.g. some bomb blast in new york at the same time) then don't trade!

4. always use a stop loss.. your goal is to make profit.. and not to *wait* for it to happen. If you know what you're doing and you're confident.. then you *will* make a profit. If you made a mistake, then atleast the stop loss will limit your losses.

5. If you make enough profit, you can always buy me a beer

 

[Chip NoVaMac]

Oh no.. the maximum amount of time that I spend on a trade is 1-5 minutes. Let me give you an example:

Canadian CPI (Consumer price index) is expected to be 0.6% and the exact numbers will come out at 8.30 am EST. Now if the CPI is >0.6%.. the CAD (canadian dollar) will go up against the USD. If the CPI numbers are low.. then the CAD goes down against the USd.. remember, all this happens really fast. If the CPI comes out to exactly as estimated, then I don't do anything.

Since I'm in California, I'm up at like 5.15 am . and I set up my macbook, and parallels running win xp before the 5.30 am news announcement. By 5.27 am I'm absolutely concentrated in front of the computer, with a trade open (5000 units of USD/CAD).. and my finger ready on the trackpad.. I will hit either 'buy' or 'sell' depending on the CPI number.

At 5.30 am the Canadian CPI on my win xp news screen comes out to 2%. Thats way more than the expected 0.6% .. so I hit 'sell' rightaway(I'm selling the USD/CAD which means sell USD and buy CAD). In the next few seconds, the Canadian dollar goes up by 50 pips (or conversely, the USD goes down by 50 pips against the CAD). I don't want to be too greedy.. so I hit 'close' and I make my profit of 50 pips. Depending on how much money you put, 1 pip = 1 cent or 10 cents or 1$ or 100$ or 10000000000$

Sure, the CAD went up still more by about 20-30 pips after I closed my trade.. but I'm happy with the profit I made. I usually try to make about 5 pips profit (everyday) so a profit of 50 pips is great.

The funny thing is, even before I hit 'sell' I can see on the charts that the CAD went up by 30 pips (at exactly 5.30 am)! Why is this? Did someone get the news before I did? Yup, the investment officers who subscribe to Bloomberg news services ($1500 or something per month) get the news instantly.. and they get to make way more pips than I.. or the average trader does.

Read my earlier post about the US interest rate decision.. I mentioned if they raised it to 50 points.. the USD would rise like crazy.. but they raised it only by 25 points.. which was highly expected. That wasn't good news for the US$ (good news for the stock markets though.. stocks and currencies are quite different in trading terms) The USD dropped by 100-150 pips against other currencies.

This is how I trade.. I'm in a trade for no longer than a few minutes. Other traders use charting, technical analysis.. etc. But honestly, I don't have the time and the patience to read a chart and start plotting. I can never understand the logic behind predicting where a currency is going to go based on charts.

I mean, you can't predict what will happen to oil prices by looking at a chart, right? Atleast I can't. On the other hand, if the US invades Iran, then oil will shoot up to $100 per barrel and all your charting logic will fly outta the window.

When you open a Forex account, you have to be careful about the margin they give you. When I first started, I had a 200:1 margin, and $300 to start with. So I could buy $600,000 with that $300.. and obviously, when the market moves against you.. you lose your money that fast.. and I wiped out my $300 in 5 minutes! Thats because I had no clue what my margin was, what a margin call was.. etc. etc. Now I do, and my account is set at 50:1 margin.

If you have $1000 sitting in your forex account, don't use all of it on one trade.. keep $500 as a backup.. to accomodate a margin call. But you *shouldnt* get a margin call in the first place, thats why you should always employ stop-loss. My stop loss is set to 10 pips.

The best advice I can give you is : 1. Don't trade emotionally.. always use your brains, and know financial terms, or rather economic terms like CPI, PPI, Interest rates, Unemployment numbers, Jobless claims, New Home Sales.. etc.. all these affect currencies.

2. Use a Forex demo or game account.. they give you $50,000 'virtual money' Treat is as though its real.. people have a tendency to bet all $50,000 on a trade.. and then if they make a profit they get excited and open a real account.. and lose their money.

3. Trade with the game account for atleast 2-3 months, and see what mistakes you've made. See how a news release affects the currency. You can have great US job results at 8.30 am EST, but if the news conflicts with some news regarding terrorism (e.g. some bomb blast in new york at the same time) then don't trade!

4. always use a stop loss.. your goal is to make profit.. and not to *wait* for it to happen. If you know what you're doing and you're confident.. then you *will* make a profit. If you made a mistake, then atleast the stop loss will limit your losses.

5. If you make enough profit, you can always buy me a beer

Dooh! You may have lost some of us. Keep in mind some of us are used to stocks. And we hear about future products and such. I mean how many of us don't wish that we had jumped on Apple over the past few years.

You are talking about short trading for those of us that have basic knowledge of the stock market. Between those of you in the "know"; how did you fair in the Fed's rate increase? And how did you hedge your bets?

 

[Music_Producer]

Dooh! You may have lost some of us. Keep in mind some of us are used to stocks. And we hear about future products and such. I mean how many of us don't wish that we had jumped on Apple over the past few years.

You are talking about short trading for those of us that have basic knowledge of the stock market. Between those of you in the "know"; how did you fair in the Fed's rate increase? And how did you hedge your bets?

Sorry Chip.. I tried to make it as simple as I could.. but I guess I got carried away

Just visit this link, it will explain the basics :

http://www.fxcm.com/what-is-forex-trading-overview.jsp

For now, let me try teaching

In the stock market, you're dealing with one stock.. and not pitting it against another. For e.g. you bought AAPL at 28.. and you sold it at 60.

With currencies, they are all paired. Lets take EUR/USD for example.

So when I "Buy" EUR/USD.. I am buying Euros and selling dollars. If I "Sell" EUR/USD then I'm selling Euros, and buying dollars.

One currency is always the 'base' currency.. EUR/USD will always be EUR/USD and never USD/EUR.

Lets take USD/JPY. If you want to buy dollars, you just buy USD/JPY. If you want to sell dollars, you sell USD/JPY. If you want to buy Yen, you SELL USD/JPY and if you want to sell Yen, you BUY USD/JPY. Get it? Come on, tell me you get that Its a lot easier than taking a panorama pic with crazy exposures!!!!


Just like in the stock market, when you buy something at a low price, and sell it at a higher price.. you make a profit. Similarly, you can 'short' or sell a stock at a high price.. and later on, buy it at a lower price to make a profit as well.

The example I gave about the Canadian CPI was that of fundamental trading.. or trading on the news.

As for the interest rate decision, if the Feds had raised it by 50 points, I would have bought the USD, because I know its going to go up. How do I do this? I "sell" the EUR/USD ..which means I am selling euros and buying dollars.

Now they raised it by only 25 points. And this was absolutely anticipated. The markets had already 'factored' this in their trading.. but they were hoping for more. There were even rumors of a 50 point raise. So when it came out 25 points, the markets were disappointed, and the USD dropped. Additionally the Fed chairman didn't sound too worried about inflation. Had he said "Inflation is a definite risk and we will raise the interest rates again" etc etc the USD would have gone up. Which is why i traded a couple of seconds after the news.. to see what the Fed chairman had to say about the dollar.

The same thing happened almost a month ago, when the ECB (the european feds) raised the Euro interest rates. They raised it by 25 points.. and that was already expected.. and the EUR dropped by 300 points against the USD (gradually.. not in one day)

Here's a tip Chip.. whenever the next interest rate thing comes up.. I'll let you know.. have your demo or game account ready. Wait for the news, and if the interest rates are raised as per expectations.. see what happens. Also, look at the chart (a 5 second interval chart) and you will see the reaction immediately. The chart will begin to move upward/downwards depending on the news.. and you will know how the market has reacted.

To make this simpler, I am going to paste a picture of my trade regarding the GBP/USD (british pound vs dollar) I did this trade on friday morning.. or thursday i'm not sure. I think it was friday morning.

The GBP GDP numbers were to come out at 4.30 am EST.. quarterly and yearly. They came out better than expected, and bam! The GBP started rising against the US dollar. In the picture, see those two triangles? The blue one on the bottom, is where i bought the GBP.. the orange one on the top is where i sold it and made a profit of 7 pips. If you look at the chart, the GBP went up waaaaaaay more after I sold it.. I could have made a profit of 70 or more pips.. but its ok. I like to get in and out fast.. I don't like surprises.

As a newbie, I recommend you do NOT trade when interest rates decisions are announced. Just watch.. and the forex news ticker will let you know of analysts' expectations, etc. Its like a 'chatter' when they expect how much rates are expected and so on. If I told you that Hey Chip, I'll raise interest rates in August by 25 points. You say Ok.. cool. As july and august pass.. there are signs of increasing inflation, and its clear that I should raise rates by 50 points if i want to control inflation. But I dont.. I stick to what I said and I raise it by 25 points. The market thinks thats crap, because it wont control inflation at all. so the USD dives.

I would suggest that you trade on smaller news.. like Jobless claims, home sales, retail sales, etc etc. Once you're seasoned.. you will *know* how the market will react when it comes to interest rates decisions. I personally love trading on interest rates decisions because currencies move by a huge margin - 100-300 pips..so thats an opportunity to make a lot of profit.

I'm sorry if I can't explain this that well.. I should be there in person. Anyway, visit that link I posted, and check out the basics. And don't pick up a book on forex from your bookstore.. they're crap!

 

[~Shard~]

Just wanted to say thanks for that excellent post Music_Producer. As a "seasoned investor" myself, I appreciate you sharing such information and in such detail. It's great to see fellow investors here on MacRumors so that we can engage in such discussions - and hopefully help someone while we're at it.

 

[Music_Producer]

Oh yeah, you're more than welcome! All the fine folks here are always willing to help when I have a mac problem or a rather retarded question.. so I'm always ready to give back.. and more.

Now if you're a PeeCee user on the other hand.. hehe

 

[Hoef]

Excellent posting Music_Producer!! So you trade the moment the news becomes available to you and not before ?.... (which is more like betting on the news I suppose).

What news product are you using again? Obviously a windows product At work I use reuters sometimes. I wish I had it at home....

 

[Music_Producer]

Excellent posting Music_Producer!! So you trade the moment the news becomes available to you and not before ?.... (which is more like betting on the news I suppose).

What news product are you using again? Obviously a windows product At work I use reuters sometimes. I wish I had it at home....

Exactly, I trade as soon as the news comes out. I never trade before.. that would be betting or gambling, just like you said. I use Tradethenews.com.. they offer a $39.99 per month service (text only) and yeah.. its windows only.. which is why I use parallels.

But like I mentioned earlier, keep the chart open (5 second interval) Lets say the news is supposed to come out at 8.30 am. At exactly 8.30 am *before* YOU get the news, the chart moves up or down.. so those investment officers have already got it before you. Another few seconds and *ping* you get the news alert, and its still not late to jump in.


Also, you have to make sure you're trading on some good/bad news. If jobless claims come out as expected, then don't trade.. you need a strong deviation for the market to really move like crazy. Even a 0.2% deviation in most cases works. There are about 15 important economic releases per month, so you can practice quite a bit. It all depends on how early you can wake up! (if you're on the west coast)

Hopefully one day I will subscribe to bloomberg News Anywhere .. its $1750 per month I'm sure I will be able to afford it based on my profits.. but its just.. paying that much money for just news when I could buy a macbook with that every month!!