Anyone here into FOREX?

[~Shard~]

Hi everyone! I found this thread a few weeks ago, read the entire thing (!), and have been watching it ever since. I briefly looked at FOREX a few months ago, but couldn't find any good explanations for trading techniques, etc. This thread has been immensely helpful in explaining things, and pointing out some other website which may help. I've opened up a practice Oanda account, but haven't been able to practice any news trades due to class schedules.

Now, I'm wondering about this last statement:
"Sure, maybe you'll only have $50 in your account, but that could quickly turn into a $500 loss if you are not careful - please, don't get margin called."

I thought FOREX brokers had a built-in safety which prevented one from losing more money than they have in their account. In the above example, if your trade took your account under $0, it would automatically close the trade - as they can't expect someone to pay money they don't have. And I imagine collection agencies would be a hassle.

Again, thank you all for such invaluable information!

I'm glad you have found this thread to be helpful - that's primarily what it's here for!

As for the margin call, oh no, you can definitely lose your shirt. If a broker has some sort of "safety net" in place, well, okay, perhaps that will help (it would depend on the broker I guess) but trust me, a broker will have no problems whatsoever in liquidating your other positions to cover a margin call or ask you to deposit additional funds to cover your loss. And if you don't, you'll be in a world of financial and legal hurt. Why do you think stock traders were jumping off rooftops in 1987?

 

[Music_Producer]

Toreador.. if you have $50 in your account and you make a couple of bad trades with high margin.. you will keep losing till you probably have $10 left (because even that's not enough to make a trade with a high margin) For e.g.

Say I have $50 and I trade EUR/USD at a 50:1 margin and buy 1000 units of EUR/USD at 1.3197. I entered the trade with the hopes of making a profit i.e eur/usd would go up.. but instead, it goes down.. way down. When it hits 1.28 I get a margin call.. i.e. my open position is automatically closed for a loss of $37. If the EUR/USD dipped further than 1.28 then you would probably go in a negative balance.. which you obviously don't have.. and they won't collect that from you.

So they'll close the trade when the loss is precariously close to your account balance. I did the same mistake when i first started trading. I had no idea what 100:1 margin meant or whatever. I started with $400 on a forex account that had 400:1 margin. So I was excited and thought 'oh wow! 400 to 1.. that means with 400 bucks i can buy 160000 $ worth of currency! woo hoo!!'

Yeah.. woo hoo.. the minute i went in a loss of like 20 pips.. boom.. my position was closed and i lost $300. I think I spent the rest of the day going "WTF? WTF? WTF? WTF?" and driving around town with a blank look on my face.

Basically.. I would trade like this.. if I have $100 in my account, I would trade with 1000 units at the most. If I had $1000.. I would go to 10,000.. and so on. Just multiply by ten (this is for eur/usd.. gbp/usd would be a lesser amount) This is till you can practice with a real live account.. whether you make a 1 cent profit or a $1000 profit.. profit is profit. You will learn how you made that profit, and why you made it. So it's good to start off small. If you are a first timer with a $100 deposit.. start with trading only 100 units, not 1000.

Once I started making profits with a few cents.. i moved on to making profits with a few dollars. Yes, I would stay up all night to make one trade.. to nab $3. Sounds like a lot of work to make a measly 3 bucks.. but that gave me the experience that I have now to make profits of hundreds of dollars.. even thousands. Now I know why NFP trades are volatile.. why the GBP can get an unexpected rate hike or cut.. how currency speeches work.. and so on.

So when you see Forex brokers offering "400:1 margin!" .. be careful. You can easily get wiped out with one bad trade. Also, don't sign up with brokers that ask for a minimum trading size like 100,000 units or whatever. Safest bet is to stick with Oanda.. you can play with even $10 and trade 100 units and practice.

 

[~Shard~]

Once again, good advice Music_Producer. I'd like to stress though that, as I said, brokerages can indeed ask you to deposit additional funds to cover losses in some cases and it's not like all you can lose is your $50 initial investment (as an example.) Just look at what happens with short-selling on the markets and then good old companies like Amaranth.

 

[Toreador93]

Well thanks a lot guys! I'm glad I asked before I went ahead and lost all my money, and my shirt!

Keep up the good work!

 

[~Shard~]

Well thanks a lot guys! I'm glad I asked before I went ahead and lost all my money, and my shirt!

Keep up the good work!

No problem.

And yes, it especially sucks if you have a nice shirt.

 

[Hoef]

mobile trading platform

guys, are you aware of have you experience with a "mobile" trading solution? I will be traveling a lot pretty soon and hate the prospect of not having access to markets when I want to ..... I guess I am addicted

 

[~Shard~]

guys, are you aware of have you experience with a "mobile" trading solution? I will be traveling a lot pretty soon and hate the prospect of not having access to markets when I want to ..... I guess I am addicted

I believe CMC Markets has some type of mobile platform that allows for trading on your cell phone via a lightweight client, but I would really question the reliability of such a service. All you need is your wireless service dropping a packet or two or dropping service all together, even just for a second, and you're royally screwed.

 

[Music_Producer]

Haha Shard @ Amaranth.. morons! Sorry I didn't reply to your earlier question about the trades coming up this week.. me and the wife just adopted a kitty.. she's a year old and her name's Paris.. will post on her in another thread ..so been busy with that Also, i think they let you trade on margin and then take money from you.. when it comes to stocks.. not forex.. but then i could be wrong But it's best not to never come near any margin call.. and never put most of your money in one trade anyway.

Yeah, I'll be trading the cpi, ppi reports for sure, the us trade balance, interest rate statement ( i feel they might raise the rates.. just a feeling) gbp retail sales, etc.

 

[~Shard~]

Haha Shard @ Amaranth.. morons!

Yep - makes me think we could run our own hedge fund better...

Sorry I didn't reply to your earlier question about the trades coming up this week.. me and the wife just adopted a kitty.. she's a year old and her name's Paris.. will post on her in another thread ..so been busy with that

Cool, send me a link to the other thread when you post some pictures.

Also, i think they let you trade on margin and then take money from you.. when it comes to stocks.. not forex.. but then i could be wrong

It is definitely the case with stocks, I know that one (although as I said perhaps different brokers handle things differently...) - if you read CMC's fine print wrt margin (at least as far as share CFDs go) I believe they comment on this very thing. At any rate:

But it's best not to never come near any margin call.. and never put most of your money in one trade anyway.

Yep.

Yeah, I'll be trading the cpi, ppi reports for sure, the us trade balance, interest rate statement ( i feel they might raise the rates.. just a feeling) gbp retail sales, etc.

Man, if they raise rates the EUR and GBP will get hit hard, no? Especially because I believe consensus right now is not for a rate hike, is it not? I haven't been following it too closely as of late... I'll be at work during the announcement, so I'll see if I can swing something so I can keep an eye on it...

Should be a fun (and hopefully profitable) week!

 

[Music_Producer]

The AUD/JPY carry traders are in full swing right now.. AUD/JPY has smashed through the 91.85 point. The key to a successful carry trade is to hold on to your positions and not be scared by the potential loss (if you sell at a lower price) If you are going to enter a carry trade, you need to prepare youself and be ready for a 1000 pip drop (it doesn't happen.. but prepare anyway) With a good interest rate differential, the interest positive currency will always be pushed up. Banks and hedge funds put billions of their $ in this carry trade, so when the pair goes down.. they sweat a lot more than you and I do.

Coming up today is UK CPI, US trade balance and US interest rate statement (if rates are cut or hiked - do not trade if nothing is changed) Good luck!

 

[Music_Producer]

Hey Shard, the only reason the rates would be hiked is because of the recent dollar slide. It was kinda like a wake up call to the Feds. Most likely the rates won't be hiked.. but what the Feds will do.. is be hawkish on the US$.

They will talk about inflation being a risk and so on. Note that the GBP has risen against the USD by a 1000 pips from mid-november. That's a huge spike in a couple of days. If it breaks the 2.0 barrier, you might see a catastrophic dollar sell-off.

So it's ok if the EUR and GBP take a beating (temporarily) In fact, the ECB (euro bank) has been doing nothing but talk about a high euro is bad for the economy.. blah blah.. trying to push the Euro down. Everyone is waiting to sell the dollar, so they need any encouraging news to push it back up.

 

[Music_Producer]

Massive slippage on CMC.. traded the GBP/USD for the UK CPI report.. initially my buy order went through for a profit of 28 pips. I was happy, clicked on 'sell' to close the order. Nothing happened. Waited a few seconds and my profit in $ was still moving.. so I knew the trade wasn't closed yet. I clicked 'sell' again. Tried one last time.. and then it executed.

I checked my profit.. 26 pips.. ok.. as long as it's not a loss or something stupid like 6 pips. So I was checking the news, etc.. and after a minute I come back to the platform and I was bloody shocked to find out that my 'sell' trades had gone through!! I quickly closed them for a loss of 7 pips eventually. F@cking unbelievable. I hate it when I do things right, but the platform screws me over.

 

[~Shard~]

Yikes, sorry to hear about that Music_Producer! That's really unfortunate and frustrating - especially when you "did it right" the first time. It appears as though no platform is perfect.

 

[Music_Producer]

Actually Shard.. there are platforms that work perfectly as they should.. but they're only for fund managers and banks. You need to deposit a minimum amount (I'm sure in the millions) You can then sign up with platforms used by Bank of America, Citibank, etc.. where there is no dealing desk or any kind of crap. Maybe someday we'll do that

I also traded GBP/USD on Oanda (very small lot) and I noticed that when i clicked on 'sell' the order didn't go through right away.. took a few seconds.. but it gave me the exact price that was quoted. CMC's platform can sure use a lot of improvements.. for e.g. if there is slippage.. or there is a pending order.. flash it on the screen!! They shouldn't revert back to the order window and let you enter a new order if the previous one hasn't been executed.

I recovered from the 7 pip loss by trading the European ZEW sentiment .. phew! But I'd better trade cautiously for the US trade balance report. The GBP should have skyrocketed today by atleast 50-80 pips.. but it didn't.. and it came down later. I am guessing this is because of today's US interest rate decision.. the markets want an idea of how the Feds are going to strengthen/weaken the dollar's image. Hence I also see any reaction to the US trade balance data as very temporary.

 

[Music_Producer]

Well, looks like CMC made it up to me Nice 31 pip profit on the GBP/USD - Trade balance (deficit) came out much lower than expected. I can sleep peacefully now!

 

[nhallmark]

I closed at a loss of 8 pips on the USD trade deficit. I got the news at the end of the spike, so I sold EUR/USD, then it reversed. I think it reversed because of the good news with the EUR earlier this morning and because of the US interest rate announcement today...and because I got the news late so I got in late.

But, Im learning!

 

[~Shard~]

Well, looks like CMC made it up to me. Nice 31 pip profit on the GBP/USD - Trade balance (deficit) came out much lower than expected. I can sleep peacefully now!

Wow, nice one! Glad to see you ending up ahead when all was said and done.

And man, you're quick - I have to work on my speed I guess. I traded the news as well but since I thought there wouldn't be much movement, I decided to use EUR/USD instead of GBP/USD. I know the GBP/USD moves more (on average) than the EUR/USD, but I thought that the EUR/USD might be better for me this time around since it's a 2 pip spread and not a 3 pip spread (although I realize it's not that big a difference in the grand scheme of things... ) Anywho, I got in and out quick, but still missed the majority of the spike - made a big old 2 pips haha! The funniest thing though is that I was only trading a $100K lot size, so now I have no idea what I'm going to spend my big $21 profit on... I'm not complaining though - a small gain is always better than a loss of any kind!

Further to this though, do you know if Oanda's news service reports differently whether you are using a real account or a game account? Because for me, it seems as though the resultant spike occurs pretty much instantaneously (if not even a bit ahead!) of when the news flashes come through for me on Oanda - it really gives me zero time to process the data properly. It just seems like the news should be coming a bit quicker, otherwise I almost find myself trading the spike rather than the #s, which isn't right. I thought the news service would be the same, but is there a chance that for their actual "paying customers" Oanda delivers a higher quality of service (i.e. faster news reports) to them first, then the game accounts? I ask, because I have seen a couple times where Oanda will disconnect game accounts during high volume periods, presumably to be preferential to their real clients.

Is tradethenews that much better? Is it worth the monthly subscription? Or is it only midly quicker? (I realize we're talking fractions of seconds here, but still...) Just trying to figure out the best way to capitalize on things.

Lastly, don't worry too much nhallmark - as you say, you're learning, and the best way to learn is by doing. And as long as you learn from your mistakes, it's all good. You will see this happen on almost every trade actually, and it's not necessarily tied into a certain factor all the time - quite simply, after a huge spike, there is almost always a natural (albeit sometimes brief) correction. So, if you're late to the game, you may get in at the peak of the spike and the trend will reverse. Just keep practicing and you'll get better. I've gotten better myself over the couple months I've been doing this but still don't seem to have the lightning-fast dexterity of Music_Producer who can get in and out in a couple seconds...

 

[Music_Producer]

Shard.. that lightning-fast dexterity is a result of years of examinations I had to pass (in medical school) You just get so used to answering rapidly and make quick decisions.. lol.. I think it's finally paying off now!!

Oanda news is super slow compared to tradethenews..I don't think there's a difference in their news speed for real or demo accounts.

Sign up for a tradethenews trial.. and when you install the software - there are 2 sections. One is text, and then there are audio channels. I prefer the audio.. that comes out 2 seconds before the text.

If the trial suits you.. then it's worth the monthly fee because you're trading 100k lots. Even more worth it, obviously, when you move on to higher quantity trading.

And I can give you a lot of ideas on how to spend that $21

 

[Music_Producer]

I closed at a loss of 8 pips on the USD trade deficit. I got the news at the end of the spike, so I sold EUR/USD, then it reversed. I think it reversed because of the good news with the EUR earlier this morning and because of the US interest rate announcement today...and because I got the news late so I got in late.

But, Im learning!

Yup.. well done! (Your logical analysis of what happened) Here's one more thing that actually pushed the GBP and EUR up by about 40 pips ( i think at about 4 am pst)

Good old Greenspan had a few nasty comments about the dollar. He said the US should be prepared for 'years of dollar weakness' and that everyone in the world should not invest in only dollars.. they should invest in other currencies too..so the $ took a beating. Man, that guy is so honest.

So take the Zew sentiment (for the Eur or UK CPI for the GBP) and greenspan's comments.. and by the way.. read my posts above (before i traded today) I have mentioned that any reaction to the US trade balance data will be *temporary* In other words, get in and get out fast because the spike will reverse.

 

[nhallmark]

.. and by the way.. read my posts above (before i traded today) I have mentioned that any reaction to the US trade balance data will be *temporary* In other words, get in and get out fast because the spike will reverse.

Yeah, I read that after I traded, unfortunately. Oh well. Did tradethenews report greenspan's comments? I wasn't up that early. Are you guys trading US retail sales tomorrow?

 

[Veritas&Equitas]

Hey, I've just been going through this whole thread and I'm really interested. The problem is, I'm of limited means. I graduated college a few years ago, and am currently in law school, but I have only a bit of money to throw around (around $5,000). Now, I was an economics major in college, but have never gone out and traded on my own...the only way I've made money is through working hours in IT or eBaying various random decent deals I can make a profit on, but nothing major (most I make is like $400-500, usually once a month or so).

The thing is, I'm a decently smart guy, yet I want to do something with my money. I'm not afraid of risk ATM (I'm young, and only have a few grand to play around with), so I don't care what I get into, I'm just looking to invest/get into something where I can make a profit with some hard @$$ work. I'm willing to bust my balls for whatever it may be; I'm a hard worker, and am really interested in this.

Now, I understand that FOREX may be a little over my head, given my lack of experience & funds, but I'm wondering if you guys have any other ideas or could point me in any direction to something that I could put my time/effort into to accomplish what I want to accomplish? I'm not asking for miracles here, but hopefully making a somewhat steady 17-30% profit margin on something. Granted, I wouldn't always make it, probably lose some sometimes, but in that general area. I've had friends that have sold poker chips for sweet money ($30,000 in a couple months), and I've sold some high end electronics on eBay for 25-35% profit margins a few times, but nothing really that is consistent. Any ideas would REALLY be appreciated! Thanks guys!

 

[~Shard~]

Shard.. that lightning-fast dexterity is a result of years of examinations I had to pass (in medical school) You just get so used to answering rapidly and make quick decisions.. lol.. I think it's finally paying off now!!

Nice! I guess I have no excuse then, as I'm a musician and you'd think I'd have that adeptness as well with respect to fast fingers, quick recognition, trasnmitting commands from brain to fingers... I'll just keep practicing.

Oanda news is super slow compared to tradethenews..I don't think there's a difference in their news speed for real or demo accounts.

Phew! I had been thinking that maybe I was just slow! I'll try a quicker news service and hopefully that will make things easier for me. Kay, thanks, that makes me feel a bit better. Now at leats I know I was somewhat handicapped in a way since I was trying to trade off Oanda's news service. ;o

Sign up for a tradethenews trial.. and when you install the software - there are 2 sections. One is text, and then there are audio channels. I prefer the audio.. that comes out 2 seconds before the text.

I think I'll do that - thanks.

And I can give you a lot of ideas on how to spend that $21

Haha, we'll it's up to $53 now - made 3 pips on a $100K lot on the interest rate announcement this afternoon.

 

[Music_Producer]

Musician? Cool! What do you play? I can play the keyboards.. but never been formally trained, can just play by ear. I had a hard time convincing my parents (typical indian doctors) that there is a living to be made by making music rather than being a doctor. They didn't believe me till I showed them my first paycheck from a jingle I composed.

Now, they don't believe me that you can make money from trading forex..

 

[~Shard~]

Musician? Cool! What do you play? I can play the keyboards.. but never been formally trained, can just play by ear. I had a hard time convincing my parents (typical indian doctors) that there is a living to be made by making music rather than being a doctor. They didn't believe me till I showed them my first paycheck from a jingle I composed.

Now, they don't believe me that you can make money from trading forex..

Heh heh - way to prove them wrong.

I play clarinet and used to play sax. I played in the Symphony Orchestra here (one of the top ones in Canada, actually) from when I was 12 until I was 19, then my Engineering degree got in the way. I was called by my old professor (the principal clarinet in the Orchestra) a few years ago wondering if I could fill in on short notice, and lucky for me, it was just like riding a bike, and I was back in shape in no time! Ever since I've been playing with the Symphony again in my spare time and doing my "Engineer stuff" during the day to pay the bills and such - the best of both worlds!

Throw some investing and now forex trading into the mix and I've got nothing to complain about!

And since we're somewhat off-topic already I actually used to make music myself with a friend of mine. He has since gone on to do it much more seriously, and even has a small film score under his belt along with a couple of CDs now, but back in the day we used to sit around in his parent's basement and make up all sorts of crazy stuff. All electronica - we used tracker programs, MIDI, a TR808 (I think it was), samplers, and then my buddy on the guitar and keyboards. We'd make all sorts of mixes - it was great fun. Now he's into Fruity Loops studio, other programs I don't know and all these professional sample packages which cost hundreds of dollars. He recently did the mastering and mixing for another friend of mine (whom I played in the Orchestra with) and his band here in town and the CD turned out amazing.

Anywho, now you know a little more about me. Feel free to comment and/or share more about yourself as well if you like. Or if you prefer we can continue this off-topic discussion via PMs or e-mail as not to hijack this wonderful thread too much.

 

[nhallmark]

I guess I'll go ahead and confess that I'm a musician too. I just play guitar though.

I was in a band in high school(only two years ago) but that didn't work out, so I had to get serious and Ive pretty much locked myself in the back room of my house for two years getting material together and Im almost ready to go...or I will be January 1st.

I write drums with Reason, the lay down the guitars, bass, and vocals in pro tools. Unfortunately, I've got to do it all on a dell because of the money issue.

Veritas&Equitas, I would recommend forex, definetely. It's damn fun and this thread pretty much explains all you need to know. Also, building websites can bring in some money. It's more work than forex but there's a lot of people that make very substantial money from websites. I use Sitesell for mine.