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Anyone here into FOREX?

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One more illustration..

The last trade I placed was the EUR/USD before the US interest rate announcement. I am pasting the graph of my trade, and I have added those arrows and numbers in photoshop:

eur.jpg


1. This is where the professional traders who subscribe to Bloomberg News Anywhere got the interest rate alert, and started buying Euros by the bucket.

2. This is where I (poor average trader) got the news and jumped in.

3. This is where I got out (like maybe 5 seconds from the entry)

4. This is where I wish I had gotten out!! :D

Honestly though, I prefer to make a small profit and get my butt outta there.. because the market is really volatile. Its fun to 'ride' the wave though.

The total from point 1 to point 4 is almost 300 pips. If you had $2500 and a 50:1 margin, and bought 100,000 units of EUR/USD when the news broke.. and exited at the top.. you would have made $2480 on that $2500. Not bad huh? :p

If you had a 200:1 margin, and bought 500,000 units.. you would have made $12,400 :eek: :eek:
 
Just wanted to say thanks ponce again for all this Music_Producer - it's appreciated. As I said earlier, although I'm not currently into Forex, I'm big into investing myself, so if you ever want to chat, discuss strategies, "hot tips" and so forth, please don't hesitate to PM me. :cool:
 
Music_Producer said:
Hopefully one day I will subscribe to bloomberg News Anywhere .. its $1750 per month :eek:
Click to expand...

If you get to that level, where the $1750.00 price tag makes you more money to recoup that, do you still stay with your trading platform, or is there a more direct way to trade that gets orders filled quicker and more accurate at a better price?

You sound passionate about this and you have given a great run down of what its like to trade forex, but it still makes me nervous that it is an industry that is so rife with fraud and get-rich-quick schemes. That being said, I'm glad your doing something that makes your money work for you. I believe that is the only way to get ahead in this world and believe it or not, most people have a plan to get wealthy. The lottery. Very sad.

Good luck, and thanks for such detailed info.


ALSO: you trade on news, is there news to trade on every day or is it more like monthly?
 
You're welcome Shard.. I'll surely bug you when I need more investment ideas :D

njmac.. I'm passionate about Forex because its worked for me.. just like I'm passionate about macs! As for the fraud part, I would guess that every industry has its share of that. As long as you trade with a reputable dealer, I don't see why you should be screwed. Currency trading probably goes back way before the stock markets ever came into existence.

The thing that really got me interested was that our banks trade Forex all the time. Yup! Bank of America, Citibank, etc.. use our money and invest in Forex (which is where investment officers and the big money management companies come in) and sheesh.. with their balances.. even a few pips equals millions of dollars in profit.

I think I'll still stay with my trading platform, because its as good as a direct instant trading platform and the pip spread is fixed. The minute I hit 'buy' or 'sell' the order gets filled. There's no waiting.. no lag.. nothing. As long as you have a decent internet connection, you're fine. How do these forex brokers make money? They make their money on pip spreads. for e.g. the EUR/USD is 1.2500.. if i want to buy it.. i get it for 1.2503 (they make 3 pips) and if i want to sell it, the price i sell it at is 1.2497.. you get the idea.

Some forex brokers charge crazy pip spreads.. and they are not 'fixed'. When important news releases come out..they jack up the pip spread to 6-10 pips because they know thats when people will trade the most.. and thats really not fair..but the average trader doesn't know this. (the average newbie trader just looks at the charts and all the blinking lights.. and trades on 'gut feeling' or on what various forex forums have suggested)

As for trading on news, just go to a good forex site like www.oanda.com and download the economic calendar for the month of July. Its a pdf file I believe, and print it out. It has a summary of countries, the economic indicators to be released, the dates and the time (in GMT) You don't have to sit in front of the computer all day, just see when the news release is expected to be announced.. and be prepared for trading on that day.. at that time. I don't trade everyday.. more like 15 days in an entire month.

It greatly helps if you understand economic indicators and what they do to currencies. You can look for that online.. at the US Department of Labor website as well.. there's a nice explanation of everything.. jobless claims, wholesale price index, gdp, inflation, etc etc.

The guys who subscribe to Bloomberg news anywhere are handling billions of dollars.. so its imperative for them to get the news rightaway. If you read about how these news results are prepared (with absolute security) .. and the room in which they are displayed to reporters (no cellphones, pagers allowed, and crazy security stuff) you'll be amazed.. its pretty exciting.

The next US interest rate decision is in August, I think. If they raise the interest rates by 25 points and announce "Thats it! No more hikes".. I expect the USD to tank really really low..if inflation is still a concern. End of hikes usually means bad news for the dollar.. because the higher the interest rate, the greater the amount of investment from foreign countries (into our banks)

Open a 'demo' account or a 'game' account.. they come with a news plug-in which provides real time news (not as fast as bloomberg though) Practice, practice, practice.. thats the only way you'll get good at it.
 
I haven't read all of the posts but I will tomorrow... I just wanted to address one specific question real quick...

I average 5-10% profit on my full account balance every month. Of course I have losing trades but I am only concerned with maintaining long term consistency. 5% per month compounded is about 80% profit on your original balance per year, i.e. $1000 in Jan 2005 is worth $1795 in Jan 2006. I manage my drawdown (the amount I can lose in any given trade) to about 5%. If you look at the numbers that way, I am only ever risking 5% of my capital and it is returning 5% per month, which is 100% profit.

More comments tomorrow...
 
Oanda

Hi,

Very giving thread!! I'm a complete newbie, determined to learn forex. My biggest hurdle have been being a Mac user and all the brokers who don't support Mac. Arggghh! So if I'm getting it right from this thread Oanda is the way to go? How long have you been trading with them? Any other recommendations? I just want to get my feet wet but want to find a reliable platform/broker first!

Thanks again for a great thread!
 
I found a great Forex tutorial site HERE that provides great info for beginners.

I'm still not convinced... but Music Producer gives pretty sound reasoning and advice. I still maintain that you must be more caution with Forex than regulated futures/securites, so be careful!
 
Curren~Sea said:
I average 5-10% profit on my full account balance every month. If you look at the numbers that way, I am only ever risking 5% of my capital and it is returning 5% per month, which is 100% profit.
Click to expand...

If you are willing to guarantee these returns for a year I'll give you a six figure sum to manage and pay you a percent of profit :D
 
So as in the stock market where you have brokers that work on index funds, are there the same for FOREX issues? Meaning that I would not mind an affordable "fee" to have someone like Curren~Sea manage my "trades"
 
Crimson said:
Hi,

Very giving thread!! I'm a complete newbie, determined to learn forex. My biggest hurdle have been being a Mac user and all the brokers who don't support Mac. Arggghh! So if I'm getting it right from this thread Oanda is the way to go? How long have you been trading with them? Any other recommendations? I just want to get my feet wet but want to find a reliable platform/broker first!

Thanks again for a great thread!
Click to expand...

Hey Crimson, as of now I like Oanda because their platform works on java, so it works with safari, firefox, etc. Every other trader's software is based on windows xp.. so that would be painful to work with. There are a couple of reasons why I like Oanda -

1. Fixed spreads.. as I quoted earlier. EUR/USD pip spread is 1.5 pips, and does not change
2. Oanda pays interest every day. For e.g. if I have $1500 in my account, just balance (i.e. no traders, nothing) they pay 4.5% interest (per year) and this interest is deposited in my account everyday (as in daily interest.. whatever 25 cents etc)
3. If I make a interest positive trade and hold it.. for e.g. I buy say 50,000 AUD/JPY (Aussie dollar vs japanese yen) I will make 5.2% interest on that 50,000 units - thats roughly $210 per month. A lot of people (including me at times) do this 'carry' trade.. and earn the interest.

Lets say AUD/JPY is 84.50 today. I buy 50,000 units. Tomorrow it goes to 84.. thats a loss of 50 pips ONLY if I sell it (i.e. I unload my 50000 units) But I have no intention of selling those units, until it goes up.. because i am busy collecting interest. So after a month or so.. it finally goes to 84.60 or 84.70.. thats when I sell off the 50,000 units. I make a profit of 10 pips (albeit after 30 days) but at the same time, I have collected quite a bit of interest.

I have tried trading with other forex companies, and they don't pay interest.. they only "collect" it from you!

Another hypothetical example - say you have $50,000 in your forex account. You use $25,000 to buy 1,250,000 units of AUD/JPY (at 50:1 margin).. then you make about $5000 in interest per month. I mentioned using only half the account balance, because you need the other half to accomodate for any 'dips'.

Right now I am not in this carry trade, because the Bank of Japan *might* raise interest rates next month, or this month. Currently the interest rate is 0% :rolleyes: ..yup.. zero. If they raise it to 0.25 or 0.15% the Japanese Yen will shoot up against every other damn currency. They have kept their interest rate at 0% for too long.. and almost every country in the world is taking advantage of this interest rate. They 'borrow' from japanese banks at 0% and invest in Aussie banks which pay them 5.2% or more interest.. its a nice game.

As for people here jumping into looking to invest money in 'managed funds'.. all I can say is , be careful. Nobody can manage your money (in forex) better than you can.
 
Hoef: :eek: No way am I to the level of managing other people's money! I've been learning about the currency market for about 16 months now and I still feel like a noob. I fully plan to make this my main source of income but I am not quite there yet. I've spent countless hours studying and I'm committed to doing whatever it takes to succeed. Maybe someday I'll move into money management - I have actually been asked that question before... but not yet.

Trading, as my mentor states, is a marathon not a sprint. I'm happy with small consistent wins. They add up.

The irony of trading is that there are hundreds of successful strategies out there but they are very difficult to find. And, it is even more difficult to follow a strategy consistently due to our human nature. Successful trading is more about how you approach it than it is about what you actually do. That's why you can see so many good traders that have completely different styles. For example, if you read some of the interviews from, "New Market Wizards", it is evident that the traders have vastly different strategies yet they are all extremely wealthy from their trading.

Music_Producer and I have different strategies. I believe that I can in fact predict the market based on technical indicators. Sometimes I'm wrong, sometimes I'm right but my money management skills ensures that I always end up moving ahead. That is to say that I limit my losses and I let my winners ride. I may have 5 losses out of 10 trades but if my 5 losses are for 25 pips each and my 5 wins are for 100 pips each then how does that look at the end of the month?

By the way, I like trading announcements also. And the grandaddy of them all is Non-Farm Payrolls which will occur this Friday (the first Friday of each month). But, I don't need to make money on the announcement for the announcement to make me money. If the announcement sets a trend that I follow, I can ride it for a long way.

One other thing for Music_Producer... Oanda does in fact slide their spreads. That's one thing that bothers me about them. During periods of high volatility they will increase their spreads. See the following link:

http://fxtrade.oanda.com/spreads/recent_spreads.shtml#eur_usd

As a trader, we want to be diligent about what broker we choose. Oanda has a good reputation. My broker, FXCM, does not have a good reputation but I have not had too many problems with them - but enough that I'm looking for a better solution. The thing I like about FXCM in Canada is that because they're Canadian, my account is insured by the government which is unlike most other brokers. Having said that, the best brokers out there have systems in place to protect your money. And, if you get real serious you can use a Swiss or Danish broker and you won't have to worry about it.

Anyway, this is much too long of a post but I'll wrap up by saying that I appreciate the dialogue here and hope we can all learn something from it.
 
Music_Producer said:
As for people here jumping into looking to invest money in 'managed funds'.. all I can say is , be careful. Nobody can manage your money (in forex) better than you can.
Click to expand...

Thank you for saying this. Very true! No one cares about your money as much as you do.
 
Curren~Sea said:
One other thing for Music_Producer... Oanda does in fact slide their spreads. That's one thing that bothers me about them. During periods of high volatility they will increase their spreads.
Click to expand...

Oh yeah CurrenSea.. that holds true for GBP/USd, etc.. but never EUR/USD. I have never seen EUR/USD cross 3 pips even during the interest rate announcements. Obviously during the weekends, pip spreads shoot up for all currencies because Forex markets are closed.. this is true for every forex broker. For me trading EUR/USD, Oanda gives me the best deal.

I wish we had a broker who would offer a 1 pip spread on all currencies.. regardless of market conditions :D
 
Korean Missiles

Another example of how news affects currencies..

Every currency shot up against the JPY today when the missile launch news was announced.. obviously the japanese yen sunk because NKorean can easily target Japan. You can't 'wait' for these kind of news.. but when you're trading, you should always take them into consideration.
 
Curren~Sea said:
And, if you get real serious you can use a Swiss or Danish broker and you won't have to worry about it.
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What benefit does having a Swiss or Danish broker give you and what exactly won't you have to worry about? Is it risky to deal with a company overseas with your money?
 
Anyone used ac-markets.com?

I am currently pretty set with using Oanda.com, but came across http://www.ac-markets.com and was told they support Mac via their java application. Anyone have any experience? Anyone used both Oanda and ACM?

Thanks! (And extra thank you to Music_Producer for your reply!)
 
Crimson said:
I am currently pretty set with using Oanda.com, but came across http://www.ac-markets.com and was told they support Mac via their java application. Anyone have any experience? Anyone used both Oanda and ACM?

Thanks! (And extra thank you to Music_Producer for your reply!)
Click to expand...

SCAM ?

LINK

.... and this is what I hate about the Forex markets. As music_producer has been showing us, it can be profitable.... but only if you are careful. Thanks for posting here first and asking. You could've been a victim.
 
Actually, it is quite possible that forexbastards.com is the scammer. I certainly do not trust that site. It is obvious that whoever maintains it spends an enormous amount of time and energy advertising and promoting (and probably not trading).

The more I surf around the more garbage I find on the net regarding forex. It's hard to sort out who is legit and who are the scammers. Since this market is not regulated, some accounts in the U.S. are not secured. However, in other coutries such as Canada your funds are secured by the government. In Switzerland, they have very strict laws and accounting procedures that virtually assure that a bank or broker will not conduct fraud. 35% of the world's money is in Swiss accounts. Additionally, there are no capital gains tax on Swiss accounts.
 
Curren~Sea said:
Since this market is not regulated, some accounts in the U.S. are not secured. However, in other coutries such as Canada your funds are secured by the government. In Switzerland, they have very strict laws and accounting procedures that virtually assure that a bank or broker will not conduct fraud. 35% of the world's money is in Swiss accounts. Additionally, there are no capital gains tax on Swiss accounts.
Click to expand...

Apologies if you have mentioned it already, but who exactly do you recommend using here in Canada? In order for your money to be protected does it have to be through a Canadian company in Canadian funds? Based on Music_Producer's comments, I started looking at Oanda, but would like to hear your thoughts on the matter...

Also, can anyone open a Swiss account then? What are the details around doing this? Do they have huge service fees, or a minimum account balance in the millions? ;) :cool:

Thanks in advance. :cool:
 
Curren~Sea said:
The more I surf around the more garbage I find on the net regarding forex. It's hard to sort out who is legit and who are the scammers.
Click to expand...

I know, me too. That is the thing I hate about forex. Its just too damn easy to get taken. I like the idea of making money off the foreign exchange market but its so hard to seperate the BS get rich quick scams from the legit outfits. I did see somewhere else about ac-markets that it is a scam... I'll have to see if I can track down a link other than forex bastards. (I don't really know whether to trust them either, and certainly wouldn't spend a dime there, but a lot of their broker reviews are spot-on when it comes to scams)
 
From all these discussions, I assume Oanda is relatively safe, at least in terms of all these "scam" entities? Just wondering who I should go through if I decide to get into this aspect of investing... :cool:

(I guess I sort of asked the same thing in my previous post as well... :eek: ;))
 
From what I can tell, Oanda is not perfect, but they are reputable. If you open an account with them, will you please report back here how you found them to be? And of course how successful you are ;) :cool:
 
njmac said:
From what I can tell, Oanda is not perfect, but they are reputable. If you open an account with them, will you please report back here how you found them to be? And of course how successful you are ;) :cool:
Click to expand...

Will do! ;) I wouldn't mind hearing a bit more from Music_Producer and Curren~Sea first though... :)
 
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