Experiences with forex.com

J

jthetrader

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Greetings,

I've been experimenting with trading simulators for the best part of two years now, I have had ups & downs (mostly the former thank god) and now, thanks to a couple of thousand £ I received from some bonds maturing on my 18th birthday, I want to try it for real. I have blessing of my parents, so now its just a matter of learning the ins and outs of real trading before I start putting real dosh on the line.

I have used Investopedia's forex sim, where I racked up 1,400% returns, I've used their normal sim (stock sim) where I have slightly less impressive returns (but no 'down months' in 24 months) and I've used Forex dot com (don't ask, I went long on the FTSE at the wrong time, and have lost much of the fictional £50,000). I know I know, diversify.

Anyway, I settled on foreign exchange trading, the money seems to be easy come easy go, which is always risky, but I don't think a few hundred pounds in a basket of ordinary shares will produce massive yields. Better to run the risk of losing for the chance to win properly.

So I spoke to the man at Forex, well actually he called me. I asked him a few questions, about CFDs (regarding counterparty risk he assured me that Forex Ltd is the counterparty and not the other users), about commodity trading and, crucially, about options.

Now given the extremely high levels of leverage used in Forex I was concerned that if I put say £100 into a position and was able to control £10,000 if the position soured and I lost my £100 + more than was in my account I could end up with a lien against me (not that I have much they can seize but being a bankrupt at 18 isn't going to do me many favours in life). The chap at Forex assured me that although options are not included in their trading platform they don't bother chasing people up for losses when they exceed the amount in the account? Is this true?

Before anyone asks why I'm using Forex, my only reason is that, firstly, the capital requirements are quite low (£250 for a mini-account compared to, I think, $10,000 equivalent for a Charles Schwab) and secondly they are very well known.

Any experiences, good or bad, with Forex.com would be appreciated.

Cheers.
 
jthetrader said:
Okay, well, can you recommend any alternatives to Forex?
Click to expand...

Forget retail forex, look at futures, the e mini s&p, the DJ Eurostoxx and the Bund are where the volume is. More than enough leverage and none of the funny business you get with forex.
 
pboyles said:
Forget retail forex, look at futures, the e mini s&p, the DJ Eurostoxx and the Bund are where the volume is. More than enough leverage and none of the funny business you get with forex.
Click to expand...

Could you elaborate on said funny business? Leverage for futures is 15 to 1 generally, am I correct? So, with £1,000 of capital @ 1.6 GBP/USD with a 10% margin payment I would only be able to buy one crude oil futures contract (1,000 barrels) with some change left over for an ounce or two of gold? I know that with the big swings in the oil price these days, dollars a day rather than tens of cents, there could be good returns to be had, but aren't they generally inferior to those acheived on the forex markets?

Isn't the futures market less liquid than the forex market though? One thing which struck me about forex was the good execution time (Forex.com advertise the fact that they close out 99.7% of trades in under one second) and the good execution price (all stop losses are executed without overunning the stop loss).
 
High leverage is going to kill you, there's more than enough leverage in futures, $500 per contract margin on the contracts I mentioned means with your $1500 account you could trade at 30€ a tick. DO NOT do this though, it will wipe you out. My point is that leverage is sufficient and you should be looking for less leverage and not more.

As regards the funny business numerous FX companies, particularly those using metatrader, have been caught ripping off their clients by manipulating slippage etc. I could go on but the list is as long as your arm.


jthetrader said:
Could you elaborate on said funny business? Leverage for futures is 15 to 1 generally, am I correct? So, with £1,000 of capital @ 1.6 GBP/USD with a 10% margin payment I would only be able to buy one crude oil futures contract (1,000 barrels) with some change left over for an ounce or two of gold? I know that with the big swings in the oil price these days, dollars a day rather than tens of cents, there could be good returns to be had, but aren't they generally inferior to those acheived on the forex markets?

Isn't the futures market less liquid than the forex market though? One thing which struck me about forex was the good execution time (Forex.com advertise the fact that they close out 99.7% of trades in under one second) and the good execution price (all stop losses are executed without overunning the stop loss).
Click to expand...
 
pboyles said:
That's retail forex for you, if you do a search for 'MT4 virtual dealer plugin' you see a few more horror stories.
Click to expand...

may be someone can start a thread to collect fresh info

about general rogue practices of new (and not very) brokers?

pboyles....!

you are from "old guard"....may be you?
 
pboyles said:
High leverage is going to kill you, there's more than enough leverage in futures, $500 per contract margin on the contracts I mentioned means with your $1500 account you could trade at 30€ a tick. DO NOT do this though, it will wipe you out. My point is that leverage is sufficient and you should be looking for less leverage and not more.
Click to expand...

Sorry, I'm confused. So if I put £1,000 in, assuming an exchange rate of 1.5 USD per GBP, I would have $1,500 to use, so how do the Euros figure in your example? I understand that this Eurostoxx index can be traded in either dollars or Euros? And when you say tick do you mean from 2662 to 2661 or from 2662.3 to 2662.2?

What kind of deal do you get with exchanging currencies to use to buy futures? If I were spreading my money about and buying crude oil futures, wheat futures, copper futures and futures based on a European exchange, then I would be dealing with at least three currencies (GBP, USD, EUR); do they change the money automatically or would I have to get the money in my account turned into the other two currencies when I wished to purchase something denominated in one of those currencies?

pboyles said:
As regards the funny business numerous FX companies, particularly those using metatrader, have been caught ripping off their clients by manipulating slippage etc. I could go on but the list is as long as your arm.
Click to expand...

It is ashame, then again there have always been scam artists in the world.
 
I recommend Oanda..................You can change your leverage on Oanda to any level you want................Since you are new to forex then I would recommend you set up at 10 to 1.........
 
The currency exchange stuff is taken care of by the trading platform, you don't need to do anything manually. I trade the bund and Eurostoxx hence my example of a euro amount. The futures contract moves from 62 to 61 so in my example that would be a tick, although I suppose it's also a point, but regardless of what name you give it that's what it is. Where can you trade the futures of this index in dollars?


jthetrader said:
Sorry, I'm confused. So if I put £1,000 in, assuming an exchange rate of 1.5 USD per GBP, I would have $1,500 to use, so how do the Euros figure in your example? I understand that this Eurostoxx index can be traded in either dollars or Euros? And when you say tick do you mean from 2662 to 2661 or from 2662.3 to 2662.2?

What kind of deal do you get with exchanging currencies to use to buy futures? If I were spreading my money about and buying crude oil futures, wheat futures, copper futures and futures based on a European exchange, then I would be dealing with at least three currencies (GBP, USD, EUR); do they change the money automatically or would I have to get the money in my account turned into the other two currencies when I wished to purchase something denominated in one of those currencies?



It is ashame, then again there have always been scam artists in the world.
Click to expand...
 
pboyles said:
Have a look at http://thestreetsweeper.org/ and
http://www.cftc.gov/LawRegulation/EnforcementActions/index.htm and you'll see the extent of the fraud that goes on in this industry, and that's only the ones that get caught.
Click to expand...

On a serious note, thanks for the resources. As a poster above me mentioned, there are always bad apples in the group, but it's good to be informed about whats going.

I mean, unless I had trillions of dollars to waste, and which point I would probably light my cigar with £10,000 as a party trick or something. :cool:
 
It's not pretty good. Kept hearing bad things.









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