Question--Forex Trade & Time Limit?

[yiros]

Hello

I have a question with regard Forex Trading.

How long can you hold a Forex trade for.?
Can one for example make a trade on USD/CHF or any other pair and hold on to the trade for weeks/months? or are they limited to a certain time period.?

As with contracts on currency futures/options there are expiry dates/time decay etc. is it the same in/with Forex?.

Thank-you

 

[ERA]

Hi Yiros,

There is no time limit to how long you may hold a spot fx position.

Just a note: If the fx broker has a daily late evening roll. You can almost regard that spot position like a ' mini one day future' as it rolls over day to day. If the broker has costs involved in this nightly roll over , in the way of a small roll over fee or a slightly negative roll price
ie your long position is closed on Wednesday night at 59 and reopened at 60, thats 1 pips you are missing, if that is happening on a daily basis, it starts adding up.

And of course there are the negative/positive interest differencials as well, but these are also reflected in the futures price as over the life of the future price will generally gravitate toward the spot price at expiry, so this is not really a factor.

Anyway if you have a broker that rolls in this fashion, as these costs accumulate over an extended period of time it would work out cheaper to hold a futures contract than spot.

Hope this helps.

 

[JTrader]

Spot v's futures holding charges.

ERA -
Anyway if you have a broker that rolls in this fashion, as these costs accumulate over an extended period of time it would work out cheaper to hold a futures contract than spot.

Hi

I am aware how retail fx brokers and spreadbet companies tend to charge an overnight fee for rolling over a position.

With CME futures brokers I am aware that there is a day-time margin requirement and an overnight margin requirment - that tends to be twice as big as the day-time margin requirement.

Do futures brokers such as IB or tradestation also charge a fee for holding overnight similar to the marketmaker broker? How do futures brokers operate?

Many thanks

jtrader.

 

[Roberto]

If you use a spreadbet, there's nothing much to think about regarding the matters mentioned above. You just open a position on the most distant future month. Some of the spreads around are so small now that it can be the cheapest way to do it, as well as the easiest. Also, if you go about it carefully with various different expiry options, it's sometimes possible (but not nearly as simple, admittedly) to do the equivalent but getting even better value with a collection of medium or longer-term expiry digital options at BetOnMarkets. It depends exactly what you want to do.

 

[ERA]

Hi

I am aware how retail fx brokers and spreadbet companies tend to charge an overnight fee for rolling over a position.

Do futures brokers such as IB or tradestation also charge a fee for holding overnight similar to the marketmaker broker? How do futures brokers operate?

Many thanks

jtrader.

jtrader, futures brokers only take a commission when you open and close a position in futures much like shares. There is no nightly fees
When trading options some brokers charge all the commission upfront on the entry so there is no charge when the option expires worthless or the trade is exited.Some charge half on opening and half on expiry or closing like with a futures contract.

Also to note there are usually a small NFA SEC ( national futures association) fee to pay on with commissions, but this is usually just cents.

 

[Yom Or]

Hello

I have a question with regard Forex Trading.

How long can you hold a Forex trade for.?
Can one for example make a trade on USD/CHF or any other pair and hold on to the trade for weeks/months? or are they limited to a certain time period.?

As with contracts on currency futures/options there are expiry dates/time decay etc. is it the same in/with Forex?.

Thank-you

Yiros

You can hold them forever or as long as your margin withhold the volatility or as long as you dont mind making or losing or making interest, no time limits in this big game, some ppl hold carry trades for years almost decades as long as the trend is with them.
MT mid term traders ride the trend LT long term traders make the trend.
Myself i like short mid term, i find ST short term too stressfull for the reward you get, plus all the pip spread you pay each trade and when you get a nice entry on a short or long position and you are positioned nicely in the trend its a NO Brainer no need to even look at the computer, no worries about getting stopped out, just set the target and slip into a coma. and God willing collect 3-7000 pips and still get to live a life.
Just my 2 cents worth

 

[yiros]

Thank-You.

Yiros

You can hold them forever or as long as your margin withhold the volatility or as long as you dont mind making or losing or making interest, no time limits in this big game, some ppl hold carry trades for years almost decades as long as the trend is with them.
MT mid term traders ride the trend LT long term traders make the trend.
Myself i like short mid term, i find ST short term too stressfull for the reward you get, plus all the pip spread you pay each trade and when you get a nice entry on a short or long position and you are positioned nicely in the trend its a NO Brainer no need to even look at the computer, no worries about getting stopped out, just set the target and slip into a coma. and God willing collect 3-7000 pips and still get to live a life.
Just my 2 cents worth

To all responders of my question a BIG THANK-YOU. Very much appreciated.
Clears up alot. [for me anyway]

Yom Or...Great perspective. This was sort of the way I looked at it, however, was unsure because of the question I had asked. [now answered thanks to all].

Just one other question at the risk of sounding abit silly, to do with getting stopped out/slippage, I see you can place stop limit or exit orders, does actually placing them on the trade/software or with the company effect the trade, I know it`s probably not supposed to, however, I have heard [hearsay, possible rumour] of cases where persons place stops/exit points and it has effected the trade, in a way that they lost out. Is it much of a problem or would keeping a "mental tab/note" private note offline for trade exit, then execute target, be a better strategy, [I realize it`s more a matter of personal choice/opinion or trading style].

Cheers
Yiros.

 

[Yom Or]

To all responders of my question a BIG THANK-YOU. Very much appreciated.
Clears up alot. [for me anyway]

Yom Or...Great perspective. This was sort of the way I looked at it, however, was unsure because of the question I had asked. [now answered thanks to all].

Just one other question at the risk of sounding abit silly, to do with getting stopped out/slippage, I see you can place stop limit or exit orders, does actually placing them on the trade/software or with the company effect the trade, I know it`s probably not supposed to, however, I have heard [hearsay, possible rumour] of cases where persons place stops/exit points and it has effected the trade, in a way that they lost out. Is it much of a problem or would keeping a "mental tab/note" private note offline for trade exit, then execute target, be a better strategy, [I realize it`s more a matter of personal choice/opinion or trading style].

Cheers
Yiros.

Hi Yiros
Some market makers have been having a problem with entries and exits on stop orders and entry orders, specificly when important announcements come across the wires like NFP Non Farm Payrolls and other important fundamental numbers for the pairs. Because they impact the price so severely sometimes orders dont get filled and stops dont get executed. Perhaps they are developing a tighter execution, i have heard of traders being beat out of many pips before they are executed. To resolve this either dont trade them moments, or wait till direction is set or enter a faith based trade before hand. I ussually pick my direction before and hope for the best. Different #'s affect differently and what you might think will push a market one way could adversely do the opposite, just a word to the wise. Hope this helps and best of luck to you my friend.