Thinking of Switching over to Currencies

[brettus]

Yep, good points made by both of you, there's a buy and hold culture with stock amongst millions of stock holders, why not a buy and hold culture with currency? How many millions of folk do nothing re their savings, just leaving them in the bank to earn less than 1% interest whilst inflation erodes their egg by 5%, when alternatively they could attempt to position trade (buy and hold) currencies?

Buy and hold currencies isn't the same. I think a lot do it with exotic pairs though.

 

[new_trader]

Buy and hold currencies isn't the same. I think a lot do it with exotic pairs though.

I think the carry trade is similar in philosophy and time horizon to buying a stock. Nothing exotic involved. An investment where you look at differences to 2 decimal places rather than 4.

 

[Black Swan]

Buy and hold currencies isn't the same. I think a lot do it with exotic pairs though.

You get where I'm coming from though eh? Wacky pete made a good point re.ignorance, folk just don't get it en masse...

 

[safvan]

No way any broker would take on a trade that size, without hedging like 95% at least in the market.

Hedging against what and how? If broker believes in my capabilities as a trader it would actually buy the apple stock in the real market since I am long but what if my ability is not proven to them? They have to take the other side of the trade then or invest in some other instrument where they are super smart enough to gather up exact 30 million dollars to pay me!

For small odd companies a broker can simply enter the real market and manipulate the stock up or down to stop or margin me out of my CFD position however for stocks like apple it cannot be done as they trade over around $5 billion dollars daily.

So when I am wrong they win BIG taking the other side of the trade but with my long term apple CFD trade worth $30 Million Dollars, there is no solid way to hedge themselves other than coming up with the rock solid cash to wire me the funds when I sell my position.

Its a dangerous game when things are synthetic. Bucket shops can only handle orders within their reach.

So if you are planning to make millions of dollars spread betting, forget it!

 

[brettus]

Hedging against what and how? If broker believes in my capabilities as a trader it would actually buy the apple stock in the real market since I am long but what if my ability is not proven to them? They have to take the other side of the trade then or invest in some other instrument where they are super smart enough to gather up exact 30 million dollars to pay me!

For small odd companies a broker can simply enter the real market and manipulate the stock up or down to stop or margin me out of my CFD position however for stocks like apple it cannot be done as they trade over around $5 billion dollars daily.

So when I am wrong they win BIG taking the other side of the trade but with my long term apple CFD trade worth $30 Million Dollars, there is no solid way to hedge themselves other than coming up with the rock solid cash to wire me the funds when I sell my position.

Its a dangerous game when things are synthetic. Bucket shops can only handle orders within their reach.

So if you are planning to make millions of dollars spread betting, forget it!

No broker would take the other side of a 10 million stake in a stock. They actually make a sh*t load of money from the funding costs of having the positions open. I used to work for a brokers that had a CFD desk and they had a 4 billion book. ( 4 yards of stock ) That made the company 1mio$ a week just in funding the positions. Most CFD brokers will just hedge in the underlying market.

I've done a few trades with IGmarkets in stocks and sometimes i get rejected when there isn't enough liquidity in the underlying market and i'm only doing small amounts( It actually says that on the ticket). There's no way of trading 10mio dollars worth of apple without going into the real market, they simply wouldn't allow you to do it.

I think many people get a bad perception of brokers because they think they manipulate prices in order to stop you out. They don't. It's too hard and they don't have hundreds of traders watching everyone's positions. You would be suprised to see how many traders there are on a currency desk at a brokers or a bank even.

If you're an idiot with 1k in your account trading 50 gbp per point they will take you on. That's the truth. If you massively over leverage and go in and out too quickly then its too hard to hedge it, and usually the client blows up.

 

[safvan]

No broker would take the other side of a 10 million stake in a stock. They actually make a sh*t load of money from the funding costs of having the positions open. I used to work for a brokers that had a CFD desk and they had a 4 billion book. ( 4 yards of stock ) That made the company 1mio$ a week just in funding the positions. Most CFD brokers will just hedge in the underlying market.

I've done a few trades with IGmarkets in stocks and sometimes i get rejected when there isn't enough liquidity in the underlying market and i'm only doing small amounts( It actually says that on the ticket). There's no way of trading 10mio dollars worth of apple without going into the real market, they simply wouldn't allow you to do it.

I think many people get a bad perception of brokers because they think they manipulate prices in order to stop you out. They don't. It's too hard and they don't have hundreds of traders watching everyone's positions. You would be suprised to see how many traders there are on a currency desk at a brokers or a bank even.

If you're an idiot with 1k in your account trading 50 gbp per point they will take you on. That's the truth. If you massively over leverage and go in and out too quickly then too hard to hedge it, and usually the client blows up.

Good points. Well said.

Gratitude.

 

[JahDave]

There are Forex brokers that you connect directly to and it is all automated...............You are connected directly to their servers..............If you pass their limit then you might have to pass through a broker on the desk, but I haven't reached that point yet...........