A suggestion for daytraders

kevin546

Established member
699 0
JonnyT

It all depends on your trading style, I am familiar with the FTSE and no absolutely nothing about the FX apart from looking at a few charts.
Its taken me about 18 months to come to terms with the FTSE for trading it intraday with a 15 min chart, several days 60 min chart and longer on the 60 min chart.

To consider moving to the FX means I will have to start all over again but I grant you it may well be worth it.

Couple of questions for you.

Why are you trading EUR/USD when GBP/USD appears to have a larger daily range, certainly that is the case with CMC's prices. Today for example just taking account of the trading between 8am and 4.30pm eur/usd has done just short of 100 yet the GBP/USD has covered 150.

With such large daily ranges; (it seems that a flat day for GBP/USD in recent days has been when it has failed to go over 100 but goes close, LOL). Why then are you trading through IB when the likes of CMC (D4F) who offer a 4 point spread will not cause a problem in terms of the spread due to size of daily range and so will not involve tax while you will have to account for GCT.

What causes these markets to kick in around 7am.
 

JonnyT

Senior member
2,560 22
The GBP/USD future is not brilliantly liquid so the spread can be large.

I trade through automated systems that interface to IB so have to trade futures.

JonnyT
 

kevin546

Established member
699 0
JonnyT

Can you give an example of the spreads you get with IB on the EUR/USD & GBP/USD.

I understand re your systems but for anyone else what would be the hang up in daytrading the GBP/USD through SB when it has a fixed spread. The spread on EUR/USD is 3 points with CMC and I suppose for a SB that is good. There is still good movement in this instrument so for anyone not using systems oriented trading what would the drawback be from trading these from an SB. I there usually is one and that is normally poor value spread and suggested bias. With the daily ranges that are appearing on these 2 it would seem that the usual hang-ups from SB can be overcome or am I missing the obvious.
 

ChartMan

Legendary member
5,580 46
Is there still the "bias" on these instruments with SB's ?
 

darrenf

Well-known member
481 3
Is there still the "bias" on these instruments with SB's ?

This is one of the main reasons I originally chose FX as I was looking for something I could SB without the issues of wide spreads and bias.

1. cmc's SB spreads are now the same as their spot fx spreads and lower than many "real" fx trading platforms.

2. The spot market is quoted 24 hrs a day and has liquidity for most of that. I find that the SB prices (with cmc anyway) very rarely vary from the actual market by more than 1 or two points at any time.

It would therefore be very difficult and unlikely for cmc to skew their sb prices away from the market (especially as they also have their own "real" fx platform.

As JonnyT said, the alternative to SB's or the spot market is to trade futures but these lack liquidity as I understand it outside the main trading periods. May be OK for daytrading if you want really low spreads and can trade a reasonable size. SB's suit me as it is based on the spot market, and I will look to hold a position for several days. (FX is also good for position/ swing trading).

Kevin546.

Personally, I see no disadvantage in sb's for forex now the spreads match the "real" spot fx platforms. You can't really complain at a spread of 3, when the range is 100+ points daily?
 

kevin546

Established member
699 0
Darren

I agree with you concerning CMC spread v's daily range. I have no experience of this instruments other than watching it for a short while tonight after 7pm and having a look at some charts. I should say I was watching the GPB/USD on CMC at 4points. First and from the CMC prices which do you feel offers the best value. Second with such large moves during the day is this prone to wild swings that can be common place with US markets; or does this generally trend as the chart appears to suggest.

Is this best to take a positional daytrade approach due to the range following a trend based set-up. for daytrading purposes.

Thanks

Kevin
 

darrenf

Well-known member
481 3
What causes these markets to kick in around 7am.

Generally, you often get the start of a good move between 7am and 8.30 am london time. This is when the london/ european traders come into the market after what is usually fairly quiet overnight session (japan/ far east etc) on pairs like eur/usd, gbp/usd, usd/chf.
 

options

Senior member
2,374 218
CM. Do you really have to ask?

They are not going to give up their favourite exercise.

Kevin. In practise the spread is 4 eur/usd. (Least that's what I'm getting all the time.) So the spread is exactly the same as fxcm/Refco.

On the face of it the sb would appear to be the better choice given the no tax thing. And imv it all comes down to how you play.

The sb do the usual tricks of jerking the price all over the place and this is at quiet times. Much more volatile than fxcm etc. So when the price does move and rebound the sb is going to overshoot prices by a fair bit. Although it is nothing like the Dow used to be.

Where you may have a stop in at 30 away with fxcm etc you'll need double that with cmc just so as you don't get gunned.

Take a look at a day chart from cmc and fxcm and see the difference. As in Piper's book with the two rooms, one qiuet and slowly accumulating gains, the other noisy and bright and full of action, but with wilder highs and lows. Most people will choose the noisy room.

It's harder to get the short term gains with the sb. (today has been an exception.) So the solution is to have 2 accounts running, One for longer term trends the other to hedge with on the pullbacks.
 

darrenf

Well-known member
481 3
kevin546.

need to go to bed now as I have to be up at 4am. Will reply tomorrow.
 

TheBramble

Legendary member
8,395 1,170
kevin546 said:
Why are you trading EUR/USD when GBP/USD appears to have a larger daily range

It would seem a large chunk of Asian investment money (particularly the Chinese) has switched from the weak dollar to the euro.
 

JonnyT

Senior member
2,560 22
If I were trading through an SB I would also have the spot price up in real time. There are many sites that give free real time charts:

www.fxcm.co.uk
www.dailyfx.com
www.oanda.com
www.cms.com

etc etc

JonnyT
 

kevin546

Established member
699 0
Options

Thanks for reply. Regarding the wider prices moves provided by the SB company exaggerating the current move. The way to play the SB at this game is to trade off there own prices. Difficult to do this to the same affect when using the real instrument charts. Thats why I like CMC as they provide charts so if you wish to avoid some of there swings you just trade according to there own movement rather than trying to second guess them when the SB price keeps going in the wrong direction according to the real price. IMHO
 

darrenf

Well-known member
481 3
Sorry for the delay in replying, I've been very busy the last few days. Anyway......

Kevin 546

Is this best to take a positional daytrade approach due
to the range following a trend based set-up. for daytrading purposes
.

Yes, I would say for daytrading fx, then a positional trade, aiming to catch the main moves of the day is probably the best approach.
I have to say I don't day trade myself but judging my posts on the fx threads, most would seem to employ this strategy, looking to catch the start of moves around 7- 8:30 am (start of european trade), 12.30 to 1.30 pm (start of us trade) being the main times. I would avoid using any timescale shorter than 5 min bars as the charts below this tend to look very messy IMO. 5min and 15min, supported by 1hr for general direction seems a popular choice.

Options:-

The sb do the usual tricks of jerking the price all over the place and this is at quiet times. Much more volatile than fxcm etc. So when the price does move and rebound the sb is going to overshoot prices by a fair bit. Although it is nothing like the Dow used to be.

Where you may have a stop in at 30 away with fxcm etc you'll need double that with cmc just so as you don't get gunned.

I have to say that I have never experienced cmc's prices to be any where near 30 points away from fxcm's prices.

I have looked at the charts you have posted and yes, cmc's prices seem more "jerky" but if you look at the price extremes, then FXCM's have both higher and lower extremes. What I have observed in realtime (with both fxcm and saxo) is that their prices (particularly during quiet times) will dance around very quickly, ranging up and down maybe 5 points whilst cmc's price stays quite stable and does not move unless fxcm/saxo's price stays at a particular level for a few seconds. I would conclude that cmc's prices are LESS spikey and you have less chance of being stopped out. I have experienced this personally when leaving stops in overnight. When I have looked at my (FXCM) chart in the morning, I have expected to have been stopped out of a position with cmc. However, this has turned out not to be the case as cmc's prices have missed my stop by 1 or 2 points! When examining fxcm's charts, the point at which my stop would have been hit appears as long tails on 1 min bars. ie small price spikes which may have only occured for a second or so which have not registered on CMC's prices. Of course, this does have the possibility of working against you, if the order you are waiting to be hit is a limit order to take profits!

The point I am trying to make overall, is that I beleive cmc's prices are not subject to large fluctuations (bias) away from the market on fx products. How can they, when they actually have their own "real" fx trading platform, they would be opening them selves up to some serious arbing possibilities?
 
 
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