Forex newbie

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marky

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Hi Guys and Girls

Im currently trading the dow with IB and they offer the facility to trade forex but never looked into it so i need a few simple questions answered first my account is GBP do you trade forex using lots as with futures or buy as in shares / also if i buy, go long the GBP/USD i am buying on the assumption the GBP will rise if you are selling the USD your account would need to be in USD or not im told they can be traded nearly 24 hrs a day and liquid would you say the risk would be greater than trading the dow . sorry if the questions seem dumb but have know idea about forex.
 
Marky,

Forex lots are typically 100k with 10 lots being 1 mio. If you go long GBP/USD you are buying sterling on the asumption it will go higher versus the USD.

They can be traded virtually 24hrs a day M-F. Opens on Sunday nite and closes on Friday usually around 4 EST.

The liquidity is more than all other markets combined. $1.4 trillion per day

As far as risk, the margins are much lower than that of futures so the risk is greater, but that also depends on your management of that risk.

Let me know if you have any other questions.

Regards,

Jaeson
 
There are also what are called mini forex accounts which offer a less "interesting" introduction to forex trading. You buy lots and each lot requires $50 margin and each pip (0.0001 on the Euro/USD rate) change results in +/- $1. So it is quite easy to understand you P&L position.

Actually one thing to keep in mind is although the charts and quotes or in pounds or euros vs the the dollar, when you see media articles they invariably do it backwards (well at least this is the way I see it). So you here people say they are bullish on the dollar, you would actually sell (whereas the with the DOW you would buy)

But I am only an advanced beginner :confused:
 
Hi Guys

Thanks for the help it looks like i better do some research and make sure i fully understand before i dip my toes in the water it be expensive if not.
Regards mark
 
5 point spread on CMC no noticeable bias like on the Dow. No trades executed unless the underlying has traded at that level. (As it should be) Worth a look and wont be costly while you get the feel for the market. Trades exceptionally well with basic TA. Currently trading it with a 15 min chart and 100 ema to identify a long or a short, and trade patterns, Sup&res only.
 
Newtron, if you compare them to real interbank rates you will find CMC are ahead of the prevailing price action on any significant economic data release or event. Generally it last for only a few seconds but it is there. At all other times they are two or three pips maximum away from the composite rate.
 
warm machine
I see you point(s) but for my style of trading cable (not day trading) a few pips is not a problem. I was hoping to illustrate that you can dip your toe in the water with cmc without having to fully expose yourself to the currency market. Again as i dont day trade cable the 1-3 points bias has not been that noticeable for me compared to that of say the dow which is often miles out.

I thought it would be a suitable starting place without having to worry too much about currency conversions with IB, slippage and a significant bias, before you would want to commit fully to the market with IB

HTH :cheesy:
 
As a progressing beginner I could not agree more about using SB as a way to try things out. I am with Finspreads and on the Euro/USD futures they have a 7point spread. 1st 8 weeks you can be 1p a pip if you want.

It may not be a suitable trading tool for an experienced day trader but for starting out it is great. Get some experience there and then open a mini fx account.
 
Neil

When you say it needs much understanding and titanium balls- can I ask what you mean by this?

I would agree that initially, it can be difficult to understand which way you are actually trading but once you have learnt this, it's just like trading anything else.

I've heard others talk of the requirement for "balls of steel" (or titanium if thats your preference), but I've never really understood why. TA works very well, particularly on 15min plus timescales, right up to daily timescales and the trends are often pretty smooth once they get going.

I know you can trade on much greater margins than other instruments but then the daily movement of pips is often no greater than say the DOW. As long as you manage your risk properly, this shouldn't be a problem either?

I also trade using CMC SB's and I too would recommend this to anyone starting out. As far as Spreadbetting is concerned, FX has to be one of the best instruments to trade. The dreaded bias is virtually non existent, the spreads are tight 24 hrs a day and you can be confident that if you place a stop, it will only be hit if the underlying currency actually hits your stop price. (2 to 3 points difference on rare occaisons excepted). Also as the FX market trades 24 hrs a day, you know that the SB price can't fluctuate wildly during market closed hours. ie as with DOW/ FTSE etc.

Compared to SB'ing indices/ UK/US stocks, you just don't get the wide variations from the actual price that seem to plague people trading those instruments.

Don't get me wrong. I'm no FX expert. However, I've been trading FX for a few months and making modest profits/ modifying my trading plan as I go along.

I'd be interested to hear anyones further thoughts on this as there seem to be relatively few people trading FX
 
Sin

self explanatory.

If you're making a profit then well done.

Perhaps you could start a thread or journal.

Spread betting was how I started until there was a blinding flash of light ( Iwas drinking in St.Ives, Cornwall at the time) and a voice said, " Cast spread betting into the outer darkness and follow the path of the Future." :devilish:

So I did.

So if you think few are trading forex on this site then visit Elite and join whatever discussion takes your fancy.

Good luck.

:)
 
Neil

Do currency futures have a smaller spread than interbank rates (ie usually 4-5) on EUR/USD?

PS. I was in St Ives myself a couple of weeks ago.

Darren
 
Darren:

I am no Forex expert...best to ask such questions on Elite board.

Johnny T......have you got your passport ?
:)
 
Pit traded CME futures have no spread obviously, but out of hours/globex spreads can vary from 3/4 pips up to 10 pips depending on instrument and time.
EBS spreads are 1 pip for eur and yen (usd) but you're not going to be able to trade on this so the best you can get will be 3 or 4 pips online trading.
 
Marky, if you can try out a demo of forex trading at www.fxcm.co.uk where you can get a virtual account and trade 17 major currency pairs online. It is pretty easy, but there are a few differences to trading the Dow - or other equities or indexes. You always get the price you see - not the next best, but you also trade on high leverage.
 
EUR/USD
Euro / U.S. Dollar
3 pips

USD/JPY
U.S. Dollar / Japanese Yen
3 pips

GBP/USD
British Pound / U.S. Dollar
4 pips

USD/CHF
U.S. Dollar / Swiss Franc
5 pips

USD/CAD
U.S. Dollar / Canadian Dollar
5 pips

AUD/USD
Australian Dollar / U.S. Dollar
5 pips

EUR/GBP
Euro / British Pound
5 pips

EUR/JPY
Euro / Japanese Yen
5 pips

EUR/CHF
Euro / Swiss Franc
5 pips

GBP/JPY
British Pound / Japanese Yen
10 pips
 
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