What's the fascination with Forex?

[scottgough]

As a total newbie, I'm trying to understand the fascination with trading Forex.
I've so far only traded commodities which seem to have far more movement, Copper and Coffee can swing hugely during the day, is this not better for trading with?

All advice gratefully received!

Thanks, Scott

 

[Martinghoul]

Mainly, it's liquidity...

 

[scottgough]

Ahh I see. If I'm just spreadbetting on market movement, isn't something volatile with lots of movement better?

Sorry if that's a totally naieve question!

 

[Masquerade]

Depends how good you are with managing it?

I really wish I just stuck with stocks.

 

[PollyM]

Ahh I see. If I'm just spreadbetting on market movement, isn't something volatile with lots of movement better?

Sorry if that's a totally naieve question!

Amongst other things, it's a matter of relativity. You will still see relatively large moves amongst relatively small moves in any market. A steadier market is better for new traders, applying very very small stakes in the beginning. This will then help establish the method your comfortable with, a benchmark that is your own, and to then increase absolute profit you will look to gradually increase the size of your stake, like a ratchet effect. Keep ploughing your returns back into your pot, and let the compounding effect take care of the growth.

Naturally, you will be more comfortable gradually increasing your stakes in a steadier market, than always chopping and changing with small stakes in very volatile markets because of the higher risk of being burnt.

 

[scottgough]

I can see the logic in that, I probably need to look around for some more consistent movers, and work from there on a longer term strategy.

Thanks Polly

 

[PollyM]

I can see the logic in that, I probably need to look around for some more consistent movers, and work from there on a longer term strategy.

Thanks Polly

Have a look on the Where do I start? thread, I did some sessions on there which touched on volatility and other matters that may be of use to new traders. Essentially, the approach is a fusion of ideas first presented by Elliott, Hurst and Wilder.

Visualising the 3d spiral model will help you start to understand the mix of relatively large and small movements on 2d charts.

 

[Rhody Trader]

I've so far only traded commodities which seem to have far more movement, Copper and Coffee can swing hugely during the day, is this not better for trading with?

If huge intraday swings is what determines the best market to trade, then we should all be trading penny stocks. That sector can put the volatility of the primary financial markets to shame. There are very good reasons for not playing them, though, such as liquidity which was noted before.

As for the reasons why folks trade forex, 24-hour trading is near the top of the list. Most commodities aren't actively traded round the clock.

 

[Jack o'Clubs]

All very well but for most retail punters I think it's the attraction of huge leverage combined with what *seem* to be simple fundamentals ('ooh, good payroll numbers, the dollar's gonna move'). And so an entire industry has evolved to exploit them.

 

[Rhody Trader]

All very well but for most retail punters I think it's the attraction of huge leverage combined with what *seem* to be simple fundamentals ('ooh, good payroll numbers, the dollar's gonna move'). And so an entire industry has evolved to exploit them.

Not much difference between forex and something like mini S&Ps in that regard.

 

[Bint_Crusher]

Leverage. pure and simple

 

[EulerFourier]

I think much of it has to do with the following:

Auto FX Millionaire!!! All I have to do is turn it on!

 

[The Leopard]

It's nuts to be honest.

 

[TobyDoyle]

EulerFourier pretty much hit it on the head...