What is it with FOREX?

[PhiltheBear]

Perhaps I'm being a bit thick here - but I don't understand the fascination of Forex for people.

Is it because most of the members here are from the US and it's about the only highly leveraged markets you can play?

Surely there are other markets that are equally risky? Commodities, futures,....? Or is it because it's the closest you can get to gambling on a market without actually gambling?

So, why Forex?

 

[shithappens]

Perhaps because it is risky ... with high rewards ... and it is not like gambling, because with some information and gut, you can turn that risk to your favour.

However forex is not for everbody, in fact it is only for just a few people.

 

[s0ap]

Retail FX was, and mostly is, and advertisers game. Until recently there was no minimum funding requirement for FX brokers located within the US so there was a proliferation of bucket shop retail brokers who were opening super leveraged accounts for anyone with $100 to deposit. The fact that they had (and have) shit spreads, execution, and feeds is irrelevant to most people becuase they don't know what "good" spreads are or commission rates on the interbank market. The NFA or whoever recently instituted a 5mil minimum cash on hand requirement for all US brokers so a lot of them shut down around November of last year I think.

Also there is the standardized platform that most retail brokers use (MetaTader) which is free and has a built in programming/scripting language which has spawned countless EAs which people think will make money for them, so they never learn to trade. Nobody wants to ask why MT4 is free however, I'll you guess why on that one.

So basically its more accessible I guess. Try to find a broker with a demo FX accounts as opposed to demo futures accounts and you can how much easier it is.

 

[jammie]

 

[PhiltheBear]

Thank you for your replies - I'm in the UK and did my first Forex trade nearly 40 years ago but have always been more interested in stock/commodity/futures and have, by and large, left Forex alone.

But MetaTrader can be used for futures, stock (CFDs) as well - and they can be just as leveraged. Is it simply a 'sales' game?

 

[jammie]

pretty much - FXCM have pretty much a monopoly on all ads on every currency website, every economic website & there ads are all over google.

They suck people in and then people start to look it up and get sucked in by all the empty promises.

I'm in the UK too and admit it happened to me, but luckily i was too young to trade and learnt a few (aka many) lessons via paper trading. glad i didn't have the money or age to put in some savings! they'd be long gone.

i'd love to get started in futures but intial investment is too much for me currently, and its a *very* steep learning curve from what i've seen.

Alot of FX brokers provide far too much leverage so people go silly. I'd presume most futures brokers aren't as daft?

 

[caretaker2007]

Yeah, the work from home syndrome is alluring to people.

The ones that I have seen make some cash are the ones that watch every speech and notice from every country that can effect the pairs that they prefer. It can be a bit much, but, once you learn to read the signs you could make some serious cash.

Patience is not just a virtue in this, but a requirement.

 

[PhiltheBear]

pretty much - FXCM have pretty much a monopoly on all ads on every currency website, every economic website & there ads are all over google.

They suck people in and then people start to look it up and get sucked in by all the empty promises.

I'm in the UK too and admit it happened to me, but luckily i was too young to trade and learnt a few (aka many) lessons via paper trading. glad i didn't have the money or age to put in some savings! they'd be long gone.

i'd love to get started in futures but intial investment is too much for me currently, and its a *very* steep learning curve from what i've seen.

Alot of FX brokers provide far too much leverage so people go silly. I'd presume most futures brokers aren't as daft?

I'm a 'spread betting' man - I don't use brokers (in the UK that gives me a tax advantage) I use bookmakers. (OK - I used to be a spread betting bookmaker )

But there suddenly seems to be a proliferation of stuff about Forex on this forum - and I'm at a loss as to why. It's nothing to do with Black Hat IM

 

[s0ap]

I only know of one broker for sure that allows for futures on MT, Alpari Russia. There is one other one I think but I can't remember who. Its possible, but options are very limited, especially in the US.

MT is great is you are trading under 50k but once you get to that point I would seriously consider moving to someone bigger on and ECN connection, or opening accounts with multiple brokers. Refco went down and took everyone's money with it, and it will happen again.

The important thing to keep in mind is that pretty much anyone trading factional lots in FX is trading against you (i.e. taking the opposite position on the other half of the trade) Because no IB connections that I know of will clear anything less than whole lots. So your broker has a vested interest in seeing a certain outcome of your trade, whether that's win or lose.

 

[s0ap]

s0ap, i like metatrader! I think its a very well created and effcient platform, never crashes with my broker and provides a very very good feed to me, execution times are spot on and i can never complain! There are obviously better feeds & brokers, but it does a very good job for most people.

MT4 is very well put together, and I use it for all my demos. The reason why it is so popular with brokers (or so I've heard...), is that the server-side software allows for custom-built plugins which allow the broker to adjust slippage, feeds, price shading, spikes, etc. in real time. I don't know that a broker with X thousand number of clients would single out any one individual trade, but it is pretty common for them to stop hunt by 3~5 pips around major S/R and "clean" numbers such as 1.3500, .9500, etc. where people but a lot of their stops.

 

[irancrude]

Being a hobby related forex trader all I can say is that I started with no knowledge and a few hundred bucks and almost doubled my money fast, then lost half of it and got it to a over 240% back now, so again in profit. Forex to me is only for those with the time and courage to persist despite its losses and profits... still nothing is 100% safe in life, money is certainty not the exception so if you put 2k in forex one day kiss god bye that money in your mind and heart and then have fun all the ride long!

Maurice

 

[jammie]

 

[creztor]

Definitely was/is more accessible as there are plenty of bucket shops around to take peoples money. This just leads to masses joining these bucket shops and getting their accounts depleted quickly. High leverage, ads about how much money flows through the forex market everyday and buck shop tools telling people you just buy/sell help them blow up their accounts. I've seen forex threads here before and didn't comment but the majority of people getting into forex won't last. It's the same with anything, there is no get rich quick answer but many believe forex is.

 

[PhiltheBear]

Being a hobby related forex trader all I can say is that I started with no knowledge and a few hundred bucks and almost doubled my money fast, then lost half of it and got it to a over 240% back now, so again in profit. Forex to me is only for those with the time and courage to persist despite its losses and profits... still nothing is 100% safe in life, money is certainty not the exception so if you put 2k in forex one day kiss god bye that money in your mind and heart and then have fun all the ride long!

Maurice

Trouble is that very few people understand that you have to regard your money as 'lost' - and then get upset when it really is lost.

 

[jammie]

if people applied the same logic as they do at a casino, they'd be alot better off.

I'd go to a casino to have a good time, a few drinks and enjoy it. If i got lucky, i got lucky, but chances are i'd loose.

I know that when i go in, put people don't see forex like that when its basically the same thing. If you know it really well, you can make a profit, but don't count on it.

I was down 50%, now i'm down 25%. Today has been a good day, but they don't come often enough it seems. Hopfully i've got rid of most of my flaws.

 

[PhiltheBear]

if people applied the same logic as they do at a casino, they'd be alot better off.

I'd go to a casino to have a good time, a few drinks and enjoy it. If i got lucky, i got lucky, but chances are i'd loose.

I know that when i go in, put people don't see forex like that when its basically the same thing. If you know it really well, you can make a profit, but don't count on it.

I was down 50%, now i'm down 25%. Today has been a good day, but they don't come often enough it seems. Hopfully i've got rid of most of my flaws.

But the difference tends to be that the sums involved turn out to be large. If I put $100 down in a casino the worst that happens is I lose $100. If I enter a Forex transaction and screw up (especially if I don't have a guaranteed stop) I may be saying goodbye to my house.

You can always lose (or win) much more than your initial margin.

 

[jammie]

ayes, but my broker has margin call if the equity in your account falls below 20% of whats required to hold the position. So if i fuck up, its just my trading account. Pretty handy!

Obviously some "back-street" brokers would claim to have this, blame slippage for why they didn't close and end up with a nice fat bill from them! Same as "guaranteed" stops which most of them never seem to be able to fill . My brokers been fine so far with stops & takes though, but im sure a lot out there can really mess you up!

Good job the authorities are clamping down on these, well ... in some countries at least!

 

[PhiltheBear]

ayes, but my broker has margin call if the equity in your account falls below 20% of whats required to hold the position. So if i fuck up, its just my trading account. Pretty handy!

Obviously some "back-street" brokers would claim to have this, blame slippage for why they didn't close and end up with a nice fat bill from them! Same as "guaranteed" stops which most of them never seem to be able to fill . My brokers been fine so far with stops & takes though, but im sure a lot out there can really mess you up!

Good job the authorities are clamping down on these, well ... in some countries at least!

Read the rules - your losses are almost certainly not limited to what's in your account.

And a 'guaranteed' stop should mean just that - you usually get a larger spread to fund it but 'guaranteed' means 'guaranteed'. If your broker is UK based and doesn't meet that then fire off a message to the FSA - he won't be anyone's broker!

 

[jammie]

 

[StillSmiling]

Being a hobby related forex trader all I can say is that I started with no knowledge and a few hundred bucks and almost doubled my money fast, then lost half of it and got it to a over 240% back now, so again in profit. Forex to me is only for those with the time and courage to persist despite its losses and profits... still nothing is 100% safe in life, money is certainty not the exception so if you put 2k in forex one day kiss god bye that money in your mind and heart and then have fun all the ride long!

Maurice

I could have written this myself. This was a few years back when I was pissed about the daytrading limits (still am pissed about this stupidity) and once I learned that there was no Uptick Rule --- forex was my new best friend. I think that a lot more new folks are going to come to forex now that they're trying to limit/regulate short selling.