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What is it with FOREX?

Discussion in 'Making Money' started by PhiltheBear, Sep 21, 2008.

  1. PhiltheBear

    PhiltheBear Jr. VIP Jr. VIP Premium Member

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    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?
     
  2. shithappens

    shithappens Registered Member

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    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.
     
  3. s0ap

    s0ap Executive VIP Jr. VIP Premium Member

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    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.
     
  4. jammie

    jammie Jr. VIP Jr. VIP Premium Member

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    because people are dissilusioned into thinking they can make millions overnight, they think they'll instantly know everything about it and can trade like an expert by tomorrow tea time.

    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.

    People who have the capital to invest in unleveraged products like shares, have enough money to spend £100 a month on specialist software and dedicated datafeed. I however, don't have that much to spend (yet!).

    If futures/options brokers used MT, i'd of moved to them a long time ago!
     
  5. PhiltheBear

    PhiltheBear Jr. VIP Jr. VIP Premium Member

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    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?
     
  6. jammie

    jammie Jr. VIP Jr. VIP Premium Member

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    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?
     
  7. caretaker2007

    caretaker2007 Power Member

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    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.
     
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  8. PhiltheBear

    PhiltheBear Jr. VIP Jr. VIP Premium Member

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    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 :confused:
     
  9. s0ap

    s0ap Executive VIP Jr. VIP Premium Member

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    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.
     
  10. s0ap

    s0ap Executive VIP Jr. VIP Premium Member

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    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.
     
  11. irancrude

    irancrude Jr. VIP Jr. VIP Premium Member

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    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! :D

    Maurice
     
  12. jammie

    jammie Jr. VIP Jr. VIP Premium Member

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    once i hit £9k this year im off to spread betting as im in the UK tax position too ;]

    only just found a decent SB broker though, but everyone has preferences.

    s0ap, didn't know alpari russia did MT futures? i'll contact there UK branch to see if they have similar plans as i use alpari as my broker. That would make somethings easier for me.

    I'd loose everything with futures though unless i got lucky, i have no idea of where to start with them really. Doubt i'll touch unless something goes horribly wrong!

    100% agree with you though, i'd move to ECN if i had the money now, minimum is alot more than i currently have though, we can all dream 'eh! Tighter spreads, more security and quicker execution *Sigh*
     
  13. creztor

    creztor Power Member

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    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.
     
  14. PhiltheBear

    PhiltheBear Jr. VIP Jr. VIP Premium Member

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    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. :)
     
  15. jammie

    jammie Jr. VIP Jr. VIP Premium Member

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    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.
     
  16. PhiltheBear

    PhiltheBear Jr. VIP Jr. VIP Premium Member

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    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.
     
  17. jammie

    jammie Jr. VIP Jr. VIP Premium Member

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    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 :p. 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!
     
  18. PhiltheBear

    PhiltheBear Jr. VIP Jr. VIP Premium Member

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    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!
     
  19. jammie

    jammie Jr. VIP Jr. VIP Premium Member

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    my broker is regulated by the FSA - alpari UK (pretty good, if you ever fancy getting back into it, i'd recommend them immensly!). There are alot of good brokers, but its when you get unregulated ones in like panama etc which only accept eGold etc.

    I've heard alot of stories of people with 1:500 leverage taking out huge positions - 5 lots with £1000, so when each pip is £50 and theres slippage of 10 pips - They really aren't happy!

    But phil, i'd never get myself into a position where my equity was anywhere near 0, trades would be closed well before that! Nip the loosers in the bud and help the winners blossom into something beautiful ... or something like that =P
     
  20. StillSmiling

    StillSmiling Jr. VIP Jr. VIP Premium Member

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    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.