Forex for Dummies

[tech/a]

I couldnt find a thread this basic.

I dont need to run through Entry/Exit Risk Management etc on Forex thats to advanced!

I want to ask the really dumb/novice starter questions.

I'd like anyone who can help to answer the following.

I trade with IB with E signal live feed.

(1) What are the most liquid contracts.
(2) What are the most traded contracts---IE popular.
(3) What is the Tick value of them?
(4) What are the margin requirements / contract?
(5) What are the codes I'd log into IB? Live data feed its also fed by E signal.
(6) What are the trading times Eastern seaboard.
(7) How do you trade continuous contracts so you dont get caught having a delivery.
(8) What are the novice traps (Other than trading errors entry exit bad risk management) The sort of thing novices just dont have a clue that can bite you!

Much appreciated.
No doubt more dumb questions to come as I explore my dumbness.

 

[prawn_86]

Re: FOREX for Dummies.

Here are a few answers for you Tech, based on my limited scalping experiences.

I trade with IB with E signal live feed.

(1) What are the most liquid contracts. Generally speaking the liquid ones i know are USD/JPY, EUR/JPY, USD/EUR
(2) What are the most traded contracts---IE popular. As above. Most liquid generally infers most traded
(3) What is the Tick value of them? A 'tick' is actually called a 'pip' and usually it is measured in 1/10th or 1/20th of a 'cent' (depending on the apir). IE if EUR/JPY went from 162.52 -> 162.53, that is 1 pip.
(4) What are the margin requirements / contract? Dependent on Broker. Surely its on the IB website?
(5) What are the codes I'd log into IB? Live data feed its also fed by E signal.
(6) What are the trading times Eastern seaboard.
(7) How do you trade continuous contracts so you dont get caught having a delivery. Are you talking currency options? Normal currency trading wont have 'delivery'
(8) What are the novice traps (Other than trading errors entry exit bad risk management) The sort of thing novices just dont have a clue that can bite you! Depending on your timeframe, but speed of movement is one. Ability to over leverage. I would recommend getting to know just 1 or 2 pairs. Again it really depends on what type of trading your doing though.

Hope that helps/makes sense

 

[Boggo]

Re: FOREX for Dummies.

This site covers just about everything tech/a, most of it you know but definitely worth scrolling through the pages, some good info.

http://www.babypips.com/school/the_skinny_on_forex.html

 

[CanOz]

Re: FOREX for Dummies.

I couldnt find a thread this basic.

I dont need to run through Entry/Exit Risk Management etc on Forex thats to advanced!

I want to ask the really dumb/novice starter questions.

I'd like anyone who can help to answer the following.

I trade with IB with E signal live feed.

(1) What are the most liquid contracts.
(2) What are the most traded contracts---IE popular.
(3) What is the Tick value of them?
(4) What are the margin requirements / contract?
(5) What are the codes I'd log into IB? Live data feed its also fed by E signal.
(6) What are the trading times Eastern seaboard.
(7) How do you trade continuous contracts so you dont get caught having a delivery.
(8) What are the novice traps (Other than trading errors entry exit bad risk management) The sort of thing novices just dont have a clue that can bite you!

Much appreciated.
No doubt more dumb questions to come as I explore my dumbness.

I'm sure there are other more experienced than I Tech, but i'll answer anyway, as i owe you some advice.

I'm assuming you want to trade spot FX, not futs.

1.) & 2.) The euro is or was the most highly traded, but the Yen would have to come close these days. Both are very liquid, but each session can be different.
3.) It depends on each but with the Yen for example 1 pip = 1.5333 AUD
EUR is 1.4077.
4.) Margin requirements for IB i thunk (i use Oanda now for FX) is like 1500 AUD to trade 30,000 AUD....basically 50:1 (i could be wrong on this as i can't open IB right now)
5.) codes for IB : EUR.USD-IDEALPRO-CASH
OR for the Yen USD.JPY-IDEALPRO-CASH
But for the codes, just type in the first three letter of the PAIR.
6.) FX hours: this is handy http://forex.timezoneconverter.com/index.cgi?timezone=Asia/Tokyo;
7.) In spot there are no expiry's, but you need to pay carry interest if you hold for a while.
8.) Novice traps:
a.) trading a lot size too large for their account
b.) stops too tight
c.) holding over the weekend
d.) not being able recognize and trade ranges and trends
e.) trading to short of a time frame eg. 5 minute noise

If i think of any more of my mistakes i'll let you know.

Cheers,

CanOz

 

[Cartman]

Re: FOREX for Dummies.

with regard to (8) above Tech ----- news hitting the wires can sometimes cause some nasty spikes so always good to know the timeframe of the news calendar and maybe stand clear ---- same site i posted on the other thread will give an overview of that and all good general info + forum http://www.forexfactory.com/

or http://www.forexsites.com/

demos and plenty of them i reckon --- nothing beats hands on ---
http://www.fxstreet.com/brokers/demo-account/ --- plenty to choose from

Tayser from here would be worth talking to. im sure he'll drop in later

oh yeah ---- and Norm too ---- who is now below me lol -----

 

[Stormin_Norman]

Re: FOREX for Dummies.

(1) What are the most liquid contracts.
(2) What are the most traded contracts---IE popular.

1. EUR/USD
2. USD/JPY
3. GBP/USD
4. USD/CAD
5. AUD/USD

(3) What is the Tick value of them?

reference:
http://www.forexfloor.com/ticks.html

(4) What are the margin requirements / contract?

margin requirements can vary from 50:1 at some brokers to 400:1 at others.

contracts can be 10,000 for a mini, or 100,000 for a full contract. many brokers who do minis will let you purchase as little as 0.01 of a mini unit (100 units).

(5) What are the codes I'd log into IB? Live data feed its also fed by E signal.

not sure what you mean by that question.

(6) What are the trading times Eastern seaboard.

from about 7am monday morning to about 7am friday morning.

(7) How do you trade continuous contracts so you dont get caught having a delivery

.

the contracts are automatically rolled over by the broker if you have held it for more then 2 days.

(8) What are the novice traps (Other than trading errors entry exit bad risk management) The sort of thing novices just dont have a clue that can bite you!

bad money management (i know you said that, but its worth repeating 10 times).
selecting a bad broker (dodgy, undercapitalised, massive spreads).
watch out for new releases. (www.forexfactory.com)

 

[CanOz]

Re: FOREX for Dummies.

watch out for new releases. (www.forexfactory.com)

Excellent point, also Trading the News....that's a no no.

Cheers,



CanOz

 

[Stormin_Norman]

Re: FOREX for Dummies.

corrections:

7am saturday (not friday)
and news, not news.

i should proof read.

and check out the site babypips

 

[MS+Tradesim]

Re: FOREX for Dummies.

tech, if you haven't already, open the paper trader account with IB.

As I understand it you would pay to access FX data through esignal. However IB gives you live FX data for free. Just add it in your subscriptions. You can stream it directly into Amibroker. I stream into Metastock with a 3rd party plugin.

Codes and minimum order sizes for IB are here:
http://www.interactivebrokers.com/e...?exch=ibfxpro&showcategories=FX&ib_entity=llc

 

[howardbandy]

Re: FOREX for Dummies.

Greetings all --

Some cautions when considering trading Forex:

1. You are trading in the over-the-counter market with a counterparty. There is no central clearing organization to help reduce the counterparty risk.

2. You are trading against that counterparty. They might have more staff, more equipment, and better trading systems than you do.

3. You are trading on their bid and asked prices.

4. They can see your orders.

5. If you get historical data to use to develop your trading system, get it from the firm you will be trading against. The data you get from another source will be different.

As an alternative:

If you have a trading system that looks good on some firms Forex data, consider trading the corresponding currency futures. You would need to revalidate your system (since the data is different), but all of the disadvantages listed above go away.

Thanks for listening,
Howard

 

[MS+Tradesim]

Re: FOREX for Dummies.

Hi Howard,

Most of those risks don't apply when trading through an ECN like Interactive Brokers. In that case you are not trading against them. They are merely broking the order into the interbank market.

But the risks you talk about are exactly why I won't trade FX with a market-maker and are valid and need to be understood, if someone chooses to use a market-maker.

 

[CanOz]

Agree on IB FX...but generally their seems to have been some reform in the FX markets in the last 18 months. Firms like Oanda have seemed to be up with times in smaller lot sizes, leverage selection, different order types etc., and the intraday data is THE SAME as IB, as i run them both simultaneously.

In any case Howard, an honor to see you in this thread, perhaps you might enlighten us on any mechanical systems you might have worked through using FX data and AB?

Cheers,



CanOz

 

[Stormin_Norman]

OandA have a great model.

The spreads offered on OANDA FXTrade vary over time. OANDA is the counter-party to trades executed over FXTrade. Trades are matched, and any net exposure above predefined thresholds is hedged with partner banks at the current market spread

plus with 150+ USD million in excess capital, im quite sure im going to get my profits paid out.

people make a big deal about this dealing desk thing. im not convinced its the be all and end all when selecting a broker.

if youre a profitable trader theyll pass the exposure on, if youre not profitable theyll personally be your counter party.

either way, if youre not profitable, youre not profitable!

and with an ECN broker youre paying a commission - about US$6.70 for a mini contract on the euro. (http://www.mbtrading.com/forexCommissionRates.aspx)

a 10,000 lot euro contract = USD1 per pip (http://www.fxstreet.com/forex-tools/pip-value-calculator/)

so the commission charged to place your trade = 6.7 pips. that's quite a spread.

 

[barney]

and the intraday data is THE SAME as IB, as i run them both simultaneously.

That is certainly a good sign, thanks Can.

In any case Howard, an honor to see you in this thread, perhaps you might enlighten us on any mechanical systems you might have worked through using FX data and AB?
Cheers,

CanOz

A link for those interested which amplifies/expands on what Howard was saying. Cheers.

http://www.traderslog.com/forex-currency-futures.htm

 

[MS+Tradesim]

and with an ECN broker youre paying a commission - about US$6.70 for a mini contract on the euro. (http://www.mbtrading.com/forexCommissionRates.aspx)

a 10,000 lot euro contract = USD1 per pip (http://www.fxstreet.com/forex-tools/pip-value-calculator/)

so the commission charged to place your trade = 6.7 pips. that's quite a spread.

IB charge 0.2 of a pip with a minimum US$2. But you don't get to trade micros and minis with them. And I regularly see 0.5-1.0 pip spreads on EURUSD.

 

[Stormin_Norman]

that sounds much more reasonable.

i am almost up to the point of trading full contracts with my account. do you have to trade in full contract amounts? (ie 100k, 200k etc)

 

[MS+Tradesim]

that sounds much more reasonable.

i am almost up to the point of trading full contracts with my account. do you have to trade in full contract amounts? (ie 100k, 200k etc)

No, but there are minimums. Check the link I posted above.

 

[kam75]

I'm interested to hear from any trader here that makes money consistently trading Forex. For example every week or every month for the past few years.

Studied babypips.com but not inpressed. Their trading system is without doubt a sure way to lose your dough - moving averages only work in hindsight.

 

[Stormin_Norman]

i make 50-100% consistently each month.

babypips was more to answer questions, rather then obtain a trading plan. they really have to be done yourself, with some research and trial and error.

 

[lesm]

Re: FOREX for Dummies.

Hi Howard,

Most of those risks don't apply when trading through an ECN like Interactive Brokers. In that case you are not trading against them. They are merely broking the order into the interbank market.

MS,

You raise an interesting point.

Although you are not trading against an MM (the broker per se), it is still effectively an OTC market, without a central clearing house.

Dependent on group of banks that make up an ECNs set of liquidity providers there may be liquidity issues that can create periods of wider spreads and/or periods of low trading activity.

For scalpers and intraday traders 'speed of execution' and 'liquidity' are key factors.

If you compare the Asian session (inclusive of New Zealand, Sydney and Tokyo) with the London or New York sessions or the respective overlap periods there are significant differences in the levels of liquidity.

Observe the market, spreads and the level of liquidity when the banks are closed for holidays or when they (or the big boys) are moving their orders around.

Cheers.