Forex help

[andrew100]

hi,

I've just started to look into forex, I have $5000 to start with, how many pip should I aim for if I would like to make about $100 / week?

I would like to trade in a AUD pair or should I trade in a different pair?

Thanks for your advice in advance.

Andrew

 

[BentRod]

Have you tried demo trading yet Andrew?

It doesn't sound like you have. I recommend trading on demo for a while first before committing your $5000.

I would like to trade in a AUD pair or should I trade in a different pair?

Some like to trade the currency of their own Country,eg- Aussies trade the AUD, Kiwi's the NZD etc, I have no idea why?

Seems a bit silly to me. Look at the charts and trade whatever pair you want.
Watch the spread if you are not using futures though, big spread=big commish.

 

[BentRod]

Andrew,
I just noticed the other thread you started:
https://www.aussiestockforums.com/forums/showthread.php?t=11793

Do some demo trading first Mate.
http://www.alpari-idc.com/en/metatrader4/open-demo-account.html

 

[andrew100]

Thanks Bentrod for your reply,

I just want to gauge how much I able to make before I invest some time.

I read on another forum that someone had a $3200 account and they were able to make about $100/ wk with 50pip. I not sure where that forum was.

But I also worked out that 1 pip is worth about $0.1, which if I make 50pip I only make about $5.00.

Is this correct?

Yes, I am a newbie, thanks for any advice you can provide.

Andrew

 

[caribean]

Hi Andrew, welcome, have a good look at this forum, there's been plenty of times when questions like yours have been answered, i think Tayser has given
some detailed explanations before.
Forex provides (through some brokers) extreme leverage, probably more than
any other instrument, so bang for buck is the least of your worries.
However, it appears you'll need to understand the concept of leverage/margin
first.
It's a long road ahead, if you're serious, do not start with a real account yet...just in my opinion.
Good luck.

 

[lesm]

Thanks Bentrod for your reply,

I just want to gauge how much I able to make before I invest some time.

I read on another forum that someone had a $3200 account and they were able to make about $100/ wk with 50pip. I not sure where that forum was.

But I also worked out that 1 pip is worth about $0.1, which if I make 50pip I only make about $5.00.

Is this correct?

Yes, I am a newbie, thanks for any advice you can provide.

Andrew

Andrew,

Standard Contract ($100,000), 1 pip = $10
Mini Contract ($10,000) 1 pip = $1
Micro Contract ($1,000) 1 pip = $0.10

Not all fx brokers offer the ability to trade in micro lots.

How much you make or lose will depend on your ability as a trader, but it will require an investment of time either way. There are no quick/easy wins in this or any business without some level of effort being applied.

You may wish to consider focussing on the major currency pairs, as a starting point, such as aud/usd, eur/usd, gbp/usd, etc. Focussing on one or two currency pairs initially may not be a bad idea, as it will assist you in gaining an understanding of their individual behaviour/characteristics.

The overall characteristics of the pairs will behave differently during each of the four(4) major sessions each day, as well as when the sessions overlap. Starting from Sydney on Monday morning (AEST) through Tokyo, London and then New York, where it finally closes on Saturday morning (AEST).

SOme other links have been provided to you previously, as well as a suggestion to look through the forum for fx related threads that will provide you with additional information.

Cheers.

 

[Underpants Gnome]

Hi Andrew, just keep in mind that $100 is 2% of $5000 and that 2% per week is 100% a year. I recently read in a SmartInvestor CFD lift-out that "the best leveraged traders in the world can earn consistent returns of 60 per cent a year and more, but this isn't a realistic goal for the inexperienced". So don't be discouraged, but make sure you're setting achievable goals or else you might be disappointed (despite doing well).

I haven't started trading myself but I've been using an IG Markets demo account for a few months now while I'm still learning. I really recommend doing that. Also a great site I've found is www.babypips.com. I find I keep going back to the "School" section and it makes more sense each time.

Have fun!

 

[lasty]

Andrew,

A very high percentage of traders lose their money in FX in the first 6 months simply because they start off with a low base.
Minimum amount is at least $20,000 before contemplating.

Secondly if you want to play FX stick with your home base currency ie AUD/USD and look no further.
Why? Because FX is not 100% charting.There is a fundamental component as well.All Australian economic data is released whilst you are awake.You get a better feel of what is going on in your country than say Europe when you are asleep.

Thirdly
The major banks in Australia predominantly play in AUD, NZD, AUD/NZD, AUD/YEN.
Very few with the acception of the foreign banks dable (position) in EUR/USD.
Now if they dont do it and they have more technology,contacts etc than you will ever have, what makes you think you are better?

 

[bvbfan]

Assuming you trade a $50000 position with leverage thats probably about $500 in margin.

1 pip in this instance is $5 so you'd need to make 20pips net a week.

If you stick to one currency I think its achievable and a good way to learn

BUT ALWAYS HAVE A STOP LOSS IN PLACE

 

[lasty]

My point about $20,000 minimum is that most ECN's are 50:1 leverage.
Its best if you open 2 accounts with different brokers.
1 being ECN and the other fixed spread.
Just incase one broker has tech problems and trust me they do.
Even the powerhouse interbank brokers like Reuters and EBS have hiccups.
Its all about Risk management.

 

[professor_frink]

...................

Thirdly
The major banks in Australia predominantly play in AUD, NZD, AUD/NZD, AUD/YEN.
Very few with the acception of the foreign banks dable (position) in EUR/USD.
Now if they dont do it and they have more technology,contacts etc than you will ever have, what makes you think you are better?

Why would someone that trades the Euro consider themselves better than than our local banks?

 

[BentRod]

Minimum amount is at least $20,000 before contemplating.

I Don't see why?

As Lesm pointed out above micro accounts can trade even as low as 10 cents a pip.

 

[lesm]

Included below is a table showing the Barclay Trading Group's currency trader rankings for June 2008.

Reproduced from Currency Trader Magazine, August 2008. So, the big boys do it better than the little boys

 

[lasty]

I Don't see why?

As Lesm pointed out above micro accounts can trade even as low as 10 cents a pip.

Because ECN's wont let you on for less than that as most are 50:1 and minimum 100k tradeable amounts.

If you like paying spread then sure go with the MM's.

 

[lasty]

Why would someone that trades the Euro consider themselves better than than our local banks?

The likes of Deutsche,Citi and RBC in Sydney are the acceptions.
The rest would have very little positions in it.
Its a difficult market in this time zone to make money in the Euro.

 

[lesm]

Because ECN's wont let you on for less than that as most are 50:1 and minimum 100k tradeable amounts.

If you like paying spread then sure go with the MM's.

The face of the ECN's has been changing for some time now. You can now open a retail account with number of ECNs with as little as USD$400 at 100:1 MBT or HotSpot Fxr USD$7,500 at 50:1. Both offer trading in micro lots for retail traders. There are other fx providers, such as IB, Dukaskopy, Alpari, etc., in this area, as well.

With an ECN you need to take into account commission + spread, where the spread is a variable spread and not fixed. Dependent upon the commission charged and the average spread costs there are a number examples on Fx fora that demonstrate that some ECNs can actually be more costly than a fixed spread MM through time.

A number of the ECNs that are targetting retail traders are quite good at advertising their minimum spread, but do not necessarily publish their average spread over a period of time. IB and Hotspot on average appear to have the tightest spreads.

Like anything it is about buyer beware and understanding what the real differences, including the advantages, disadvantages and costs are, between MMs and ECNs, rather than loose generalisations.

Cheers.

 

[andrew100]

Thanks everyone for your reply,


I have been to babypips and went through the school, although I might need to go through a few more time to make it stick.

I have started a demo account with GFT and planning to play around with it.

I have considered increasing my account to $10,000, I not planning to use leverage, is this a good idea?

Leveraging is like borrowing money and I only want to deal with money that I can afford.

Thanks again for all your input.

Andrew

 

[tayser]

GFT are going to be ringing you on a weekly basis starting in two weeks wanting to get you to open a live account.

And yes, you should be using leverage. Being scared of borrowing money is the wrong attitude, you should be using leverage from the start in a demo and learning how to use it effectively when there's no monetary risk to you.

 

[lasty]

The face of the ECN's has been changing for some time now. You can now open a retail account with number of ECNs with as little as USD$400 at 100:1 MBT or HotSpot Fxr USD$7,500 at 50:1. Both offer trading in micro lots for retail traders. There are other fx providers, such as IB, Dukaskopy, Alpari, etc., in this area, as well.

With an ECN you need to take into account commission + spread, where the spread is a variable spread and not fixed. Dependent upon the commission charged and the average spread costs there are a number examples on Fx fora that demonstrate that some ECNs can actually be more costly than a fixed spread MM through time.

A number of the ECNs that are targetting retail traders are quite good at advertising their minimum spread, but do not necessarily publish their average spread over a period of time. IB and Hotspot on average appear to have the tightest spreads.

Like anything it is about buyer beware and understanding what the real differences, including the advantages, disadvantages and costs are, between MMs and ECNs, rather than loose generalisations.

Cheers.

Yes thats why you have to be choosy on who you pick.
In quiet markets fixed spread will be 2 pips but the likes of hotspot or IB it could be 1/2 pip.]
In busy markets the fixed spread will be 2 pips and the ECN maybe 4pips but you have a chance to close that by offering or bidding inside the market spread. however I have noticed in busy markets that a fixed 2 pip spread is like playing lotto. The price jumps around very fast and is hard to hit. So the spread theoretically widens.
Remember the MM is there to make money on your spread.They arent a charity and will do their best to ensure they make it.The ECN is there to make money on brokerage only.

 

[CanOz]

As in any instrument there are many ways to trade it.

If you have a 10,000 AUD account you could trade 10,000 lots and be close to 1:1 leverage (minus some FX differeces).

If your scalping you need leverage, but if your trading reversion to mean, you may be interested in capturing larger moves. If so, less leverage can be better on a smaller account.

I traded Dirk DuToits 4x1 strategy for a while and while i broke even in the end, it was the leverage that made me realise that i don't have the stomach to take much of a loss. With IB you can only trade 30,000 lots as a minimum, and that was also my account size, but i couldn't handle being -600 or more in the red on a trade and waiting for it to come back to mean.

Trading FX is a great way to learn Macro Economics too, if you use the fundamental picture as part of your edge.

Dirk's ebook is here:
http://www.dayforex.com

While i subscribed to his forum for a while i was a bit turned off by the cost, and the quality of the site. His reversion to mean system is quite good IMO, and i will definitely trade it again someday when i have the time.

Cheers,


CanOz