FOREX newbie questions

[funnybunny]

I was thinking about investing in forex for a few months now - had a few questions which I couldnt find from forex books - mostly was reading about technical analysis not specifically related to australia

1) I was wondering are there any forex brokers in australia (or provide service to australia) that have guaranteed stop losses or in the effect of preventing negative balances i.e. wont be too worried if I lose my investment but not any more

2) If there are any brokers that provide GSLOs - how much are the prices - what brokers do ppl reccommend - I was going for Pepperstone but realise they dont provide GSLOs.

3) I assume if I deposited $1000 AUD, then to buy CHF/AUD, EUR/AUD etc would be straightforward - but what about EUR/US..would I need to first exchange from AUD to USD - would the forex broker do this for me at a reasonable price then buy EUR with US? What would the costs be approximately?

I understand I have a long way to go but had these initial questions for australians taking on forex markets

Thanks!

 

[peter2]

1) IG Markets have guaranteed stop losses on FX currencies. (see pic)



2) The costs vary with the currency pairs (AUDUSD ~0.8pt, GBPUSD ~2pt)

3) The broking platform will automatically calculate the margin and your P&L in the account currency.
The costs are in the spread every time you need to cross it.

It's up to you to ensure that your account has enough for the margin requirement for every trade and enough to cover any loss from the trade. If you make a "fat finger" mistake or overlook a decimal pt in your trade calculations you can lose your entire account. It won't be the brokers fault if you make this mistake. GSLOs won't prevent these mistakes from happening.

Good luck and practice until you know what you're doing.

 

[funnybunny]

1) IG Markets have guaranteed stop losses on FX currencies. (see pic)

View attachment 87219

2) The costs vary with the currency pairs (AUDUSD ~0.8pt, GBPUSD ~2pt)

3) The broking platform will automatically calculate the margin and your P&L in the account currency.
The costs are in the spread every time you need to cross it.

It's up to you to ensure that your account has enough for the margin requirement for every trade and enough to cover any loss from the trade. If you make a "fat finger" mistake or overlook a decimal pt in your trade calculations you can lose your entire account. It won't be the brokers fault if you make this mistake. GSLOs won't prevent these mistakes from happening.

Good luck and practice until you know what you're doing.

Hi Peter
Thanks for that info. i was going to look at IG markets as well.

Say if i had $1000AUD and buy EUR/AUD, it would be straight forward. How do i go about buying EUR/USD...who would i only be able to buy in AUD as a base currency?

 

[peter2]

You can buy or sell any pair to start a trade.
The trading platform will do all the calculations and notify you of your margin requirements in AUD before you start the trade.

Get a demo account and see what happens.

 

[funnybunny]

Thanks for the replies
Also with IG markets- the do do guaranteed stop losses- so i guess this would safeguard me against slippage but does it guard against gaps as well? (is that the same thing)

 

[peter2]

The price of the GSLO is the exit price of your trades. There will be no slippage and no gaps.
Your paying for that service.

Gaps and slippage are not the same thing. Gaps in the price feed happen when prices move fast or happen over the weekend between the close at the EOW and next week's open. The gap would be in response to something that occured while the markets were closed.

Slippage occurs when prices move after you've placed a market order. You try to buy at 0.7500 but as soon as you enter your market order the price changes either up or down and you get filled at a slightly different price, ie 0.75002 or 0.74999.

 

[cynic]

A couple of further comments on the gaps and slippage question.

Depending upon one's trading methodology, the GSLO might not be the only exit trigger for the trade.

One might wish to exit upon achieving a predertemined profit target, in which case gaps and/or slippage can potentially impact the exit price.

Intraday gaps can also occur when liquidity dries up in advance of high impact news reports, or during sudden shocks to the market.

 

[Wysiwyg]

Thanks for the replies
Also with IG markets- the do do guaranteed stop losses- so i guess this would safeguard me against slippage but does it guard against gaps as well? (is that the same thing)

Keep an eye out for the GPT (guaranteed price target) offer.

 

[cynic]

Keep an eye out for the GPT (guaranteed price target) offer.

Is this your way of hinting at the availability of limit orders?

 

[Wysiwyg]

Is this your way of hinting at the availability of limit orders?

No, just joking.

 

[aus_trader]

My only suggestion is go slow and learn from mistakes as you do. Currency markets can be very frustrating to trade based on my experience and try to stick to longer time frames such as Daily and 4H. 1H may be as low as I would go since it starts to look like noise when you go further down in my opinion.

Also as peter2 mentioned earlier with aud/usd at 0.8pips example, the cost of the trade is also important so I reckon stick to the majors such as aud/usd, eur/usd and gbp/usd as they offer lower costs. Best of luck and do post your progress...

 

[Stratagist]

Definitely suggest you open a Demo account and practice trades to get a handle on the market
FXCM offers a Demo account using the Trading Station Platform which can be downloaded to PC also mobile to monitor during the day.The platform allows 24 hour trading from Australian market into the US market overnight. Bear in mind there is a cost carrying a trade over to the next day https://www.fxcm.com/au/ Download their EBOOK.pdf, Trading Station user guide.pdf
$1000 is a small amount to play with as does not give you much leverage ie if currency pair goes in opposite direction to what you anticipated you can lose the lot in a blink of the eye
The platform allows you to place a trade either buy or sell at the price you deem is value.
Always place a stop/limit order to cover losses in excess of what you can afford or what you concider is a good profit - do not get greedy as you will loose big time
Forex market is very volatile but practice makes perfect
Research and homework is your friend. Use chart indicators to find market direction, many are available.
I use MACD (12-26-9), Chaikin Oscillator (monitors money flow in and out of market), Directional Real Volume (Histogram), Bollinger Bands, SMA (simple moving average)
Have a look at these links, they will give you a handle on the market
https://www.tradingview.com
https://au.investing.com/currencies/streaming-forex-rates-majors
https://www.dailyfx.com/market-news
https://www.investopedia.com/ask/an...dlines&utm_source=rss_www&utm_medium=referral

Good luck but remember until you are confident with the practice account DO NOT PLAY

 

[Stratagist]

An example of my setup 30m chart
In this case would trade the Bolinger bands top and bottom ie going short or long
For a more precise price movement re volume switch to 5m/15m charts
Be careful entering a trade too early wait for a change in the market direction
Real volume histogram gives a good indication of buy/sell volume for each 30m peroid

 

[Stratagist]

 

[Stratagist]

 

[funnybunny]

Hey guys
thanks for the replies- very useful!
Also i have been reading about how brokers can be dogy like the following link
how often do you feel that this occurs? is it comomn? how do people then actually make any money? also what are ecn accouts?
thanks

 

[peter2]

Unfortunately this happens quite commonly when trading cfds on thinly traded markets with almost all cfd providers. On this occasion the trade was left open as the underlying market (or cfd market) closed for the day. The market reopened at a random(?) price triggering the stop order.

I had this happen to one of my trades a few days ago, triggering 17pips of "slippage".

The only course of action is to make a polite inquiry with the cfd provider. They will probably say that their spreads can get a little wide when their markets reopen. If they don't offer to fix the trade, there is nothing you can do about it. Their product disclosure states that they can do anything they want with their prices and we have to accept the consequences.

These "unfortunate" spread issues don't happen in the real underlying futures markets.

Profitable traders fully understand the trading conditions of every market they trade and fully understand how their brokers execute their orders. They also have an edge or understand how to create one with disciplined and consistent management of risk.

ECN accounts - google is your friend.

 

[cynic]

Hey guys
thanks for the replies- very useful!
Also i have been reading about how brokers can be dogy like the following link
how often do you feel that this occurs? is it comomn? how do people then actually make any money? also what are ecn accouts?
thanks

As I have never traded with Pepperstone I make no comments, (explicit, implicit or otherwise) about the quality of their service offering/s.

ECN stands for Exchange Consolidated Network. Normally comprised of a number of liquidity providers (ofttimes major banks amongst them). From amongst the bids and offers across that network, the most favourable of the bids is selected and coupled with the most favourable of the offers and then used as the basis for the price quoted by the broker/s using that ECN.

Based upon my past experience with many other OTC derivatives providers, and conversations with other traders like myself, the seemingly mysterious triggering of stop orders with precision, has been an all too common experience.

As far as I can discern, the terms of the product disclosure statements of OTC derivatives providers, typically allow ample scope for discretionary price setting and profitting from clients' losses.

I recommend that anyone contemplating use of OTC products, rather than risk the free donation of one's trading capital to the broker's coffers with stop order placement, instead monitor positions continuously and exit at market, or find an alternative method of risk mitigation.

 

[minwa]

If you've ever seen a major USD pair spreads increase from 1ish to 7+, during major market hours, with no major news/announcements, while other majors stayed same, while a exotic pair of the currency you're trading has even tighter spreads than the USD cross, while also paying commision for supposed institutional grade spreads, after you enter the trade - you will likely stay far away from CFD brokers.

Ignore the marketing buzzword ECN. No true ECN exists in retail OTC brokers that I know of.

I do know of people profitable using these types of brokers though. Just an uphill battle in my opinion.

 

[Stratagist]

My suggestion is go for a broker that trades 24\7

Some AU brokers create thier own boards only trading on a day to day basis - in my opinion manipulation is too easy hedging against your buys etc. On joining you are assigned a so called portfolio manager who will hound you on the phone to make trades suggesting various strategies. These guys work on commission - stay away. Some notable brokers have been pulled up by ACIC (Google Search)
Trading NZD/USD long today
Entry 0.69231 100k
Backup entry 0.69108 100k
Watching trading volume