Are you suggesting that the market can move a few cents and not allow a small trader to get out? I'd need the market to move maybe 10 cents before it's a 'distaster', and even then I've probably still got at least half of my balance. You can't throw out these comments without addressing futures, and the leverage you have used. I'm sure a black swan would've ruined your day as much as any responsible fx trader.
Forex trading - what are the negatives?
- Thread starter bugmenot
- Start date
Are you suggesting that the market can move a few cents and not allow a small trader to get out? I'd need the market to move maybe 10 cents before it's a 'distaster', and even then I've probably still got at least half of my balance. You can't throw out these comments without addressing futures, and the leverage you have used. I'm sure a black swan would've ruined your day as much as any responsible fx trader.
There is always liquidity in FX and if not the CB's add it.
In other markets what do they do? Turn the machine off.. Pick up their bat and ball and go home.
Trembling Hand
Can be found on the bid
- Joined
- 10 June 2007
- Posts
- 8,852
- Reactions
- 205
You have no idea the leverage I use. The contracts are leveraged but that doesn't mean my account is.
I'd like to see unleveraged returns from a FX trader. Actually I'd like to see a FX trader NOT using leverage and you will soon see that FX is not volatile.
Therefore you need leverage, therefore if you guys where honest or awake you would realize that FX liquidity is forcing you to play with way more money that you have.
A bit like buying a house.. a car.. a wife...
No, I don't know how much leverage you use, but I don't believe you'd be trying to capture a 10 point move of the SPI while covering most of that contract yourself. To achieve a reasonable return, we use a reasonable amount of leverage.
I doubt any of us need to be told this TH. In percentage terms, it is obvious that fx moves little, and that we use leverage to amplify this movement. It's the same, to a lesser extent, in futures.
I'm completely aware of that fact, but your argument doesn't have practical sense for someone using leverage in a reasonable manner. I use enough leverage to turn 10-100 pip moves into worthwhile gains, but I'd still need a 20 cent move to wipe me out. If this were to happen, I suspect that my financial worth will be the least of my troubles. Leverage is fine if appropriately managed.
I doubt any of us need to be told this TH. In percentage terms, it is obvious that fx moves little, and that we use leverage to amplify this movement. It's the same, to a lesser extent, in futures.
I'm completely aware of that fact, but your argument doesn't have practical sense for someone using leverage in a reasonable manner. I use enough leverage to turn 10-100 pip moves into worthwhile gains, but I'd still need a 20 cent move to wipe me out. If this were to happen, I suspect that my financial worth will be the least of my troubles. Leverage is fine if appropriately managed.
Trembling Hand
Can be found on the bid
- Joined
- 10 June 2007
- Posts
- 8,852
- Reactions
- 205
Back to the orginal point about lack of volitilty is not a positive of FX.
no more to say.
Stormin_Norman
Currency Trader
- Joined
- 12 January 2008
- Posts
- 1,256
- Reactions
- 0
everything's relative. the movement and the leverage.
that's why i trade FX. small movement, large leverage. no premarket nonsense. no close of market waiting for a gap against me when the next bar opens.
there are lots of negitives. but leverage is only dangerous if used recklessly.
that's why i trade FX. small movement, large leverage. no premarket nonsense. no close of market waiting for a gap against me when the next bar opens.
there are lots of negitives. but leverage is only dangerous if used recklessly.
It's volatile when amplified, and the risk in amplification is reasonable. Feel free to convince me why a GFC-type event, without the possibility of exiting a position for days - even weeks - is a reasonable expectation, and why I would be any better off in futures. I accept the risk, and consider these events unlikely, especially the inability to exit the position.
Trembling Hand
Can be found on the bid
- Joined
- 10 June 2007
- Posts
- 8,852
- Reactions
- 205
Mr J how about taking less time in needing to argue and more time in thinking. For starters I never said you should be in futs. FFS!!!
But your thin thinking and post above is perfect example,
Leverage amplification is not Linear.
No, I meant that it seemed you suggested futures were less risky, due to less amplification. My point was that an event that wipes me out in forex would have also wiped me out in futures. More amplified, but the risk seems similar.
Yes, which is why I consider my 'Black Swan' to be so unlikely, far less likely than a highly-leveraged scalper suffering a 100 pip spike. It won't be a black swan for me though, because I consider it a possibility
.
Yes, which is why I consider my 'Black Swan' to be so unlikely, far less likely than a highly-leveraged scalper suffering a 100 pip spike. It won't be a black swan for me though, because I consider it a possibility
.
- Joined
- 18 June 2008
- Posts
- 1,071
- Reactions
- 2
Not hard to scalp if you are playing with the futures.
Plenty of insider trading going on, I have attached a report that goes into detail about such practices.
In addition to Whites comments on this topic, some people also use this strategy to create a straddle position just before a news event.
white_goodman
BOC
- Joined
- 13 December 2007
- Posts
- 1,635
- Reactions
- 0
whats a straddle position....
is it sorta going long and short just before NFP.... wwhatever gain that will be made will be large, so accept a loss one way and the larger win the other?
Stormin_Norman
Currency Trader
- Joined
- 12 January 2008
- Posts
- 1,256
- Reactions
- 0
pending order 20 pips above price.
pending order 20 pips below price.
u hope the market goes in one direction and hits the pending order, and keeps going for another 100 pips.
that's the theory.
i dont like it too much. im testing an alternative using correlated currency and entry before news.
pending order 20 pips below price.
u hope the market goes in one direction and hits the pending order, and keeps going for another 100 pips.
that's the theory.
i dont like it too much. im testing an alternative using correlated currency and entry before news.
- Joined
- 18 June 2008
- Posts
- 1,071
- Reactions
- 2
If done with a pending order, the spreads are complete crap (as to be expecting during a news event). If your orders are actually entered a min or so before the news event you are able to take advantage of decent spreads.
Its not a strategy I would recommend pursuing.
Its not a strategy I would recommend pursuing.
Stormin_Norman
Currency Trader
- Joined
- 12 January 2008
- Posts
- 1,256
- Reactions
- 0
yep. i look to enter just before news on correlated pairs.
ie long on eurousd and usdchf - and have 25SL and 50TP for eg.
ie long on eurousd and usdchf - and have 25SL and 50TP for eg.
- Joined
- 18 June 2008
- Posts
- 1,071
- Reactions
- 2
Yes, you most definitely can do that. Almost all FX brokers offer leverage (because most people need it to make FX worthwhile).
Ive seen leverage ranging from 1:1 to 500:1.
- Joined
- 31 December 2008
- Posts
- 236
- Reactions
- 0
What has leverage got to do with it?
It's risk per trade that matters.
Account size determines postion size. Not how much leverage your account has.
Leverage determines how much margin is used.
It's risk per trade that matters.
Account size determines postion size. Not how much leverage your account has.
Leverage determines how much margin is used.
yea you're completely right. not too many people buy stocks with leverage but nearly everyone trade currencies with high leverage, that's why I mentioned it
Similar threads
