[brownsfan019]

Hoping some of you experienced forex guys can answer some basic questions. I've been trading futures for years and enjoy that, but just curious about forex and whether or not it would be a good fit for me.

Some questions...
1) Tell me about forex trading. I've read horror stories of bucket shops and such. How do you avoid this?
2) I like volume, esp Volume Based Charts. Is there anyway to translate that to forex since it's not trading centrally?
3) I've read that forex can trend more in comparison to indexes. Do you find this true? If so, how often would you say that a trend can go?
4) Assuming it does trend more, is it better to swing trade here or is it possible to daytrade. I've also read that brokers can 'get mad' or 'blackball' you if you trade too quickly.
5) How about during econ news... I've read that the spreads can get ridiculous.
6) What's a good charting platform?
7) How does leverage work here? I understand futures, but have read about 'mini' accounts and such in forex, so not sure.
8) Who are stable, recommended brokers?
9) What else should I know?

I appreciate the help guys. Just looking to satisfy my curiosity.
Thanks!

[notouch]

1) There are two types of forex broker: the direct access broker and the bucket shop. The direct access broker gives you direct access to the banks (Bear Stearns, UBS, Deutsche Bank etc) while the bucket shop makes its own market. Avoid bucket shops at all costs. Some direct access brokers are EFX, interactive brokers (IdealPro) and hotspotfx.

2) There's tick volume and some data providers allow you to subscribe to the volume of particular banks but total interbank volume is not available. Volume on futures is available but often too light to be useful. CME Euro futures are very liquid though.

3) I wouldn't say currencies trend necessarily. It depends entirely on the currency pair. USD is in a long term down trend against the European currencies. I think swing trading opportunities are best.

4) I wouldn't use less than a 30 minute chart. 4 hours and daily charts are also good. Direct access brokers couldn't care less how you trade. Bucket shops will try to fiddle you.

5) Extreme volatility and wide spreads immediately after economic news.

6) The same one you use for index futures will work just as well for fx.

7) A full sized lot is $100,000 and leverage is typically 100:1 so you need $1000 to trade 1 lot. So for GBP/USD and EUR/USD each pip is worth $10. With EFX you can trade $10,000 lots and with IdealPro you can trade any size above $25,000.

8) EFX and IB.

9) Do your own research before pestering me with such simple newbie questions again.

[torero]

I use MBT, which is a direct access broker, which has the same trading platform as EFX. Also oanda is a good option. If you don't see on average EURUSD is 1 pip or less at normal times, then it's a bucket. GBPUSD should be at most 2 pips.

Also, make sure you make yourself available for London open (2am EST), best time to get in or out despite being a 24-hr mkt, even for swing trading. This is an important time where levels tend to be broken or tested.

[brownsfan019]

Originally Posted by torero »

I use MBT, which is a direct access broker, which has the same trading platform as EFX. Also oanda is a good option. If you don't see on average EURUSD is 1 pip or less at normal times, then it's a bucket. GBPUSD should be at most 2 pips.

Also, make sure you make yourself available for London open (2am EST), best time to get in or out despite being a 24-hr mkt, even for swing trading. This is an important time where levels tend to be broken or tested.

I was afraid someone would mention that 2am EST thing... That's a deal killer for me. As much as I love trading, adjusting my life and sleep schedule is just not an option right now and probably never. I can see why the Euro open is important.

[notouch]

If you trade a non-European currency pair like USD/JPY, USD/CAD, AUD/USD or NZD/USD or even a cross like AUD/JPY then the London open is not that important.

USD/JPY is the second most traded currency pair and if you like trends check out NZD/JPY.

[torero]

These are fine but it's still not ordinary non-vampire hours LOL.

[Anonymous]

* Currencies have the highest propensity to trend of all the markets. Unfortunately, that does not mean they are easier to trade. Nor does it mean that they always trend. It simply means they tend to trend more often than all the others, and when they do trend they tend to trend longer.

* Technicals work well in currencies, when used correctly. Which is true of all markets. But if used to define trends rather than pick tops and bottoms, technicals do work well. I don't like indicators myself .......

* Tick volume only in a lot of cases with spot currencies. You would do better to trade currency futures for constant volume candles.

* 24 hour spot market, but the best hours do put a crimp in your day. The European open is important as is the New York session.

* Some brokers will widen the spread prior to and during news releases. I hate this and it is one reason I am moving to the indexes. I would suggest making sure that the broker does not do this, if they even exist. Not to mention you might not get your stop honored.

* A lot of brokers frown on scalpers, at least that is the story. If you are a in and out 20 xs a day looking for 3-5 pips, you might have to beware.

* You can't beat the leverage offered in this market (spot FX) tho.

[PYenner]

Recommend you do your demo trading with someone that offers the MBT4 platform and an account that doesn't expire.

Coesfx is unusual, they have non-bucket accounts for bigger accounts only and bucket accounts with MBT4 platform. The smaller accounts with high leverage are sucker traps IMHO, $US5k at 100:0 is actually risky, too you must stick to half lot trades at first, 1 lot is overtrading IMHO. Trading with just one position is tedious and difficult but unless you are rich I don't know where else to start.

MBT4 platform = bucket account, it can't be used for non-bucket accounts, sadly.

The reason for recommending MBT4 even though it is a bucket platform is that it is a whole lot better than any of the cumbersome treatcherous in-house platforms. Also better charts than many. For a demo, it doesn't matter so much if it is bucket trading, even though you will have to relearn everything if you even go live trading and non-bucket.

From memory, GBPJPY swung 3,500 pips last year, EURUSD moved about half that speed. But longer term trading is far more complicated than it looks at first, don't let the $ signs blind you, it isn't Xmas every day.

In GBPJPY it is often necessary to trade just the first half of a swing, eg buy the bigger dip only and get out sooner rather than later near halfway.
Midswing has a lot of sideways and reversals and it is a lot more dangerous to enter near midswing.

The 5 Major currencies have 10 pairs between them, they work a bit like an octopus with 10 tentacles, interelated and working together and sometimes against. Its a dance with 10 dancers, follow just 1 dancer and you are missing a bigger picture.

GBPUSD is a big mover but to me seems more difficult to predict than GBPJPY.