Why day-trade currencies? | Currency Futures

futures.io - futures trading strategies, market news, trading charts and platforms

Currency Futures

This subforum allows you to find traders that trade Currency Futures. You may post about anything to do with trading currency futures in this section


Why day-trade currencies?

  #9 (permalink)

new york NY USA
Trading Experience: Advanced
Platform: NT
Favorite Futures: CL
Posts: 56 since Jan 2013
Thanks: 102 given, 20 received

Yuri57 View Post
It's a simple question and I give a few reasons not to try day-trading them. If you are successful doing so please feel free to prove me wrong. So here it goes:

Why trading currencies is so complex?

1) I never read it but I know from experience that pairs support each other. That's right cross pairs also have significant volume and they all play significant role in changing the price for 1 currency. But since everything is related with something else, you would need a VERY complex system to measure all these bearish and bullish forces.

2) Volatility very inconsistent. Once it is small, than it gets very volatile. That's a disaster for risk management. You could only take advantage of volatility when it is very small and you know it will be a lot bigger but usually that's impossible to tell. (Or scalp counter-trend when volatility is high)

3) News come out way too often and they ruin the original picture of price action. You can't trade the news because of slippage.

I understand that currencies offer some good opportunities too. I like to trade the London open because that's the only time I can play volatility with good expectancy on my side.
There are also good fundamental stories to back certain trades...

My point is: trading the ES or Bund seems like a piece of cake compared to trading currencies. So why bother day-trading them?

Hello Yuri,

I am not expert in this but my simple thinking is: Trade what ever you have studied, practiced and feel comfortable with.

Currencies are no more unpredictable than any thing else. ES shows more whipsaws, oil is even worse. News always affects a certain instrument. look at bonds the last few days. They are supposed to be the most stable instrument but last few days they have been in wide trading range. 3. If you are trained with currencies, stick to currencies if Es stick to ES.

In my experience currencies do have smoother charts than many other things.

You are right, currencies are all related and are affected by each other. The king currency is still US dollar. So, every thing revolves around the US dollar. To make is easier and simpler, pick one pair with USD in it. When fundamentals affect dollar every currency paired with USD will move. So, pick just one pair with USD and other major like EUR or GBP, get good at it. No derivative pair like CHF.JPY.

The attraction for currency trading for beginners with not enough money: Brokers will allow you to open an account with as small as 50 dollars and ask you to trade "microcontracts". Good for practice but you can never make enough money with those. The spreads will eat you up, they have specially high 2.5 to 3.5 pips spread on those.

For those who have money, attraction is the leverage. For non US residents, there are brokers who will allow you 500:1 leverage. You cannot do that in futures.

Reply With Quote