I know this is a futures trading site, but its such a great community that I hope its OK to talk a bit about forex every now and again whilst Im figuring out the futures thing.
I have just been through my worst losing streak since I started trading.
8 trades in a row.
What have I learnt?
1. Its not just about how much money you have in the old trading account but just as important is how much reserve of 'patience' you have. When this starts depleting things get pretty ugly. By the 4th trade, my inner voice breaks free and my angry eyes are out whilst I swear aloud at my computer saying things like 'you cannot be $%$%^ serious!'. 6th trade and my patience was sounding like a submarine that has gone down too far... Pressure valves going off, water pipes bursting, the crew all looking at each other with worried looks on their faces. 8th losing trade and my usual rock solid composure is an unrecognisable delirious maniac that has been told to stand in the corner while the emergency salvage crew attempt to restore all the safety trip switches that have been going off. Thankfully 9 & 10 were nice winners.
2. I now have a considerable respect for money management. I always asked myself 'Can you afford to lose 10 trades in a row and if you did, how much would that represent as a percentage of your funds?'. Right now I am so happy that I stuck to my rules.
3. Some of them my stops were juuuuuuust touched before price continued in the original direction. So was my entry incorrect or my stops to tight? As far as I can tell I stuck top my rules but I will be able to tell once I have had a chance to review my saved charts.
So my question is, what has been your worst losing streak and how did you deal with it?
Well, I am sure that the debate between spot vs futures has been to infinity and back, however I am interested in your experience of the two and why you hold that opinion.
Here is my personal view from what I have learnt about futures over the past few weeks.
Depth of market : I was watching a video on the awesomeness of DOM and I was initially all starry eyed. But then I discovered that orders are constantly being removed and added and that a trader needs to spend a lot of time getting to know the movement of the DOM to avoid manipulation by way of fake orders. So not as simple as it first seems.
Volume: This appears to be the biggest advantage with futures. But then again, this simply ties in to the number of orders shown in the DOM list and can be manipulated. Please correct me if I'm wrong.
In terms of regulation, Forex brokerages are regulated by the FCA and here in the UK, a traders deposit is guaranteed up to a certain amount. Futures are regulated by CFTC so there is no advantage on this front. Not all forex brokerages are market makers. The one I use is an SPT so my orders go straight through to liquidity providers. I fail to see how there can be any manipulation or for it to be regarded as a bucket shop. Even though forex is a decentralised market, no one can corner the market, it is far too big.
I must say that the one huge advantage of forex or CFD in my mind is that I can enter at whatever price per pip that I want. If I am on a losing streak it is simple to reduce size until I am back on track again. With futures contracts there is one size. This is a big disadvantage in my view.
My true intention here is to learn futures and not to defend forex. If I end up doing better trading futures then that is what I will do. It is just interesting to me (and very amusing) that forex trading has its divisions. If you are on the 4 hr charts and above then the 'perception' is that you are doing it right and anyone on the lower timeframes is sniffed upon. Futures traders view forex in its entirety with that same jaundiced eye.
The following user says Thank You to Grantx for this post:
My experience with forex is horribly skewed. I started in forex cause it's simple to make an account with a bucketshop so they can take your money faster. I should've known after signing up with avatrade when the only platform I could use was called "Ava metatrader." This was their rendition of metatrader but with the broker plug in. Look up what the metatrader broker plug in it and you'll probably not be interested in forex. I suppose it could also be the fact that brokers make money when they don't log your trades. The fact that these institutions hold positions against you. It's either you winning or them is the way I see it. Not to mention the spreads are brutal too, for example if you want to trade cfd's on sp500 eminis then you're easily paying a 3 tick spread. I've since seen the light. Never going back to unregulated markets again. Too bad I spent time there; my trading mentor (20+ years experience & trades an account in the m's) told me from the start scratch forex and go to a regulated market: futures, stocks, possibly even options rather than forex. He also told me everything is crap except the volume. Which brings me to my next point, sure the dom is manipulated a bit, but time and sales is what matters anyways. After trading with time and sales in a regulated market, I just wish I would've listen to my mentor sooner.
That is very interesting that you have made the move from spot to futures. I have heard from a few different sources that the switch resulted in more reliable and consistent profits. How did you find the transition? Is there any documentation that you can recommend for time and sales approach, I would like to look into that.
Im not sure what you mean by a brutal spread? The spread on the SPX500 mostly sits at 4.9 which is very reasonable I think (unless youre a scalper)?
I sometimes take very quick trades, and in those times a 3 tick spread is killer. Btw the transition from forex to futures is night and day. Unregulated BS to a central exchange, real volume, time and sales, etc. I seriously should've taken my mentors advice sooner. The only thing is, idk much about ECN and stp brokers, so maybe it's a different situation, which is why I wouldn't take my word on this. What I can tell you is that if you're with a broker that doesn't log your trades/trades against you, you're better off throwing away money because in that case I don't believe one can actually call it "trading" more like just giving money away to your broker. I can tell you, after experiencing futures I won't even be touching the forex spot markets again.
Anyways, I don't know enough about ECN's and such. I'm sure someone else on futures.io will know better than I.
Interesting question. I recently had 6 losing transactions in a row. Definitely not a nice feeling, but I stuck to the plan, only going in trades where the market reached the situation matching my criteria and over the course of the next 8 trades made it all back to net 0.
It was a good reinforcement that anything can happen, what's key is sticking to a plan and $ management that helps you avoid blowing up.
There was some reference / question about forex above. Definitely agree that going with a questionable forex broker is a waste of time. There are pros and cons to every instrument/market. I haven't had issues with using Interactive Brokers but have also moved mostly towards the forex futures (instead of spot) as it was a bit more commission efficient for my level