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Why does forex have a bad rep?
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Why does forex have a bad rep?

  #31 (permalink)
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cencored View Post
What I would like to know is why currencies on spot and futures are so highly correlated when the players are so different in each market??

From a traders' perspective, would you say currency futures are more reliable for the various reasons mentioned here and overall the preferred way to trade currencies?

CME FX futures are the way to go as far as I'm concerned if attempting to trade forex. Centralized exchange says it all IMHO. Spot FX is also referred to as gambling by some because there is really zero way to know what or how much volume is being traded since nothing is centralized. Volume profiling is a waste of time on these markets IMHO. I'm sure many make money trading spot. I look for high probability events and the whole volume issue, for me, lowers these probabilities reduces the edge and thus approaches the gambling side. No longer a business.....entertainment.

Ron

It is an axiomatic fact that while you meditate you are speaking with your own spirit. In that state of mind you put certain questions to your spirit and the spirit answers: the light breaks forth and the reality is revealed.
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  #32 (permalink)
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cencored View Post
What I would like to know is why currencies on spot and futures are so highly correlated when the players are so different in each market??

From a traders' perspective, would you say currency futures are more reliable for the various reasons mentioned here and overall the preferred way to trade currencies?

The Futures market is derivative of an underlying cash market. In this case, FX cash(spot) is the underlying market that affects the Futures. Remember, there are no future deliveries on cash, and that could only be reflected in Futures or Forward contracts. So if the cash moves, the Futures will most likely move in the same direction.

I suggest to learn a little how Futures are priced and why. This is the basics before you decided what is more reliable.

Matt Z
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  #33 (permalink)
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cencored View Post
What I would like to know is why currencies on spot and futures are so highly correlated when the players are so different in each market??


Mostly because of all the HFT's arbing any discrepancies automatically.

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  #34 (permalink)
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Tymbeline View Post
Mostly because of all the HFT's arbing any discrepancies automatically.

This does not explain the relation between Futures and cash initially.

The discrepancies that exist and are picked by algos, are not ones that are highly visible or detectable by retail..let alone allow them to capitalize on it.

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  #35 (permalink)
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Blash View Post
.....Spot FX is also referred to as gambling by some because there is really zero way to know what or how much volume is being traded since nothing is centralized.

Ron

I don't think this is true. Some FX firms have very deep liquidity providers and have the ability to disclose it. Some have very poor liquidity providers, and their volume is not significant, so they may choose not too.
However, The OTC market, has oppose to a centralized exchange will always have a lot more of "it depends" when it comes to many trading variables.

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  #36 (permalink)
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please tell me how trading in general doesn't have a bad rep. The only difference is that most people are actually familiar with stocks so it may seem more feasible.

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  #37 (permalink)
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Blash View Post
. Spot FX is also referred to as gambling by some because there is really zero way to know what or how much volume is being traded since nothing is centralized.



Ron




mattz View Post
I don't think this is true. Some FX firms have very deep liquidity providers and have the ability to disclose it. Some have very poor liquidity providers, and their volume is not significant, so they may choose not too.

However, The OTC market, has oppose to a centralized exchange will always have a lot more of "it depends" when it comes to many trading variables.



Matt Z

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There is a substantial risk of loss in futures trading. Past performance is not indicative of future results.


I guess I'm confused.

The statement is.... "Some" refer to it as gambling .... I refer to it as such. Four years ago I was at a trading seminar in a university lecturer hall were the educator up front held this belief as well so there are two people right there and I know others think the same way. Some were right next to me possibly.
If poor liquidity providers have volume that's not significant, which is relative, insignificant to one person and significant to another, for example, I want to see all of it, so they may choose not disclosed it. It's again back to gambling for me more so than other trading instruments. Not complete gambling just not the type of edges I would invest time in.

I should of perhaps said "zero way to completely know for sure exactly how much volume is being traded...."

Ron

It is an axiomatic fact that while you meditate you are speaking with your own spirit. In that state of mind you put certain questions to your spirit and the spirit answers: the light breaks forth and the reality is revealed.
The steed of this Valley is pain; and if there be no pain this journey will never end.
Buy Low And Sell High (read left to right or right to left....lol)
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  #38 (permalink)
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Broker problems

If you know how to trade then forex isn't a bad market.
If you don't know how to trade some forex brokers can take the opposite side of your trade as a business model decision, pocketing your loss.

If your profitable they will pass your order through to their liquidity providers.

Most major forex brokers( think FXCM, Gain Capital and others) have had complaints that are discoverable via Google and have to to with cheating customers with widening spreads numerous requotes. (it's the traders job to know when spreads may widen and to decide if trading during those times is advantageous) and asymmetrical slippage( you pay slippage and if you would have received positive slippage they didn't credit you with that and keep some of all of the profit the profit.) that setting is as simple as setting the spread paid by one trader versus another trader.

Then there are the poorly run, capital anemic brokers who fail to honor withdrawals and go bankrupt taking the traders account with them(trading accounts are essentially unsecured loans/deposits to the broker(who can use the funds for operational expenses etc) and do not have any favorable priority in the case of broker insolvency-theUK has a $50,000 limit and insurance on accounts and the USA has no such protection, since most forex broker do not have segregated accounts traders are unlikely to get funds back. I think that the NFA and CFTC has done a good job of requiring brokers to have a significant amount of net capital in order to do business and conditions for trading forex have left generally stronger players opporating as forex brokers.

Now is the Time!
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  #39 (permalink)
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masterchanger View Post
trading accounts are essentially unsecured loans/deposits to the broker(who can use the funds for operational expenses etc)


That depends in which country, how and by whom they're regulated. Few traders with a choice would deposit funds where they're not legally obliged to be segregated from the broker's other funds.



masterchanger View Post
theUK has a $50,000 limit


£50,000 (about $72,000).

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  #40 (permalink)
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Blash View Post
CME FX futures are the way to go as far as I'm concerned if attempting to trade forex.

Unfortunately there's only 8 liquid CME futures, and they are all USD crosses, which is very limiting when compared to FX brokers that offer dozens of different pairs.

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