I have heard a lot of traders say trading fx is like gambling. Why? If you trade through CFDs I know it can be sketchy cuz broker takes other side of your trade and u can get a lot of slippage and stuff. But what about ECNs? Or fx futures for that matter. I think the only difference between fx futures and spot fx is you dont get lvl II access with spot.
Understanding yourself is just as important as understanding markets.
Most of the gambling commentary comes from the fact that you can get an insane amount of leverage plus a lot of the retail brokers are bucket shops offering "nil" brokerage who take the other side. The low perceived cost of trading plus the excitement of the markets attract gamblers hence the perception.
Having said that, ECN is good but the real issue is if you trade short term you have absolute zero idea of order flow (which is level 2) so you are at an extreme information disadvantage. FX is not just used for speculation, a lot of the flow is from actual business related transactions. For example, if Big Company Co. wants to exchange 1b USD to EUR, they can do it at any time and at whatever price they want to and you would have no idea when/where/why.
Considering you can get a more complete set of information trading futures such as the e-mini's, I see no reason to trade spot. If the reason you trade spot is because you only have $500, then you shouldn't trade at all until you add more zeros to that number.
Not sure about spot FX and FX Futures, I think there was a thread here talking about which one leads which but there is still an information disconnect I think as it is still two separate "markets" which will influence each other.
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If you are like most retail forex traders, they are oblivious to the facts, are searching non-stop for EA's and signals/systems, and want the most leverage, want to make deposits by credit card, etc. These people are the ones that all those fraudster brokers are going after, and they get them.
Now, if you are a professional, then you know better than mess with any of the above. You can use Interactive Brokers for example, as a reputable FX broker, and have the advantage of more granular sizing of your positions if trading 1 lot on futures is too much leverage or size (and for many people, it is).
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Last edited by Big Mike; July 10th, 2015 at 08:21 PM.
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No asset class is a scam so long it priced right, dealt right (no hidden agenda by market maker), and has sufficient liquidity. FX is considered by many to be a scam because until today you have many that do no deal it right, push for insane leverage, re-quote and widen pips like its their own plying field. On the other hand, there are those who do everything to deal FX in the most honest manner.
Every asset class goes through evolution of competition, regulation familiarity with the product, and the traders spotting where the traps are. Those who are willing to do the research will potentially establish accounts in reputable establishment.
Do your homework, and due diligence, and consult with pros, not ones who trade the mini me Fx.
The CME FX products are dealt under the exchnage regulation, and in my opinion could be potentially under more scrutiny than many small FX operations.
There is a substantial risk of loss in futures trading. Past performance is not indicative of future results
PM with any questions about optimusfutures (800) 771-6748 (561) 367 8686. THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES TRADING.
Last edited by mattz; July 11th, 2015 at 02:08 AM.
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It's simple... think about the average Forex trader. Usually an ignorant person who is trying to find a financial instrument that requires little capital to trade. He thinks it's awesome - until after a few randomly placed trades he has lost all his money and is on margin call. Then he posts online about how Forex is a fraud and how he has "irrefutable evidence" that his broker stole all his money by stop hunting him. There are thousands of such idiots all over the world breaking their accounts and doing it repeatedly, and they just keep blaming their brokers whenever they get stopped out on a trade: "My broker is scammerz, I want my money back, plz help me where should I open new account? forexpeacearmy says my broker is scammerz." Hilarious.
Equities and Futures require a larger amount of capital, and to the ultra-ignorant this is usually enough to scare them away. They'd rather repeatedly fill up their Forex account with a couple hundred bucks or a thousand (or maybe more) every time they destroy their account.
With Equities and Futures, you are usually having a smaller percentage of "financially idiotic" people in the arena, because there is a larger barrier to entry and usually more research that goes into this playing field before person opens up an account.
That's just the way I see it, but it makes sense to me.
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