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Thanks! I wanted to say that, but I've been trying to become more diplomatic in my old age. I can't pull it off very well, though. Aside from my fierce, but slightly ironic, polemics, I can do crazy, stupid and satirically friendly, but that's about it. It takes some effort to disguise what an arrogant prick I really am, but I'm trying... God knows I'm trying...
Can you help answer these questions from other members on NexusFi?
I prefer spot forex because it let's me scale into and out of a position. It is important that you are with an ECN broker. In essence acts as a exchange/clearing party. LMAX, MB Trading are both good examples of ECN brokers. You can see your order on the market book. You can open a limit order in between the bid-ask spread.
Stay far far away from the "commission built into the spread" Metatrader4 type brokers. For example - FXCM, Oanda etc.
If you guys think that because CFTC regulates the "real" market at CME that it is a safer place not full of bandits looking to pirate every penny from anyone they can, you are gravely mistaken. Trading is a solitary individual sport and it must be treated as such. Everyone and I mean everyone is looking to do one thing.... separate you from your money. Even guys from your own firm will turn against you and work behind the scenes to destroy you if you jump too far in front of them.
In starting the post I was hoping that the obvious would be "filtered out" of the discussion and that guys who had a deeper knowledge would identify themselves by how they responded. It does look like an entrance exam of sorts and I already apologized.
On the taxation: It used to be much easier to get an effective tax rate that was in the low teens. Guys would hunt for big reverse conversions that would give them, at least a temporary dividend liability. When you are short the dividends you account net liq gets the hit....so at least for a little while you lose lots and lots of money. The reverse conversion is characterized as short put, long call (a synthetic long position) against short stock. The opposite trade type, a conversion, could then be used to set things back and based on pricing, adjustments could be made. This was easier at quarter end and year end when funds where looking to window dress.
NOW, and here is the big support in favor of forex, it is way easier to leave the US for a country like say Uruguay...where the top tax bracket on financial transactions is 10%. The trick is finding a somewhat legit bank that has a decent platform you can trade on. Deposit must be kept as small as possible because it can disappear in a heartbeat...but the net financial advantage imo, would favor forex.
So, the deep water far offshore cast I was hoping for by the original question was for someone to post..."wldman noche pirate bank in guatamala has a decent platform...and I have a guy there that will help with asset transfer funding.
You are wise Traderj. This gets to the heart of the matter. Spot will always be preferred to futures for currencies because the CME has it's head up it's hiney. Lack of fractional contracts and a ridiculous commission structure keep it from capturing the spot market. For the EU you have three different instruments, 6E, M6E, E7, and for the others you have 2. The micro commissions are approximately 3 times higher than the full contract. The commissions for the full GU contract are double a full EU contract. Are you serious? What a freakin mess.
what you say is mostly true...CME emerged for a different purpose, that is to hedge commodities transactions...to defray risk. The speculators for a very long time where concentrated as insiders at CME, called members. Their role was to provide insurance to farmers, and ranchers.
The fractional contracts M6E are an accommodation. The volume sucks. Anyone can see exactly what the little guy is doing in that product. Sitting ducks really, imo
I also like being able to set forex size to $10,000 and press the button 20 or 30 times to establish a position if I need to. That exaggerates a bit, but when I scale in with 5 separate orders nobody knows and nobody cares...and the fills are instantaneous with very little slip most of the time.
If you are trading on a ECN with multiple liquidity sources I think the prices would very very closely match Bloomberg-EBS/Reuters otherwise the opportunity for algos to arbitrage would be too easy.
That's why I would never trade with ShittyBank CitiFx or Deutsche Bank dbFx because you are stuck with getting prices from only the principal counter party.
!
