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I guess currency trading isn't as easy as I thought. I couldn't afford to lose those 4k right now. I think I'm going to open an online trading account to buy stocks and bonds instead, for now.
When you make a trade with a Forex broker, they act as the counterparty in the trade, meaning they are making a trade against yours. The spread is determined by the broker - they can make it what they want. A service like IB - which is not a Forex Broker per se - will offer a much tighter bid/ask spread and you aren't at the mercy of the broker to determine quotes that are fair or unfair.
Fair enough and I am not necessarily disagreeing with you. But like I said, the spot and futures markets move in near perfect correlation. So if you are trading on a longer time frame like I do, it really makes no difference? On a shorter term time frame, that bid-ask spread will widen your ******* like a train running through it. Does that make sense?
I guess currency trading isn't as easy as I thought. I couldn't afford to lose those 4k right now. I think I'm going to open an online trading account to buy stocks and bonds instead, for now.
You say buy stocks and bonds...does that mean as investments? Because if you plan to trade any instrument, be warned it will be very, very, very difficult to make consistent money. Like I said, you're going head to head with people who are very smart or have a lot of experience, or both.
Fair enough and I am not necessarily disagreeing with you. But like I said, the spot and futures markets move in near perfect correlation. So if you are trading on a longer time frame like I do, it really makes no difference? On a shorter term time frame, that bid-ask spread will widen your ******* like a train running through it. Does that make sense?
It makes sense - but the OP specifically asked about "trading" and "traders" generally are short term horizon investors. The real point in my post is just be very, very careful about transaction costs with Forex trading. It's more complicated than trading equities or other assets in terms of transaction costs. If you have a broker that offers you low commissions and reasonable bid/ask spreads then that's great. But a lot of retail Forex brokerages are pretty close to scam level IMO in terms of transaction costs. You also have to not just look at bid/ask spreads but also execution - it's not good enough to give you quotes but they need to actually execute trades at the quotes they give.
It makes sense - but the OP specifically asked about "trading" and "traders" generally are short term horizon investors. The real point in my post is just be very, very careful about transaction costs with Forex trading. It's more complicated than trading equities or other assets in terms of transaction costs. If you have a broker that offers you low commissions and reasonable bid/ask spreads then that's great. But a lot of retail Forex brokerages are pretty close to scam level IMO in terms of transaction costs. You also have to not just look at bid/ask spreads but also execution - it's not good enough to give you quotes but they need to actually execute trades at the quotes they give.
OK I see what you meant. I agree with you that trading Forex short-term is not a good idea. Do you trade Forex? If you don't mind me asking, who is your broker and what is your general time frame?
OK I see what you meant. I agree with you that trading Forex short-term is not a good idea. Do you trade Forex? If you don't mind me asking, who is your broker and what is your general time frame?
I trade Forex sometimes. I use Interactive Brokers. I trade equities, stocks and bonds mainly, with Forex sometimes. IB is my broker for all of the above. My time frame varies - I used Forex as a EUR/USD hedge when I was doing business conducted in EUR. I've also done short-medium term trading on AUD/USD and CAD/USD.
The main disadvantage with trading Forex with IB is you get less leverage than with other currency brokers - but it's still pretty insane leverage if you ask me. IB is also generally designed for people who have at least 10k to invest and probably closer to 25k. It is not designed for people who want to play Forex with $500 or $1000. It is generally targeted at slightly larger scale investors (but not really large scale or anything).
I guess currency trading isn't as easy as I thought. I couldn't afford to lose those 4k right now. I think I'm going to open an online trading account to buy stocks and bonds instead, for now.
Quote:
Originally Posted by lilamx
I was just looking into it and my bank has a discount online brokerage service, I think I will open an investment account with them.
It is still not clear whether you want to trade or invest.
Generally speaking, trading is short-term buying and selling, investing is a long-term plan. Of course it is possible to do both, both can be full-time jobs, especially trading: most traders work in big banks/investment houses and they use the company's money, most traders get burnt out after a few years, some fall by the wayside, at times in a cloud of snow, the best get kicked upstairs into management positions, supervising younger traders, etc. Yes, there are successful independent career traders, but they are relatively rare.
If you are looking to try your luck at multiplying your money in relatively quick fashion through short-term trading, there really is not much difference among trading currencies, stocks, bonds, commodities, and their respective derivatives, or dealing drugs. Pick your poison.
If you have steady income from a good business or profession, and patience, and you can't afford to lose $4k right down, start a long-term investment plan, preferably one heavy on income - let compounding work for you - with some growth, but the bulk of the growth should come from your own business or profession.
Then, in some years, you may have $4k or more to play with trading in the markets, or take an annual vacation and go to a casino.
I trade Forex sometimes. I use Interactive Brokers. I trade equities, stocks and bonds mainly, with Forex sometimes. IB is my broker for all of the above. My time frame varies - I used Forex as a EUR/USD hedge when I was doing business conducted in EUR. I've also done short-medium term trading on AUD/USD and CAD/USD.
The main disadvantage with trading Forex with IB is you get less leverage than with other currency brokers - but it's still pretty insane leverage if you ask me. IB is also generally designed for people who have at least 10k to invest and probably closer to 25k. It is not designed for people who want to play Forex with $500 or $1000. It is generally targeted at slightly larger scale investors (but not really large scale or anything).
Thanks for sharing. IB is a very good broker from what I've heard. I only trade Forex now but I'm soon moving into grain spreads...do they offer spreads? Thanks.
Thanks for sharing. IB is a very good broker from what I've heard. I only trade Forex now but I'm soon moving into grain spreads...do they offer spreads? Thanks.
You can trade commodities with IB and commodity futures, but I don't know anything about trading grain spreads but my assumption is you probably can since grain is not an uncommon asset that people will trade. I would check with IB though to make sure. It also might depend specifically what type of trade you're looking for with that asset.
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