Anybody into trading in the Foreign Exchange market? I was on www.forex.com and was impressed by its advantages over trading in equities and futures. Anyhow just wondering if you guys had any first hand experience on this.
Cheers,
J.
wayneL
15th-July-2004, 06:09 PM
What advantages are those?
positivecashflow
16th-July-2004, 01:32 AM
Hi Wayne,
From the Forex website:
FOREX VS EQUITIES
If you are interested in trading currencies online, you will find that the Forex market offers several advantages over equities trading.
24-Hour Trading
Forex is a true 24-hour market, which offers a major advantage over equities trading. Whether it's 6pm or 6am, somewhere in the world there are always buyers and sellers actively trading foreign currencies. Traders can always respond to breaking news immediately, and P&L is not affected by after hours earning reports or analyst conference calls.
After hours trading for U.S. equities brings with it several limitations. ECN's (Electronic Communication Networks), also called matching systems, exist to bring together buyers and sellers - when possible. However, there is no guarantee that every trade will be executed, nor at a fair market price. Quite frequently, traders must wait until the market opens the following day in order to receive a tighter spread.
Superior Liquidity
With a daily trading volume that is 50x larger than the New York Stock Exchange, there are always broker/dealers willing to buy or sell currencies in the FX markets. The liquidity of this market, especially that of the major currencies, helps ensure price stability. Traders can almost always open or close a position at a fair market price.
Because of the lower trade volume, investors in the stock market are more vulnerable to liquidity risk, which results in a wider dealing spread or larger price movements in response to any relatively large transaction.
100:1 Leverage
100:1 leverage is commonly available from online FX dealers, which substantially exceeds the common 2:1 margin offered by equity brokers. At 100:1, traders post $1000 margin for a $100,000 position, or 1%.
While certainly not for everyone, the substantial leverage available from online currency trading firms is a powerful, moneymaking tool. Rather than merely loading up on risk as many people incorrectly assume, leverage is essential in the Forex market. This is because the average daily percentage move of a major currency is less than 1%, whereas a stock can easily have a 10% price move on any given day.
The most effective way to manage the risk associated with margined trading is to diligently follow a disciplined trading style that consistently utilizes stop and limit orders. Devise and adhere to a system where your controls kick in when emotion might otherwise take over.
Lower Transaction Costs
It is much more cost-efficient to trade Forex in terms of both commissions and transaction fees. FOREX.com charges NO commissions or fees whatsoever, while still offering traders access to all relevant market information and trading tools. In contrast, commissions for stock trades range from $7.95-$29.95 per trade with online discount brokers up to $100 or more per trade with full service brokers.
Another important point to consider is the width of the bid/ask spread. Regardless of deal size, forex dealing spreads are normally 5 pips or less (a pip is .0005 US cents). In general, the width of the spread in a forex transaction is less than 1/10 that of a stock transaction, which could include a .125 (1/8) wide spread.
Profit Potential In Both Rising And Falling Markets
In every open FX position, an investor is long in one currency and short the other. A short position is one in which the trader sells a currency in anticipation that it will depreciate. This means that potential exists in a rising as well as a falling market.
The ability to sell currencies without any limitations is another distinct advantage over equity trading. In the US equity markets, it is much more difficult to establish a short position due to the Zero Uptick rule, which prevents investors from shorting a stock unless the immediately preceding trade was equal to or lower than the price of the short sale.
I haven't done any investing in the forex market just thought you guys might know more about it.
Cheers,
J.
positivecashflow
16th-July-2004, 01:34 AM
Forex vs Futures
The global foreign exchange market is the largest, most active market in the world. Trading in the forex markets takes place nearly round the clock with over $1 trillion changing hands every day. It is the main event.
The benefits of forex over currency futures trading are considerable. The dissimilarities between the two instruments range from philosophical realities such as the history of each, their target audience, and their relevance in the modern forex markets, to more tangible issues such as transactions fees, margin requirements, access to liquidity, ease of use and the technical and educational support offered by providers of each service. These differences are outlined below:
More Volume = Better Liquidity. Daily currency futures volume on the CME is just 1% of the volume seen every day in the forex markets. Incomparable liquidity is one of many advantages that forex markets hold over currency futures. Truth be told, this is old news. Any currency professional can tell you that cash has been king since the dawn of the modern currency markets in the early 1970's. The real news is that individual traders from every risk profile now have full access to the opportunities available in the forex markets.
Forex markets offer tighter bid to offer spreads than currency futures markets. By inverting the futures price to compare it to cash, you can readily see that in the USD/CHF example above, inverting the futures dealing price of .5894 - .5897 results in a cash price of 1.6958 - 1.6966, 8 pips vs. the 5-pip spread available in the cash markets.
Forex markets offer higher leverage and lower margin rates than those found in currency futures trading. When trading currency futures, traders have one margin rate for "day" trades and another for "overnight" positions. These margin rates can vary depending on transaction size. FOREX.com currency trading gives the customer one rate all the time, day and night.
Forex markets utilize easily understood and universally used terms and price quotes. Currency futures quotes are inversions of the cash price. For example, if the cash price for USD/CHF is 1.7100/1.7105, the futures equivalent is .5894/ .5897; a methodology followed only in the confines of futures trading.
Currency futures prices have the added complication of including a forward forex component that takes into account a time factor, interest rates and the interest differentials between various currencies. The forex markets require no such adjustments, mathematical manipulation or consideration for the interest rate component of futures contracts.
Forex trades executed through FOREX.com are commission free. Currency futures have the added baggage of trading commissions, exchange fees and clearing fees. These fees can add up quickly and seriously eat into a trader's profits.
In contrast, currency futures are a small part of a much larger market; one that has undergone historical changes over the last decade.
Currency futures contracts (called IMM contracts or international monetary market futures) were created at the Chicago Mercantile Exchange in 1972.
These contracts were created for the market professionals, who at that time, accounted for 99% of the volume generated in the currency markets.
While some intrepid individuals did speculate in currency futures, highly trained specialists dominated the pits.
Rather than becoming a hub for global currency transactions, currency futures became more of a sideshow (relative to the cash markets) for hedgers and arbitragers on the prowl for small, momentary anomalies between cash and futures currency prices.
In what appears to be a permanent rather than cyclical change, fewer and fewer of these arbitrage windows are opening these days. And, when they do, they are immediately slammed shut by a swarm of professional dealers.
These changes have significantly reduced the number of currency futures professionals, closed the window further on forex vs. futures arbitrage opportunities and so far, have paved the way to more orderly markets. And while a more level playing field is poison to the P&L of a currency futures trader, it's been the pathway out of the maze for individuals trading in the forex markets.
Cheers,
J.
Joe Blow
16th-July-2004, 04:48 AM
Very interesting indeed.
Will have to look into this a little more carefully!
Thanks pOsItIvEcAsHfL0w!
positivecashflow
16th-July-2004, 05:43 AM
No problem.. We are all here to learn...
Sharing is Caring :D :D
Cheers,
J.
wayneL
16th-July-2004, 10:06 AM
Hi,
I will go into it more when I have time but there is one point here which is a bit of a clanger....transaction costs.
A five pip spread is in fact costing you $50 per round trip. A futures deal will cost you 1 tick spread plus $4.80 commission = $14.80.
You will find almost all professional currency traders use the futures.
There are more points but will go into later.
Cheers
positivecashflow
16th-July-2004, 10:13 AM
Hi WayneL,
Look forward to reading your opinion.
Cheers,
J.
banjo_pete
17th-July-2004, 10:11 AM
the forex game is good too, to get a feel for it.
hoobadriver
22nd-July-2004, 12:48 PM
I believe you can get much tighter spds like 2-3 pips with some online brokers.
stefan
2nd-August-2004, 06:18 AM
Interesting. Are there any Australian brokers offering forex trading similar to www.forex.com?
Trader01
5th-September-2005, 10:33 PM
I have been trading Forex for about five years now and find it very profitable!!! I also teach forex trading and write currency analysis on the major pairs.
If you would like to contact me I will help all I can!!!!!!!!!!!!
Cheers
Smurf1976
5th-September-2005, 11:26 PM
A few comments from my experience trading forex (not advice, just observations).
1. Have a plan. Know before you check the markets for the week/day/hour/minute (depending on your trading frequency) what would make you to go long, what would make you go short, what would make you close a position, what would make you stay out altogether.
2. Your plan needs to include some means of setting stops. Guessing or "she'll be right" isn't really a good idea IMO.
3. You need to know that the method is actually profitable unless you really do like sitting up at all hours worrying about your account being wiped out. TEST IT!
4. You need to know the maximum drawdown that the method is expected to produce. Position sizing (amount of leverage) needs to be CALCULATED based on this. Don't guess when it comes to leverage.
5. If you are going to limit yourself to a reasonable (say, 20%) maximum drawdown then I would be very surprised if you are going to be able to use leverage greater than 5:1 and most probably the leverage will need to be less than this. Want to use higher leverage? Back test to see what happens when you have a bad run and you'll probably decide that very high leverage isn't such a good idea after all... There are trading systems that work with high leverage though, you just need to be SURE before you start leveraging your trades.
6. 100:1 leverage WILL blow your account sooner or later. Probably just after you think it's starting to go well...
7. Keep away from dodgy brokers. This is far more important with forex than with stocks. Be particularly wary of overseas-based market makers that rely on traders' losses, rather than simply collecting the spread, to be profitable. I probably shouldn't mention names here but there's a real problem when your broker WANTS you too lose and isn't regulated by anyone.
8. The cheapest broker is not necessarily the best.
9. Don't forget to include buy/sell spread when designing and testing trading systems.
10. Just because a system works really well long or short DOES NOT mean that it works in reverse. Logic might suggest that it ought to, but that's not necessarily the case in practice. You can lose a lot of $ if you assume that it works both ways without testing it.
Just a few thoughts. It's certainly not a comprehensive list though. :)
philnaylor
6th-September-2005, 07:19 AM
Smurf,
Great list. There is a lot to be taken form that list. I guess I would like to expand on finding the right broker, but I will save everyone the sales pitch!
Just make sure they are transparent and regulated. The National Futures Association (NFA) in the US has a really good website with heaps of useful information on investor protection. The site is www.nfa.futures.org
From the trading side of things, I was speaking to one of our dealers here who has done a lot of analysis on our clients trading. In general our clients are picking profitable trades over 50% of the time, but the number one way they get unstuck is having average losses far exceeding average gains.
I can't stress enough how important it is to have exit points clearly defined before getting into trades. And if you think you will take profit at 20 pips, don't have stop losses at 40! If you do this and pick the trade over 50% of the time, you will still loose.
Just some of my thoughts.
Phil Naylor
FX Sales, Australia and New Zealand
IFX Commerce
www.cbfx.com
TheProphet
2nd-December-2005, 09:07 AM
Hi all
Interesting thread. Any comments on trading forex with CMC?
Cheers
Milk Man
2nd-December-2005, 09:40 AM
CMC use a market maker CFD format I think. This means the prices are somewhat artificial and are not necessarily hedged in the market. These types claim their money is made through the buy/sell spread. Just remember that they are market makers. I would like to hear from someone as to whether they place large orders through market maker CFDs and consistently turn a profit and as such any shananigans these guys pull :sly: (market makers; not just CMC). Like stops being triggered by price spikes and such.
The other format is DMA or 'direct market access'. These positions are fully hedged in the market so you can actually see them go through in market depth. I think man/e-trade and macquarie are the only two in Australia; thats who im looking at signing up to anyway. They make money through commissions although it would be possible to manipulate the market so it triggers your stop. This is probably less likely since they have nowhere near as much to gain.
I could be wrong, see below message.:screwy:
Whathell
8th-December-2005, 03:42 PM
Does macquarie do forex and indices??
I'm currently trading in forex at the moment... i'm finding it hard to tame :banghead:
mit
8th-December-2005, 08:02 PM
Forex is one place I haven't had much to complain about with CMC, but I have only ever been a very small and not particularly profitable forex trader. Macquarie is purely shares.
MIT
Double Six
21st-January-2006, 10:24 AM
do we not have any forex traders here ?
Smurf1976
21st-January-2006, 05:18 PM
My forex trading is up and running with real money and has been for a little while now. It's a rather complex system which uses different triggers for different currency pairs.
I'm not planning on disclosing the system for the moment. At least not until it's got a proven track record with real money over sufficient time (years).
I consider it impolite to be disclosing how wealthy an individual is/isn't on an anonymous forum. Just a personal moral view. I will simply say that my trading is done with a normal retail broker but the scale is sufficient to get decent spreads.
Currency pairs traded are:
AUD/CAD - long and short
AUD/JPY - long only
AUD/NZD - long and short
AUD/USD - long and short
CAD/JPY - long only
CHF/JPY - long and short
EUR/AUD - long and short
EUR/CHF - long only
EUR/GBP - short only
EUR/JPY - long and short
EUR/USD - long and short
GBP/CHF - long and short
GBP/JPY - long and short
GBP/USD - long and short
NZD/JPY - long only
NZD/USD - long only
USD/CAD - long and short
USD/CHF - long only
Based on testing and paper trading, the system results in (approximately) 200 trades per year, return on funds (unleveraged amount) of 80%, maximum drawdown (based on profit / loss of completed trades only and ignoring fluctuating value of open trades) of 6%. These figures are net of all costs except internet access, computer, stationery etc.
Trading is based on spot fx day trading. Certainly not the cheapest method in terms of fees paid to the broker but as I said, the 80% is net of those fees. My priority is to trade profitably, I'll worry about reducing costs later.
Actual profit is up 23% since mid-November. This consists of a strong run between November 16th and December 16th and broadly flat since then with a small dip recently. This performance is in line with expectations. It's basically a strong run up followed by a flat period and then a dip. Then the cycle repeats.
Actual trades so far (buy / sell / open date / close date / profit or loss) have been as follows. These figures are net of brokerage.
Please note that all trades open on 31-12-05 were closed that afternoon as a precaution due to (my) computer problems. They were not reopened but trading resumed as normal from the beginning of the year. I also haven't worked out the % profit / loss for trades this year yet so I've had to leave that off.
Just posted this for interest. Forex trading is not a guarantee of wealth. I'm not a financial advisor etc. Do your own research and trade at your own risk.
Milk Man
21st-January-2006, 08:05 PM
Hi Smurf, do you use EOD data or intraday/live data? Ive only got eod at present and I cant find a system that works. Not yet anyway ;) . A nudge in the right direction would be good..... :D
Smurf1976
21st-January-2006, 10:34 PM
I use a OHLC (open, high, low, close) chart. For most pairs this is a daily chart although for 3 of them it's a weekly chart. In practice I look only at the high and low price for the day/week unless the close is either very near the top or bottom of the day's range.
If a buy signal is triggered by the high / low price but the close is right near the low then I will set a limit order to catch the trade if it breaks out rather than risk the very real possibility that the signal is false. Reverse situation for shorts.
In general I trade my account once per day in the morning before going to work. In my testing I always assumed a worst case scenario for the time of day that trades are started. So I always assumed buying at the high for the day (or selling at the low if going short). My actual trading results ought to be a little better than the back testing indicates since, in practice, I won't generally be entering the trade at the worst possible time on that day.
It takes approximately 15 minutes to check for all possible trades each morning. I find that doing it whilst in a reasonable hurry (before leaving home to go to work) assists in reducing emotional decision making as there simply isn't enough time to think about it. I just follow the rules and check to see if they have been met. I do check again in the evening though just to make sure that I haven't missed anything although in practice I have only found one error with incorrect stop setting which fortunately was of no consequence. I do not enter trades in the evening.
All of my trades are closed by hitting a stop loss. I do not manually close trades (except if there's a good reason such as being unable to trade for a while). My stop loss orders are always set 4 pips from the trigger they relate to. So if I were long AUD/USD and wished to exit should it fall below 0.7480 (hypothetical - that's not a current trade) then I would set the stop at 0.7476. During my system development I became aware that this would, on average, boost profits by reducing tradign on false breakouts. IT MAY NOT WORK FOR ALL SYSTEMS THOUGH.
In general my trades are opened manually. However, I wait for a clear breakout following a failed trade (defined as a trade taken out by the stop with minimal price movement (relative to typical price movements for that pair based on the chart) regardless of whether it was a profit or a loss) before entering any more trades for that pair in the current cycle. By cycle I mean when the price has clearly moved in a sustained trend either up or down from the present level.
Charts. Most charts show bid price. Be VERY careful when setting limit orders or stop loss to take bid/ask spread into account otherwise you will find orders executing when they shouldn't. THIS IS IMPORTANT.
If you use indicators then be aware that they aren't valid until the end of the trading period they relate to. And remember that forex runs 24 hours a day during the week so know what the cut off time for the end of a day is on your charts. Just because the RSI has crossed some threshold half way through the day doesn't mean it will still be over/under that level at the end of the day. Get this wrong and you'll be entering / exiting lots of trades when in fact your system hasn't given a signal to do so.
I only enter trades when ALL conditions are met. Whilst an individual opportunity may appear good, my system is based on probability and profit / loss per trade using strict entry criteria. Hence my willingness to ignore anything which doesn't meet all the criteria.
Actual system development. Whilst incredibly time consuming, I like doing things manually where possible. My system was developed by proposing rules and then MANUALLY back testing them over 12 months. This is very time consuming but leads to the discovery of what you should have actually done whereas automated back testing will only give a yes/no on a proposed method. Do it manually and it becomes easier to identify methods to test. Of course automated testing has a role for verification of results.
There's no rule that says you can't change the settings on indicators to some unconventional value. Make sure to keep using those values if you develop a system based on them though.
Don't forget to factor spread and any other broker costs into your testing.
Make sure you know the maximum drawdown of your system and adjust leverage accordingly.
Don't try to develop a system which exploits inefficiencies in your broker's systems. Such things are possible but brokers do have software to detect such things and you'll be shut down if you do. (This isn't from personal experience).
Be aware that money deposited with a forex broker is NOT safe IMO. They are not banks and may well go out of business. I therefore deposited only the minimum necessary funds to my account fully aware that I may need to deposit additional funds in the event of a substantial drawdown happening before substantial profits were made. I based my leverage on the notional amount of funds, most of which were sitting in a bank account, rather than the funds actually with the broker. I plan to remove funds periodically, keeping only enough in the account to operate the system plus allow for expected drawdowns without having to constantly withdraw and deposit funds.
Take ALL trades triggered by your system.
I have not needed to use any expensive software, computer equipment or data services. If the system is running profitably near the end of this financial year then I intend buying a laptop with suitable modem in order to continue trading whilst travelling. (It's only 15 minutes a day...). 2 monitors on my PC would be nice, one for charts and the other for order entry, to save time but I don't have that at present and am in no hurry to get it. I've kept all costs as low as possible without affecting the actual trading in any way. I have dialup internet.
My system is based on all trades being approximately the same size when converted to AUD. :2twocents
Milk Man
24th-January-2006, 03:40 PM
Thanks smurf, I just saw this (Joes gettin too many posts for it to show up on home page!). Excellent advice, oops, I mean guidance :) . How did you decide long and short on pairs- trends, positive roll, or just plain probability?
Manual testing huh, your eyes must be sore!
:bier: :bier: :bier:
Three cheers for Smurf!
Smurf1976
24th-January-2006, 11:31 PM
Probability, a desire to avoid overly complex trading methods and the effect on drawdown are the reasons for leaving a few pairs out either in long or short direction. :)
(Just thought I'd make a nice short post for a change... :D )
traderob
1st-February-2006, 03:07 PM
I trade forex. Have been a prop stock trader and futures trader but find advantages in forex. I stick to the majors plus nZD and AUD.
Fundamentals and technicals are needed to be successful IMHO.
Milk Man
25th-April-2006, 06:39 PM
Anyone know why the yen took a dive recently?
money tree
25th-April-2006, 07:15 PM
G7 putting pressure on asian leaders to revalue their currencies. Its mainly the U.S demanding China revalue the yuan.
wayneL
25th-April-2006, 07:28 PM
Anyone know why the yen took a dive recently?
Actually it' the US$ that took the dive as it's quoted USD/JPY
If you look at the Futures, which is quoted JPY/USD, the yen is flying ;)
Cheers
Smurf1976
25th-April-2006, 09:16 PM
With Japan strongly hinting at raising interest rates, there will be plenty of investors looking to unwind longer term positions which involved borrowing Yen to buy something else.
Given that the trend of rising interest rates is already a global one, this won't be the only market to feel the effects IMO. :2twocents
Milk Man
26th-April-2006, 03:02 AM
Actually it' the US$ that took the dive as it's quoted USD/JPY
If you look at the Futures, which is quoted JPY/USD, the yen is flying ;)
Cheers
Hmmmmm, I might think before I talk next time :o . Thanks guys anyways.
money tree
26th-April-2006, 05:24 AM
With Japan strongly hinting at raising interest rates, there will be plenty of investors looking to unwind longer term positions which involved borrowing Yen to buy something else.
This is a cliche and a myth.
There is absolutely no evidence to prove anyone is unwinding carry trades yet. Why would they? The ONLY reason to close an arbitrage is if the arbitrage decrease or dissapears. In the USDJPY carry trade, USD rates have been and will continue to rise faster than JPY rates. Since "anal-ysts" started calling an end to the carry trade, USD rates have increased 50 bps, while JPY rates are unchanged. The arbitrage has INCREASED.
yesterday USDJPY gapped through daily trendline support. However, since todays candle does not confirm, and the reason for the fall was G7 and NOT unwinding of carry trades, I feel this will prove to be a false break, and USDJPY will go to 120 before 110.
Milk Man
26th-April-2006, 06:29 AM
I feel this will prove to be a false break, and USDJPY will go to 120 before 110.
Hope so i'm long. Erm, short yen that is. ;)
chemist
1st-May-2006, 09:22 PM
This is a cliche and a myth.
There is absolutely no evidence to prove anyone is unwinding carry trades yet. Why would they? The ONLY reason to close an arbitrage is if the arbitrage decrease or dissapears. In the USDJPY carry trade, USD rates have been and will continue to rise faster than JPY rates. Since "anal-ysts" started calling an end to the carry trade, USD rates have increased 50 bps, while JPY rates are unchanged. The arbitrage has INCREASED.
It's not a true arbitrage because the USD/JPY is not fixed. The JPY can rise a lot faster than a 4-5% pa "arbitrage", and, when it does, carry traders lose.
yesterday USDJPY gapped through daily trendline support. However, since todays candle does not confirm, and the reason for the fall was G7 and NOT unwinding of carry trades, I feel this will prove to be a false break, and USDJPY will go to 120 before 110.
It may not have been unwinding but it's the sort of thing that encourages traders to think about unwinding.
cheers,
Chemist
POPSTER555
6th-June-2006, 10:42 PM
Hi All,
I am new to all this and i would like to learn more so if i ask a question that my seem stupid please forgive me. Can anyone tell my what is the safest way to trade Forex by experience? The more research i do on the web the more confused i get. Is there a web site or book that anyone has found when they first started? :confused:
Smurf1976
6th-June-2006, 11:52 PM
Keep the leverage sensible is my number 1 tip. Leverage too high and sooner or later you WILL blow up the account (lose all your money).
Also don't over trade. Develop and TEST a system to make sure that it works and then WAIT for the trading opportunities to present themselves in accordance with your system. Focus on trading successfully and don't worry about "I could have made a profit today doing X". If you know that you have a profitable system that works over a long period of time then the fact that you missed out today doesn't really matter. Trying to profit from every single opportunity just isn't going to work IMO. :2twocents
Milk Man
7th-June-2006, 08:57 AM
Popster: ive had a bit of luck with swing trading. Also, as with any trading, good money management is the key IMO.
bowser
7th-June-2006, 12:27 PM
Hi All,
I am new to all this and i would like to learn more so if i ask a question that my seem stupid please forgive me. Can anyone tell my what is the safest way to trade Forex by experience? The more research i do on the web the more confused i get. Is there a web site or book that anyone has found when they first started? :confused:
I think the most important aspect to learn first is what type of investor you are. There's no point buying postion trading books if you cant sleep while you have $xx on the line. In that case maybe you're better day trading for a couple of pips here and there.
Have a look at www.babypips.com. It's a free website that runs through the basics of forex trading and technical analysis. Once you have an idea of a system that you would like to try open a paper trading account and see how you go. When you consistantly make a profit put some real money on the line.
Good luck!
scsl
20th-September-2006, 02:57 PM
I've just started on Forex and was wondering if any of you would be able to help me decipher the following. I have very little idea of what it is trying to say. I have done one trade on the AUD/USD spot (successful) and am eager to read/learn more before the next one.
0411 GMT [Dow Jones] Long AUD/USD vs USD/CAD 1-year vol spread ends with loss; anticipated move in relative implied vols failed to materialize, but could still be good value with fresh positions.
AUD/USD spot has generated just 0.52 actual volatility more than USD/CAD over past year (8.62% vs 8.10%), implying loss of about 0.70 vol at overnight expiry for longs - recommended by Dow Jones CommentaryPlus from implied-vol spread of 1.20 vols.
Position anticipated mean reversion, implied-vol bounce toward 3.5 vols over subsequent months. Series failed to bounce from projected support but trade was held as AUD/USD realized vols were expected to outperform. Instead, steep downtrend in AUD/USD realized vol sent 1-year as low as 8.36% in March.
Fortunes could still change. Relative realized, implied vols attempting to base above parity; spread should recover.
AUD/USD 1-year implied trades very cheap, under its 1-year low to 8.55% - 1.91 standard deviations below its 1-year mean of 9.31%. USD/CAD trades much more in line with fair value at 7.80%, modest 0.42 standard deviations below mean of 7.91%.
(Russell Floyd, russell.floyd@dowjones.com)
Dow Jones CommentaryPlus Web site: http://www.djcommentaryplus.com/acs
Thanks,
scsl
jovan
5th-November-2006, 01:44 AM
do we not have any forex traders here ?
I've been trading forex for about 3 years. I was a share trader but these days I hardly trade stocks at all. I own a few pharmaceutical companies which I've been interested in for a while but that is all.
For newbies starting out in forex, I suggest babypips.com as somebody already mentioned. I've also made a website based on my experiences starting out, and I've tried to review forex trading systems, courses and brokers. (I'm not spamming here but if anyone is interested, they can check my sig).
The excessive use of leverage in forex is a big problem. It is a big attraction to forex however it is also probably the biggest killer of trading accounts. CFD traders can probably relate.
jovan
5th-November-2006, 01:59 AM
To add to positivecashflow's post, I would say that some of the other advantages of trading Forex vs Stocks (apart from leverage and the other benefits of CFD's) are:
- No insider trading possibilities (because of the huge size and non-centralized nature of the market)
- Absolutely no relation to the stockmarket or correlation to company earnings and other factors which influence stockmarkets.
- 24h market - you choose when ever you feel like trading.
- Fewer decisions and headaches in Forex - there is 2000+ stocks on the ASX plus 3x that in the US. There are only 7 major currency pairs to choose from in FX.
alankew
12th-January-2007, 03:02 PM
Does anyone have any opinions on the future of the NZ$ versus AU$.I have a friend who is moving over here from NZ and want to get an idea of which way the exchange rate is trending.He is transferring about $400k over from the sale of one house in order to buy over here,Thanks for any info offered
bvbfan
12th-January-2007, 08:21 PM
Depends on time frame, but my opinion is the oonly support for NZD is the carry trade from Japan.
I think the New Zealand economy is in trouble and expect NZD to be a poor performer over next 12-24months.
I'd expect AUD to be back to 1.20 v NZD but it may not get there until later this year.
