As far as I’m concerned, it is literally impossible to make a living day trading currencies. There’s nothing going on with currencies unless you’re planning to fall asleep in front of your screen. In Europe, they came up with CFDs, so they can offer you other markets but unfortunately the spreads are just ridiculous in some of them, 3 to 8 ticks in OIL, 4 to 8 ticks on the Nasdaq 100 (when I say ticks I’m actually comparing it to the future’s market tick size), they’re really saying that they are doing everything for you to fail. There are more day trading opportunities in Indices during the first two hours of the US open than the whole month trading EURUSD or any other pair. Now that CME came up with several micro eminis making the tick value 10 times smaller I see no reason as to why anyone would even try the Forex markets. The micro Russell, Nasdaq 100, DOW are $0.50 per tick, S&P500 $1.25 per tick and gold at $1.00 per tick with no spreads, that’s right no broker can mess with spread something that is so common with Forex brokers.
CFDs are illegal in the US, because it is actually betting against other traders with no real product behind it, seen as gambling in the US but that might be just an excuse to kill the competition for the futures market. In my opinion they are still very inferior product to futures, brokers can increase their spreads at will. As of now, if you want to get serious about day trading, the best solution to me is the futures market.
In some way there is truth in your statement: for intradaytraders the forex-spread is really a problem- either they charge you small spread with high commission or they charge high spread without comission.
During a one month test phase scalping-trading strategy with Takeprofit 0,5 Pips without commission and spread 0,4 EUR/USD i achieved impressive satisfying results
Than in reality they charged 40 % comission each trade and from Takeprofit 0,5 pips each trade only little was left, thats really not satisfying.
@idude, Very true… I’m operating out of Australia and helping a few newbies in Europe with their trading and yes the Spreads are huge… the Swap is huge… and the leverage is low / Margin required high…
The Spread and Swap rates in Australia via Pepperstone and IC Markets is about a third of what I’m seeing for comparable account types in Europe even through the same Brokers…
ASIC (Aust. Regulator) is hellbent on bring Australia’s CFD Market into line with ESMA’s ruling early in 2020 … I’m sure ESMA’s tightening of CFD’s in Europe has all but killed off a large percentage of the Newbie traffic both to Brokers and to Forums such as Babypips…
Yep defintely the margins have gone up on many instruments - thats annoying. Almost fell off my chair when i saw the new requirements on some things like the German Bund
If you trade gold, or any of these Russell2000, DOW, UStech and S&P500, these are available in micro format which make the tick value 10 times small than what used to be. For example the Tick value for gold (GC) was $10.00 and with the micro gold (MGC) is $1.00. So if you day trade with the risk of 20 ticks your are risking $20.00 plus commission which varies from broker to broker but usually around $1.40 for round trip or less. I don’t know how liquid is the CFDs but since I live outside the US I did look at ICmarkets spreads but it seems to me the best would be Gold which usually stays around 1pip. I do agree that you can control your risk a lot better with CFDs because you can adjust it quite well unless you trade oil which goes in 1/2 pip increements.
The reason to day trade is to try to make a living. Most day traders spend less than 2 hours in front of the computer, that’s how it should be. Many future instruments offer those opportunities to them, CFDs could offer it if it weren’t for the high spreads.
Dont agree with this at all. gbp and eur pairs moved about 100 pips each today, oil has moved 200 odd pips today and last friday. Markets are moving everyday, you just need to trade your strategy or trade what’s moving. I day trade so I’m in and out of my positions by the end of day. Theres no way I’m falling asleep at a screen where I can make money from the comfort of my home.
You may need to review your trading strategy but theres nothing wrong with day trading currencies.
Crude is not a currency! Crude moves exactly the way it moves in futures (there’s difference in price but the charts looks almost an exact copy). I don’t know if you were looking at currencies 15 years ago or not but Forex was big at that time, bureaucracy was less also. In my opinion these markets look dead. What pair are you trading? My biggest issue with CFDs are the spreads, gold seems to move pretty well and have a decent spread! You have to realize that one of the biggest markets for forex was in the US, yet its traders don’t have access to CFDs and forex brokers offer only currencies which is ridiculous, I’m not even sure if there are many currency brokers offering their products to Americans!
I absolutely agree with you. Those were the days when trading 15m/5m charts was “edge of the chair” fun. Every data release from the US was important and created movement. Even housing starts, cap. utilization etc. And, of course, NFP really was the king of releases, prompting huge moves that actually lasted into at least the following week.
Those were times when inflation and interest rate changes were substantial and the Bank of England was full of surprises.
But it is not surprising that things have cooled. Firstly we have an almost global change in Central Bank policies where we keep things stable via multiple small iterations in interest rates and a tight grip on guiding economic health. Previously economies drove like a car swerving from one curb on one side of the road to the curb on the other - now we have Central Bank “lane control” keeping us in a straight line.
Also, we currently have a very different world where currencies and commodities are thrown into confusion by huge trade war uncertainties and the Brexit saga. The profusion of sanctions and prohibitions such as the US/EU and Huawei throw deep shadows over economic growth expectations and it seems all the investment banks are busily updating their predictions.
It seems to me that currency markets are in a stop-go mode, where a piece of news or an event starts a big spurt, which then fizzles out like a damp firework, hangs around doing nothing and then often drifts back to where it was…
Not a healthy environment for newcomers, to say the least. And I,for one, cannot sit watching a screen when there is nothing to see for ages. My trading has changed almost totally towards setting a trade with a set TP and SL and walking away.
But there are still many ways to trade, even intraday. I think it is just a case of tweaking one’s expectations, and maybe tightening up one’s trade quality entries and employing bigger positions.
But that’s just my view - and I should add that I moved over to commodities and indices already several years ago because of this change in currency market characteristics - so maybe I shouldn’t be commenting on this!
@anon46773462@idude
Dont know what it was like 15 years ago but sounds crazy! I wish I was trading then lol. I only know these markets and the way they move. I wouldve loved moves lasting for a week!
You guys think it will ever go back to those conditions?
Personally, I doubt it. But that does not mean that things won’t change in some other way!
There are many factors which are very different nowadays such as:
a more hands-on iterative approach to monetary policy, which may have already changed the “normal” cyclical nature of economic growth
far greater technological power which is appearing the form of algorithmic/mechanical/bots trading which can work in several ways such as creating “Black swan” type events or contrarily keeping markets within tighter ranges.
Regulation is clearly increasing, which is currently reducing the loss rate in regulated brokers such as ESMA (already seems to have dropped from around 80% loses to 70% losers). But I think this is currently mainly due to people who have low capital and are seeking high leverage, moving to off-shore brokers. But these brokers may also start to find that the high turnover of losers will dry up.
There is a lot of publicity nowadays emphasising the high probability of losing all one’s money, which, combined with low leverage, is killing the dreams of quick high-wealth and financial independence
there is a big focus of cryptocurrencies which is diminishing interest in traditional forex
the impact of tweeting comments by high-influence people is likely to continue and increase - which only creates more uncertainty and disruption in longer term views.
These are just a few thoughts off the top of my head and I have no idea how these will all impact on market trading, but I suspect we will see more of what I call the “saw-tooth” movements, with relatively slow build-ups and sudden collapses.
But I think, in general, the swing-trade type of business will continue to prevail but will need greater attention to where one gets out compared with the decisions when to get in!
Based on new statistics, Daily Forex trading volume increased by 30% (6.6Trillion$ Per Day)
So, you cant tell the problem is that there is no money or there is Not paying attention to the market
Each week I count how many consecutive completed weekly bars overlap in the last 3mths (13wks), to give an objective indicator as to how energetic the market is, how prevalent long-term trends are.
This week, no less than 9 pairs of the main 28 have maximum 13-week overlaps. The average overlap is 8. Only in GBP and NZD pairs is price pushing ahead. A flat market.
Yes, you are correct that there is no reduction in actual volumes in the forex market as a whole, but there are a multitude of different reasons why institutions, companies, organisations, funds, etc buy and sell currency.
The vast majority of forex, I would imagine, is not related to intraday or short-term speculative trading. So I think what we are seeing is a drop in this particular area, which creates a lot of the “wiggle” in forex, as well as a reduced perception of what to anticipate in the future.
By way of example, we can take a simplified look at the US economy. There are two basic issues here: the strength of economic action and inflation. The Central Bank is reading the economic data and CPI releases and adjusting interest rates, as and when it feels a need to. But these interest rate movement nwadays tend to be around 0.25% compared with earlier times of 0.5 - 1% changes.
So if the market anticipates from data releases that an interest rate increase or decrease is likely then they will build in only about 0,25 basis points as an expectation - that is not much and does not leave a lot of room for differing opinions.
In addition, speculative activity has become very sidetracked by the unknown effects of these hugely major issues of Brexit and the US-China trade agreement negotiations. Several commentaries have pointed out that there are so many unknowns that the analysts simply “don’t know” what to say any more. So markets tend to take on a “spike and freeze” characteristic, where it reacts to an input …but then stops dead in the water not knowing what to do next!
I have never seen markets intermittently standing still for such long periods before. We only speculate when we believe that price should be somewhere else other than where it is right now - but if one cannot decide where it should be then there is nothing to do!
But these are, of courese, only generalisations. There are always some things to do!
I think this hourly chart of EU covering the last month shows what we are referring to.
Naturally, there are other pairs and commodities with different stories.
I would guess most traders look for trends, and these kinds of long consolidation periods can not only limit profits but lead to excessive whipsaw losses on false breakouts - depending how one trades, of course.
