The biggest problem with IG is their leverage is changing when your position is too big.
If your concentrated position is bigger than 150 lots, your leverage is significantly reduced.
For example, if you have euro position more than 150 lots, your leverage is reduced to 15 times.
150 lots is only equal to $300000 buying power at current market value.
I would rather go to currency futures if I have to switch.
A friend of mine has turned me on to Forex trading and I’ve been doing research on it for the last week. MT4 Demos, Broker Demo’s, Forums, EA’s, Leverage, Strategies, and all that. I stumbled on this post when I was doing research on Brokers, leverage, and why my friend was recommending me to the broker he uses(FXChoice).
I have been reading this post and the forum off and on for an evening and a morning and it has answered some but left me with a couple questions. If any of you could please help me out by either answering them or pointing me to a thread that did answer the question(my search-fu may be weak) that would be most helpful.
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Taxes with an overseas Broker. I understand that the trader will be responsible for all taxes and filling out the proper forms as the overseas brokers do not provide 1099’s. My question is, what was you recent experience been on that, what types of info do you have to provide aside from gains and losses and the actual foreign account. My goal to be 100% above board on this, I have no problem paying taxes just don’t want to invite trouble for doing so.
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Have any of you experienced any hangups with your local(US Based) banks on doing wire transfers originating from an overseas entity?
TIA for any help or assistance.
BTW reading this thread has really educated me on the Frank-Dodd act. It seems they tried to put out a campfire with a Tsunami and now its boning most Americans and causing the American economy to miss out on a lot of income in this area.
thank you very much for the reply and sharing your views on it. yes . I think liquidity plays important role here. that is what makes spot forex very interesting. currency analytics sounds like a very interesting topic to me. I will google it.
have a great weekend. RB
hi, thank you for the reply.
globex ( cme ) offers gbpjpy for futures trading . liquidity might be an issue.
am I misunderstanding something here on cme website??? I am very new to concept of futures trading.
You are right.
CME offers GBP/JPY futures but there is almost no volume.So my futures broker AMP doesn’t offers this product.
yeah I called cme about low vol thing, they said just find the broker and they will help close the trade in case no volume…but this is risky…I think dolman was willing to offer it, if I remember it correct. but I think, as you also pointed out, volume is too low on such currency pairs and it won’t be a good idea to trade future contracts for gbpjpy or eurjpy… do you think trading future contract of majors ( eurusd, gbpusd, usdjpy ) should be fine ??? thank you and enjoy your weekend. Ray
SmallPaul, do you use the 5 minute, 30 minute, 1 hour, 4 hour, or daily charts for trading? I use only the 5 minute charts for trading.
for small swing trades i use 1hr and for larger moves i use 4hr
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If you trade futures on major pairs it would be fine as futures volume on majors are decent, especially for intraday trading. Futures intraday leverage is roughly 300 times at AMP, which is also good enough.
But for me since I hold a lot overnight positions, I prefer my offshore broker because it offers 500 times overnight leverage compared with futures overnight 75 times leverage.
I trade the S&P mini index, 90 day eurodollars (not to be confused with the Euro FX) & other interest rate futures @ AMP. As for currency futures… it depends, if your system is strictly day trading w/ no overnight trades & sticks to the USD majors, I think you should seriously consider trading currency futures.
- access to level II & time of sales data
- 130-250:1 day trading leverage
- Much deeper liquidity on the USD majors
- Free deposits/withdrawals
Offshore retail forex has serious scale issues. You’re limited to about 500K-1M liquidity at the best bid/ask spread, by comparison futures on the majors typically have 4-6M available bid/ask during the UK/US session.
My information suggests liquidity on spot forex is much higher than currency futures.
I open up depth of market on both EU6(eur/usd futures) and forex euro pair right now, and see that EU6 has like 50 contracts at best bid&ask, while forex euro pair has 1500 lots at best bid&ask within 0.5 pip range.(since EU6 tick size is 0.00005, I use total bid&ask volume within 0.5pip range on euro pair)
1500 lots is 150M…you couldn’t fill that at bid/ask on the interbank ECNs EBS or Reuters matching. Single bank platforms that allow you to fill 50-100M directly with the tier 1 executing bank on their platform have spreads of 4-6 pips for those amounts… Good luck filling that with these small time offshore retail brokers @ .5 pips.
Then how it is compared with 50 contracts on currency futures’ best bid, which is only equal to 6M?
With what I have had access to in the retail space over the years… Ctrader was a complete fraud ECN with fake level II data. MBT Navigator (when they were still around) and Interactive brokers TSW both had about 500K-5M 2-3 levels deep with matching time of sales data. The 3rd & 4th liquidity bank ECN’s Currenex & Hotspot that were accessible via retail brokers prior to dod frank typically had 5-25M with lots of partial fills.
Daily volume on spot forex eru/usd pair is 1 trillion.
Daily volume on currency eur/usd futures is 300M.
That 1 trillion is not retail forex… a significant % of that 1 trillion is swaps and another large % is over the phone. Retail forex is more like 200M and that is further split among 100s of individual brokers.
Retail forex daily volume is 300 Billion,eur/usd take 1/5, which is 60 billion daily.
https://www.leaprate.com/retail-fx-volume-index/
So retail volume on spot eru/usd is still 200 times that of currency euro futures .
And how much of that daily 60B EUR do you think FXChoice & Coinexx have access to? Forex is not a centralized exchange like the CME with every broker having access to the exact same combined pool of liquidity.
At least they have more than 1/200 of total retail liquidity pool.
Let’s say they have 2% of the retail market which is a total fantasy for a single offshore broker. That’s 1.2B on the euro for 24 hours of tick changes… how much of that 1.2B do you think is available per tick? I can tell you what it’s not… 50-150M.