Trading physical money, not online

Beginner Questions
1

Dear forum members,
After a couple of years trying to find my way on the FOREX online, I have to reckon that it is not so easy. I’ve tried scalping, daily trading, swing trading, lots of indicators, EA, trading the news, reading books etc but I didn’t find yet a profitable system.
This said, my main concern is the utterly damaging STOP LOSS. Without enough fund, and despite leverage (from 1:100 to 1:1000), the volatility can destroy your position in a blink. I don’t count how many times I was trading in the right direction of the trend, but a sudden low candle cut my climb and it activated the stop loss.
[B]Long story short, I’d like to try something less risky[/B].
As I have many accounts here and there (EUR, GBP, SGD, USD etc), I want to try to trade ‘physical currencies’. Basically, I check when currency is low compared to the other (say for instance I convert SGD to AUD since AUD is low now), I go to the exchange office nearby, and I put my notes in a safe bank account with some interest rate. I wait and I monitor the situation. [B]From there, two scenario[/B]: 1) the currency I traded is not going higher, or even is going lower : I keep it, I still earn some interest, and I keep going. Worse case I will use the money to go on vacation (Australia in this case).
2) The currency is going higher (the AUD exchange rate is getting higher vs SGD in my case), I go to my bank, take my cash (in AUD), go to my favorite nearby broker (much better exchange rate than the bank of course), and after I have more SGD compared to when I start.

The advantage here is that I don’t have a stop loss or problem in margin. In between trade, I still earn some % in interest. And I don’t need the money I will trade in case of emergency.

What do you think? Did you ever try this?
I’m tired to feed the online brokers…
Thanks in advance for your comments and suggestions :33:

2

[QUOTE=“jcvd12;578188”]Dear forum members, After a couple of years trying to find my way on the FOREX online, I have to reckon that it is not so easy. I’ve tried scalping, daily trading, swing trading, lots of indicators, EA, trading the news, reading books etc but I didn’t find yet a profitable system. This said, my main concern is the utterly damaging STOP LOSS. Without enough fund, and despite leverage (from 1:100 to 1:1000), the volatility can destroy your position in a blink. I don’t count how many times I was trading in the right direction of the trend, but a sudden low candle cut my climb and it activated the stop loss. Long story short, I’d like to try something less risky. As I have many accounts here and there (EUR, GBP, SGD, USD etc), I want to try to trade ‘physical currencies’. Basically, I check when currency is low compared to the other (say for instance I convert SGD to AUD since AUD is low now), I go to the exchange office nearby, and I put my notes in a safe bank account with some interest rate. I wait and I monitor the situation. From there, two scenario: 1) the currency I traded is not going higher, or even is going lower : I keep it, I still earn some interest, and I keep going. Worse case I will use the money to go on vacation (Australia in this case). 2) The currency is going higher (the AUD exchange rate is getting higher vs SGD in my case), I go to my bank, take my cash (in AUD), go to my favorite nearby broker (much better exchange rate than the bank of course), and after I have more SGD compared to when I start. The advantage here is that I don’t have a stop loss or problem in margin. In between trade, I still earn some % in interest. And I don’t need the money I will trade in case of emergency. What do you think? Did you ever try this? I’m tired to feed the online brokers… Thanks in advance for your comments and suggestions :33:[/QUOTE]

Good luck with that.

The banks charge premium, and the money changers r not that far behind. Unless the currency your holding appreciates by atleast 20 cents, ur not going to see much because the spread between bid and ask at a bank is usually about ten cents, if not more.

Secondly, forex is profitable only because of leverage. Without leverage, u need a huge capital to make it worth while.

Secondly, be prepared to wait for a long period to see a move up by twenty cents.

U have not taken into account ur account fees etc.

Trading forex is not for everyone. Binary options is even worst.

Ive seen leverage of 1:800. Didnt know there were brokers who gave you 1:1000.

If there is one way to feed ur broker, that is to pick mind blowing leverages like u did.

1:200 is the best as far as im concerned.

Get rid of ur indicators and EA.

Learn how price moves and how to take minimal risk position based on how markets move.

EA, news n the rest are not very assuring or consistent. Price action makes much more sense.

3

In real life, take $100.00 into your local friendly FX provider and ask for equivalent in Gbp, he will give you £60.24.

Walk outside, light a cigarette, breathe in the smoke, stub it out and go back inside with the £60.24 and ask him to give you back the USD.

He will smile, look at his computer, then hand you $95.18

Above numbers based on tonight’s exchange rate

4

Could I add, stop loss problems are common, your analysis is spot on, you see exactly what price ‘should’ do from where it is now, you calculate where you are going to be wrong - there you set your SL.

These calculations are done on a chart visible to every single trader, large and small, on planet earth. All of these traders, including those that can move price, can see where your, and many other’s SL would logically be.

Some believe that such info is meaningless, so many trillions etc, etc, your tiny trade not getting past the end of the block.

Do not think like this, think us and them. Now you have a chance. Think where price may retrace to, figure that price could never retrace back to that low level - it’s way too far, old you would put your SL there, new you would put your buy limit there.

5

Just one thing to add to this. Only get in when the stops have been taken out. If a lot of people are trapped and freak out then the market can run as people dump.

Another thing is that if you are constantly making bad calls you can profit from this by just doing the opposite. When you see a set up that can “only go one way” often it’s a trap. If you do the opposite then it’s actually not stupid as you’re trading the setup failure and profiting from the trap.

@peterma Have you ever heard the interview question about asking a group of people to guess a number between 1 and 100 and they win if they chose two thirds of the average response?

6

The bank charges probably won’t be worth your efforts. Maybe you just smaller position sizes so you’ll live to trade a few more days longer. Or maybe your stop losses are too tight given the time frame and pair that you’re looking at.

How about putting on a small trade with a positive carry and going back to demo for a while to refine your trading rules?

7

Every exchange charges for these transactions and then, there’s the bank cost…
Nope, do think online forex is a better bet than trying to convert the currency in question with an exchanger…just my two cents.

8

Team,
Thank you for your comments. I’m obviously not using Bank change rate or a bad exchange broker, so the spread is low and very competitive (Mustafa in singapore). Plus I use transferwise.com which is awesome. Because I transfer a lot of GBP/EUR/SGD, I monitor the exchange rate and the gain can be significant (especially with the recent GBP growth, 1 gbp=1.96 when I changed first and I exchanged back 1 gbp= 2.04, so it’s a 4% gain)
I tried carry trade with NZD/JPY but I hit also the SL, and I was not comfortable to not set-up a SL as it is generally advised.
I’ve tried 15mn frames 1h, 4h and 1 day but it looks like I’ve entered at the reversal moment/retracement.

9

All imcan say is u complicated things unnecessarily.

10

I remember an article in readers digest by this comic indian writer, some netto or anil something.

He said all he had to do was go the money changer ten times to change a currency back and forth and he would be having nothing in his hand. And he hadnt even spent a single dollar.

Do update us on how this method of yours pans out.

We all might learn a lesson from it.

11

I cant go through an airport any more without getting really angry at how much they screw everyone and no one seems to either realise or care.
Every time i see the bid and offer and i can only assume they are the mids of two different currencies since there is no way in hell the spread on EURGBP can be 30%.

There are so many things in society in which people are just getting totally fleeced and its is just deemed to some how be ok, that you shouldn’t ask too many questions, that you are just being a d1ck for point it out. Any guesses who’s having a bad weekend?

12

There is big thing that has not been addressed in this thread. You said that you had tried a number of strategies in the last 2 years. Do you really feel that you had really given each their fair shot? People can tend to strategy flip when they first start out and it often the death of them. I think focusing on one strategy for at least a year or two is really only fair to know its true merits.

Even if you go for this physical plan ask yourself this. How long and how much money will you plan to spend on it before you deem it to be a good idea? Specifically to what you are talking about its a really slow burner. Its going to take years to know if you can make a decent return from doing this. Do you have the staying power, are you likely to give up on this as quickly as the other things?

13

[QUOTE=“pipwhip;578812”] I cant go through an airport any more without getting really angry at how much they screw everyone and no one seems to either realise or care. Every time i see the bid and offer and i can only assume they are the mids of two different currencies since there is no way in hell the spread on EURGBP can be 30%. There are so many things in society in which people are just getting totally fleeced and its is just deemed to some how be ok, that you shouldn’t ask too many questions, that you are just being a d1ck for point it out. Any guesses who’s having a bad weekend?[/QUOTE]

Talking about money changers and airports, my husband used to work with a company that solely was responsible for moving all hard currencies inside Singapore when we first moved here.

That included money to and from the monetary authority, the Singapore version of a central bank.

He was one of guys who had to go to the physical location of banks and their vaults and do the documentation before receiving the money and than transporting it to a other location and doing the documentation for handing it all over to another party.

One of the regular assignments he did was transporting physical forex exchange notes that takes place between a tier two bank and smaller banks.

The smaller banks got their money from the bigger ones.
The money changers etc in return got their cash from the smaller banks.
So there is actually more than one party to be fed.
Hence the mind boggling spreads are not a surprise.
He couldnt figure out why the money changers didnt deal direct with the tier two bank though.

Than there use to be the daily assignments of collecting cash from the tier two bank and sending it to the airport secure cargo so that it could be flown overseas to other banks that had bought the physical denominations.

THe total amount between the smaller banks and the tier two banks were atleast 20 to 35 million a day.

The tier two banks shifted currency out of Singapore by the truckload. All in sealed tarpaulin sheets.

A rough calculation told us that even in this quantity, the smaller banks hardly made 20 grands a day from their forex desk. And one wrong call could wipe off whatever they made in a week or two.

So its a scenario where many have their hands in the pie, and the man on the street pays for the whole lot.

14

[QUOTE=“pipwhip;578815”]There is big thing that has not been addressed in this thread. You said that you had tried a number of strategies in the last 2 years. Do you really feel that you had really given each their fair shot? People can tend to strategy flip when they first start out and it often the death of them. I think focusing on one strategy for at least a year or two is really only fair to know its true merits. Even if you go for this physical plan ask yourself this. How long and how much money will you plan to spend on it before you deem it to be a good idea? Specifically to what you are talking about its a really slow burner. Its going to take years to know if you can make a decent return from doing this. Do you have the staying power, are you likely to give up on this as quickly as the other things?[/QUOTE]

When I first started I had someone guide me and this person kept changing the system he used every two or three months once, telling me this is the real thing that he had used.
Thats how I came to having used nearly all indicators and trading styles that came with them.
Me the ever trusting, followed everyone of it.
And I didnt make a dime, lost all and more.

Than one day I decided enough of this and I decided to stop trying to make money and started to look at the charts and see how the market moved.

That was the turning point.
After about three years, things suddenly started making sense to me.
So I slowly added layers to what I knew and started trading with what I knew.

Overtime, my trading got better and Little by little I got to a point where trading was no longer such an emotional roller coaster for me.

I than decided to look back at some of the things And systems I had used previously, just to donate money to the market.

To my surprise, The same systems, be it a combination of ema, sma, bollinger bands or itchimoku that didnt work than, worked now.

So its my personal opinion that when its not working, than its the trader who is missing something, and not the system.

That is why I tell those who are new to this to ditch the indicators.

If there is one thing that blinds newbies, it has to be indicators.

Learn the basics first, which is a few candle stick patterns, interrelation between different TFs, market times and SnR lines and price waves.

Once we have an understanding of this, we can than add indicators as a second confirmation signal to our system.

Its sad to see newbies go down the indicator path and get overwhelmed by it all and write the entire endeavor off as unworkable due to the common myth that price follows what indicators say.

Its the otherway round. Indicators follow what price does.

Finally, patience is not a virtue in this business, its the number one basic prerequisite for survival.

Those who cannot learn to control their emotions will not even make one third of the journey.

And when it comes to money, our emotions are very difficult to be controlled.

15

Thank you for sharing all of this. It is very interesting getting your input on how you learnt.

16

I’ll second Nikita’s post, we would love to really know if we can make any money from exchanging back and forth…of course, it would have to be small amounts but still…a better bet than trying to mine bitcoin

17

Very silly idea, whats the difference between this and the online trading?

If the exchange rate goes against you , you get f***ed either way, the only advantage you have that you dont get a margin call, but if you buy for example 1 euro at 1.2345 and the eur/usd drops to 1.0000 what are you going to do ? :18::18:

Online trading is the way, since you can trade faster that way, the rates can drop very quickly and by the time you get to your exchanger you might miss stuff.Its much easier to stay home in front of your PC and see the market live, than speculate stuff there and there.

Plus your exchanger might have unpredictable spread, while your online broker has a target spread if variable, and if its fixed, then its better.

So to recap, physical trading is much much wore than online, why do you think all major stock exchanges switched from physical trading to online in the past 20 years hmm? Its more reliable.

I`ve also seen some pro’s and cons against physical “outcry pit trading” at the Chicago Mercantile Exchange, and more people say its better now that its electronical.

And C’mon do you really think an exchanger gives favorable spread.If i go outside i have a cash exchanger just near my home, i always laugh at their spread.On average they have 3000 pip spread, while a bank has ~4000 , yes you read it correctly 4000 pip spread , do you think that can be compared to the 1-2 pip spread given by brokers :18:

18

I can’t help but agree. I dont see how this could ever be better than online trading. Once you have taken fees into account the interest rate differentials just dont seem to be worth the fx risk.