Catastrophic event

If one can trade spot with more volume and no gaps, why trade futures with known gaps at the open?

Since I'm strictly a day trader i don't have opening gap problems so spot or futures wouldn't make any difference, but much more liquidity in spot makes it easier to trade. If I were a position trader I'd be paranoid of opening gaps and would not trade futures. Since spot is 24 hours I can place a stop good for all night long.

Of course everyone has their own opinions, this is mine!

Peter
 
Since I'm strictly a day trader i don't have opening gap problems so spot or futures wouldn't make any difference, but much more liquidity in spot makes it easier to trade. If I were a position trader I'd be paranoid of opening gaps and would not trade futures. Since spot is 24 hours I can place a stop good for all night long.

Of course everyone has their own opinions, this is mine!

Peter
My thoughts exactly. I have traded via Fxcm along with other brokers on that same platform and have always received horrible fills, always slipping, even with small size.
I swear that platform is a total scam.

Oanda rocks, I think there are some extremely intelligent and fair people behind the scene.
 
Thanks. I trade the real market too so i know how it works. Actually what happens most of the time and the reason why the market gaps is because the liquidity completely disappears, well it does in the spot market anyway, then gradually bids and offers come back in, and because the banks are price makers instead of takers, you will be filled at the best offer or bid. Boom!

if you are bidding at /60 you are the liquidity until you are taken out or you pull your order
 
But if the price is 44 at 45, and i bid 50, i get filled at 45, not 50.

yes, thats right.

you cant bid at 50 if its 44/5 because your limit will immediately be filled at 50 or better, which in this case is 45.

if you want to bid at 50 with 45 offered you need to put in a stop limit order to prevent the bid being sent to market before 50 has traded.
 
My thoughts exactly. I have traded via Fxcm along with other brokers on that same platform and have always received horrible fills, always slipping, even with small size.
I swear that platform is a total scam.

Oanda rocks, I think there are some extremely intelligent and fair people behind the scene.

i dont know anything about fxcm but i think oanda are a very good outfit. i dont know why other people dont trade with them and use others for charts and things.
 
I'll give an example of exactly how I determine risk per trade. Since I trade spot forex and only scalp or daytrade there is very very little risk for extraordinary gap in price and zero overnight risk. This may not apply to other markets so you need to assess your own risk parameters, but this is how I do it.

example: $5000 account, day trading/scalping only, eurusd and audusd
normal stop loss: 10-15 pips.
max unthinkable gap against me: 400 pips - this is very very unlikely while daytrading.
$$ loss I'm comfortable with at the max gap: $1000 -- 20% of account drawdown at max gap.

So we calculate: $1000/400 = trade size of $4/pip
If you can average just 30 pips per week thats $120 profit each week. Very possible for experienced profitable scalpers.
$120/week @ 50 weeks = $6,000 per year (2 weeks vacation!) on a $5,000 account

These results are not only possible, but very conservative. Now if you are trading for a living multiply everything by 5 and you get a decent weekly income. This is not just bulls**t theory. I've been trading for many years. First and foremost is making absolutely sure you can survive another day no matter what happens. Easier said than done for new traders, I understand.

I would suggest a new trader who is not yet profitable only use $2/pip to preserve account size until better days.

One problem I see all the time with new traders is they are expecting to make a several hundred a week with $5000 or smaller account and anything less isn't very appealing especially after seeing all the ads for making huge $$$$. Eventually they take risk they can't handle.

I welcome any comments!


Peter

Resurrected this from a link on a current thread.

Quite apt thread post Swiss hanky-panky anyway.

Anyway, excellent post Peter and a great header as to what is indeed achievable in trading.
 
the SNB move is a timely reminded of the path traders walk........and that Trading risk is not just merely the strategy you adopt......it encompasses all parts of the business model ......like the partners you chose to place your money with

N
 
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