Question from a beginner

[hindsight]

I'm very new to the currency markets and as such haven't opened a specific forex dealing account. I've been monitoring prices with my IG index account and effectively paper trading behind the scenes.

My question involves the level of margin required to spread bet currencies. I currently use a limited risk account with IG, and as you know this does exactly what it says on the tin, albeit for a significantly wider spread.

When i looked into trading currencies in the same way I found there seems to be the need for a large margin requirement. In the case of Sterling/Dollar, even with me betting at the lowest £2 a pip level, it appears to require a multiple of £175 per point bet.

Can anyone explain why this is the case, as i would have thought that having a limited risk account works heavily in their favour in volatile markets. As having your stops kicked out early will surely be a factor. I think i must be missing something here, and would really welcome any guidance.

Thanks in advance, and as always apologies for the low level of knowledge on the subject!

James

 

[rossored]

Try someone like FXCM for Forex : its about 55p a pip minimum, and I think the margin requirement is less.

 

[hindsight]

Thanks for the quick reply. I was hoping to trade in a small way until i found my feet. Are there any spread betting accounts out there which offer limited risk accounts that don't require excessive margin requirements?

 

[GotGold]

Why bother,
Just set up a dedicated FX account. The stops and limits are free and the spreads are tighter. The software is better (try GFT deal book.....best charting going).

and if you make enough money for the tax man to notice............ no, on second thoughts thats too far fetched, lets keep it real here!

 

[hindsight]

Thanks GotGold,

Thats the route ive started leaning towards. I'll give GFT a look. I'll ignore the tax comment......

 

[hindsight]

Why bother,
Just set up a dedicated FX account. The stops and limits are free and the spreads are tighter. The software is better (try GFT deal book.....best charting going).

OK, I downloaded their trial software and it does look very impressive, but as i suspected its a little too advanced for what I'm looking for initially. Can you tell me what their opening balance requirements are, and their min trade values? Alternatively a system that might be a little less complex for someone starting out and wanting to wet their feet rather than take a bath.....

 

[jsd]

have a look at ig markets forex cfd's 3 pip spread on cable, and they offer guarenteed stops on cfd's for a spread of 5 pips. but of course liable to tax charge on profits via cfd. they do mini cfd's as well. margin details on their site.

jsd.

 

[GotGold]

GFT software is not complicated when you get used to it. Just maximise one chart at a time and practise changing the scales and indicators.

I wasn't having a dig at you earlier....fact is it's extremely difficult for anyone to make money in the FX market. Whatever you do, your unlikely to be consistently profitable for several years, if ever.

I think the min start up is around $1000 but i'm not sure.

 

[GotGold]

Probablility is you'll lose money, you must be prepared for this.

 

[hindsight]

GFT software is not complicated when you get used to it. Just maximise one chart at a time and practise changing the scales and indicators.

I wasn't having a dig at you earlier....fact is it's extremely difficult for anyone to make money in the FX market. Whatever you do, your unlikely to be consistently profitable for several years, if ever.

I think the min start up is around $1000 but I'm not sure.

I appreciate there is a learning curve for any financial instrument, but surely money must being made in this market or why trade it in the first place.

My situation is slightly different as my primary business trades in US dollars and accounts for about 90% of our revenues. Day to day we have been handling dollars / sterling for a little under 7 years. After all this time I felt it might be interesting to extend my normal trading (stock CFD's) to encompass a market we already follow closely.

 

[Roberto]

Have a look at Capital Spreads as well. Their spread on Cable is smaller than FXCM and the margin is a lot less than IG. Best customer service, too.

 

[sid392]

Hindsight,
If you have an IG account, you can trade FX Spot Sterling/Dollar with a 36 point margin. Just speak to the dealers to let them know you want to place the minimum down. (eg.. £2 per tick - 36 tick margin = £72 at risk) - Just be sure you know your market......... in this market it is easy to loose a lot of money if you get it wrong, or make a lot of money if you get it right.

Good Luck.

Just go in small and keep it real, until you get a better feel for it..

 

[hindsight]

Hindsight,
If you have an IG account, you can trade FX Spot Sterling/Dollar with a 36 point margin. Just speak to the dealers to let them know you want to place the minimum down. (eg.. £2 per tick - 36 tick margin = £72 at risk) - Just be sure you know your market......... in this market it is easy to loose a lot of money if you get it wrong, or make a lot of money if you get it right.

Good Luck.

Just go in small and keep it real, until you get a better feel for it..

Thanks Sid, reading through their dealing handbook i could make sense of their requirements as its focused mainly on none limited risk account holders. Your explanation makes sense as to what i expected to see.

I noticed that finspreads offer £0.50 per tick trading, do you know if its worth switching from IG whilst i find my feet so to speak.

 

[sid392]

Thanks Sid, reading through their dealing handbook i could make sense of their requirements as its focused mainly on none limited risk account holders. Your explanation makes sense as to what i expected to see.

I noticed that finspreads offer £0.50 per tick trading, do you know if its worth switching from IG whilst i find my feet so to speak.

It's up to you mate, IG are as good as the next when it comes to SBing, on any market. you can go as low as £1 per tick with IG. Try to make it a hobby rather than a job, go in small to earn small, the more you make the more you can stake. give a shout on msn.

 

[hindsight]

GFT software is not complicated when you get used to it. Just maximise one chart at a time and practise changing the scales and indicators.

I wasn't having a dig at you earlier....fact is it's extremely difficult for anyone to make money in the FX market. Whatever you do, your unlikely to be consistently profitable for several years, if ever.

I think the min start up is around $1000 but i'm not sure.

I've had a few hours using the system and your right it does start to come together OK. The interface is very smooth. After speaking to their customer service guy, i found out the min deposit is $2500 and the margin percentage is 1%. The spread is 4 points on the GBP/USD. Minimum trade is 1 lot which is the equivalent of $10 per pip. Currently they only support Dollar/Euro/Yen for base trading currency, with sterling coming online in 2005 apparently.

 

[hindsight]

It's up to you mate, IG are as good as the next when it comes to SBing, on any market. you can go as low as £1 per tick with IG. Try to make it a hobby rather than a job, go in small to earn small, the more you make the more you can stake. give a shout on msn.

Thanks again Sid, the only issue i have with IG is the size of their spread. 18 points is a lot of movement to see go to waste. Finspreads operate on a 6 point spread.

Whats your MSN handle? Mines: jamesketchell