Thinking of Switching over to Currencies

[JahDave]

Correct they do. For short term traders that is definitely not advised. For my trading style where I keep the stocks for months to years it takes time to build a position itself.



Correct I think I am too soon to go to that judgement however with all the crap on the internet about forex brokers manipulation schemes it gives rise to many suspicions.



I have traded hourly charts of forex on demos so far to test it out. Momentum trading and investing techniques work a lot better with forex simply because of its movement. I am just a bit hesitant due to its extreme volatility but that also probably relates to the techniques involved rather than blaming the sports itself.

I will test out demo sometime more before shelling out real $$$.

Gratitude for inputs.

If you are worried about broker manipulation then you could always use multiple brokers..............There is no shortage of them and unless you are scalping then the several minutes it would take you to place orders with multiple brokers should not create a problem.

 

[safvan]

If you are worried about broker manipulation then you could always use multiple brokers..............There is no shortage of them and unless you are scalping then the several minutes it would take you to place orders with multiple brokers should not create a problem.

Much gratitude.

 

[JahDave]

Much gratitude.

I currently have 4 brokers that I use.

Good Trading,
Dave

 

[safvan]

I currently have 4 brokers that I use.

Good Trading,
Dave

Good idea. Gratitude.

 

[nunrgguy]

From some of the opinions here you'd imagine that no-one had ever seen an FX monthly chart.

Liquidity problems, yeah, while you get the odd gap in FX it's nothing like the gapping you get in stocks.

Short term traders use risk, long term traders use net exposure. Not necc the same things.

Manipulation..NFP?? Hundred pips or so. If you're a true positional trader it's nothing, just a ripple in the ocean. Manipulation of stock prices? Enron?

OTC CFD's, why does anyone in the UK bother with them? Exactly the same instrument as SB just not in a 'tax free wrapper'

I'm saying no-one is right or wrong but what I'm saying is that opinions can be formed by trading style and not always seeing the other side of the coin.

 

[0007]

I'm saying no-one is right or wrong but what I'm saying is that opinions can be formed by trading style and not always seeing the other side of the coin.

Very good point. It's so easy to adopt the "closed mind" culture.

 

[new_trader]

OTC CFD's, why does anyone in the UK bother with them? Exactly the same instrument as SB just not in a 'tax free wrapper'.

Incorrect. CFD's don't expire and you get dividends or interest payments depending on whether you are long or short.

 

[Black Swan]

Very good point. It's so easy to adopt the "closed mind" culture.

Yep, good points made by both of you, there's a buy and hold culture with stock amongst millions of stock holders, why not a buy and hold culture with currency? How many millions of folk do nothing re their savings, just leaving them in the bank to earn less than 1% interest whilst inflation erodes their egg by 5%, when alternatively they could attempt to position trade (buy and hold) currencies?

 

[nunrgguy]

Incorrect. CFD's don't expire and you get dividends or interest payments depending on whether you are long or short.

True. But the differences really are negligable.
CFDs are essentially the same product as SB but in a different wrapper. SB was around first.

There are many subtle differences if you have to nit pick but they are essentially the same. One difference is the average losing trader can offset capital losses with CFD. But if you are a winning 'trader'; with SB there is no capital gains to pay.

In terms of actual dealing costs there's not much in it at the small retail level.

What else? Erm...rolling daily contracts do not expire. Quarterly contracts can be rolled over.

There are interest payments with SB just the same for overnight.

Dividends on CFD's, yes.

No dealing commision on SB but spread obviously wider.

Margin costs/leverage required are typically the same.

OTC CFD is just as opaque as SB, unless DMA, provider is not obliged to hedge btw- bucketshop same as SB.

 

[wackypete2]

Yep, good points made by both of you, there's a buy and hold culture with stock amongst millions of stock holders, why not a buy and hold culture with currency? How many millions of folk do nothing re their savings, just leaving them in the bank to earn less than 1% interest whilst inflation erodes their egg by 5%, when alternatively they could attempt to position trade (buy and hold) currencies?

Most people don't understand how the currency markets work or what makes pairs or single currencies go up or down, but they can relate to oil prices rising = larger dividend or share price on their Exxon Mobil holdings. It's a fear based on ignorance. They can relate fundamentals to stock pricing but not to currency pricing.

Peter

 

[Black Swan]

Most people don't understand how the currency markets work or what makes pairs or single currencies go up or down, but they can relate to oil prices rising = larger dividend or share price on their Exxon Mobil holdings. It's a fear based on ignorance. They can relate fundamentals to stock pricing but not to currency pricing.

Peter

Good points..

 

[forexproptrader]

I trade stocks. Do okay but it sort of limits the abilities. Currencies are hot now days. I was wondering what the possible advantages are of currencies. I am aware of low margin requirements but why have many traders moved to currency trading instead of traditional stock trading?

Thank you.

I used to trade equities and now that i trade FX i would never go back to stocks. 24/6 trading, 4 trillion daily turnover, much tougher to manipulate then stocks, no enron's, etc....leverage is awesome too.

 

[BeginnerJoe]

Dividends on CFD's, yes.

There is dividend in SB too. They pay you a cash equivalent.

 

[nunrgguy]

There is dividend in SB too. They pay you a cash equivalent.

There you go then, to all intents and purposes sweet FA difference. I wasn't aware of that one. If I buy shares I only buy the underlying, I've never traded them on margin.

 

[BeginnerJoe]

There you go then, to all intents and purposes sweet FA difference. I wasn't aware of that one. If I buy shares I only buy the underlying, I've never traded them on margin.

I didn't know either until suddenly they put 500 big ones in my account. So I went right ahead and blew it away. The down side to SB is the time element. I have no idea what is the cost for rolling over.

 

[George12]

I trade stocks because in the main (well, my ones anyway) because they're slow, steady, boring, predictable and decently profitable. Never found that to be the case with fx but presumably many do.

Slow steady boring predictable ............ all good stuff.

 

[new_trader]

I didn't know either until suddenly they put 500 big ones in my account. So I went right ahead and blew it away. The down side to SB is the time element. I have no idea what is the cost for rolling over.

So are the dividend payments on a spread bet tax free?

 

[BeginnerJoe]

So are the dividend payments on a spread bet tax free?

They call it Adjustment for Dividend. If it's not dividend, I don't see why you would be paying tax on it. But I suggest you find out for yourself. As I have thrown it away, I ain't paying no damn tax. I just looked again, and it's actually 600 big ones. It paid for a bit of my training at least.

 

[nunrgguy]

Here you go
http://www.financial-spread-betting.com/Dividends-spread-betting.html

Some of it sounds a load of sh1t tbh re witholding 20% etc but it's their book and they can do what they want.

 

[brettus]

Also CFDs are based on fake liquidity as they are synthetic. There is no paid up capital or other legal mumbo jumbo.

You could create a CFD to trade *trolls on forums* if the broker is willing to create the market for it.

They are really risky because I do not believe any broker out there has the financial capacity to be a complete market maker for so many companies out there by just following their prices.

If you were to accumulate a $10 Million dollar position for a CFD stock that is trading say at $20. One year down the line it is trading at $80.

How is your broker going to generate $30 Million dollars to pay you on top of your initial investment? In this case a CFD broker needs to continuously make sure to keep enough money in their account to pay for the profitable trades. For small profits they can probably afford it but what about large ones?

I believe strongly trending stocks like apple etc are seriously hurting CFD brokers because trading them is easy for simple buy and hold.

Very fishy market. No wonder it is banned in the US.

No way any broker would take on a trade that size, without hedging like 95% at least in the market.