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Anyone with FX experience?

Hi,

I’ve started applying the same algos I have to trade stocks with to FX, and like the results. I’m interested in doing this because work basically has my balls in a vice grip when it comes to trading. I very seldom am able to get things pre-cleared. To make it worse, I like trading options, and there’s no guarantee that even if I can get cleared to load an options trade, that I’ll be cleared to sell it before it expires. I also have to hold those options for a minimum of thirty days - yeah, which is a deathtrap. However, there are absolutely no restrictions on me trading currencies… shwing! 

I have a few questions, maybe we could even connect in private?

1. What broker is the best? 
2. Specifically, I’m looking to trade options on currencies, which brokers will do this? 
3. Minimum account size to do point 2?
4. In a given 6 month time span, let’s assume I take 20 options positions, and that in each position I’m risking no more than 5% of my total account. I understand how this plays out in equities, but how will this play out on currency tradnig? I guess the question I’m asking here is how do you measure volatility on currencies? Just like you would with stocks?

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Only in the most important fx, gold.

Sweep the Leg wrote:

Only in the most important fx, gold.

I say this out of pure ignorance… but gold sounds like it’s not volatile enough

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You would probably trade gold using futures, so I doubt you’d have a problem with not being able to expose yourself to enough volatility. FX are generally less volatile than equities. You can measure this through historical or option implied volatility. However, if you are looking to trade options, you would be able to afford more options for a less volatile underlier. So this doesn’t mean you would have to take less risk.

I’ve only traded FX through tools that are not available to retail customers, so can’t recommend any specific retail broker. As in most of these brokerages though, the Top 5 or so are probably about the same. 

Also, I know you didn’t ask, but this is probably a bad idea, since it is pretty clear that you don’t know what you’re doing. It’s your money though.

“Visit the Water Cooler forum on Analyst Forum. It is the best forum.”
- Everyone

dont do it.

currency is a **** investment. its all speculation.

less regulation. more leverage. 

gold, which is not a currency (indirectly used to back currency though), is the only thing that’ll beat inflation in long run! :)

I love my cheese. I got to have my cheddar.

I forget what broker (maybe Interactive Brokers?) has a trial period to try trading fx. You get to run a paper portfolio for a month. 

In my very limited experience, fx seems to be one of the more difficult asset classes to predict. I’d echo ohai and caution against getting into it unless you want to really dive in.

ohai wrote:

You would probably trade gold using futures, so I doubt you’d have a problem with not being able to expose yourself to enough volatility. FX are generally less volatile than equities. You can measure this through historical or option implied volatility. However, if you are looking to trade options, you would be able to afford more options for a less volatile underlier. So this doesn’t mean you would have to take less risk.

I’ve only traded FX through tools that are not available to retail customers, so can’t recommend any specific retail broker. As in most of these brokerages though, the Top 5 or so are probably about the same. 

Also, I know you didn’t ask, but this is probably a bad idea, since it is pretty clear that you don’t know what you’re doing. It’s your money though.

Well I sort of agree with you. I just know that the same algo I have to trade equities with works well with currencies. So I’m effectively losing money sitting here and not trading. I opened up a FX account and started trading a few pairs. I’m only using $1k to start. and risking no more than 5% a trade. So with a 70% win rate theoretically I should be able to at least make some dough over time. 

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Nerdyblop wrote:

gold, which is not a currency (indirectly used to back currency though), is the only thing that’ll beat inflation in long run! :)

Yes, it is. I’ve asked this question to people on this forum for 10 years now and no one has ever even replied, even when I got into this debate with Blake. If gold isn’t a currency, why is it counted towards a country’s central bank’s foreign reserves? Only fx is counted in foreign reserves.

Sweep the Leg wrote:

I forget what broker (maybe Interactive Brokers?) has a trial period to try trading fx. You get to run a paper portfolio for a month. 

In my very limited experience, fx seems to be one of the more difficult asset classes to predict. I’d echo ohai and caution against getting into it unless you want to really dive in.

Nerdyblop wrote:

dont do it.

currency is a **** investment. its all speculation.

less regulation. more leverage. 

gold, which is not a currency (indirectly used to back currency though), is the only thing that’ll beat inflation in long run! :)

The attractiveness is in the fact that I can do whatever I want though. I don’t have to pre-clear anything. 

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currency is a medium of exchange. so if you use gold coins to say buy your everyday transaction then i guess you can call it that. but nowadays with fiat currency, why would anyone mint gold coins or any coins for that matter (althought we still got a lot). if anything they’d melt that **** down and print paper! 

https://www.washingtonpost.com/news/wonk/wp/2014/12/15/it-cost-1-7-cents...

anything can be a reserve. Foreign-exchange reserves (also called forex reserves or FX reserves) is money or other assets held by a central bank or other monetary authority so that it can pay if need be its liabilities, such as the currency issued by the central bank, as well as the various bank reserves deposited with the central bank by the government and other financial institutions.[1]

I love my cheese. I got to have my cheddar.

To most people, currencies have an actual definition, where they have to meet certain criteria. You could argue that gold is a generally accepted medium of exchange - but it is a much weaker medium then normal money. You can’t walk into ShopRite and ask the clerk how many ounces of gold a pack of beer costs. At best, gold can only be called a currency under limited circumstances. The same can be said for a lot of things: cigarettes, Rolex watches, or others.

OP, oh I didn’t realize you had an “algorithm” that definitely works and that you’re just “losing money” by not trading. In that case, yes please continue.

“Visit the Water Cooler forum on Analyst Forum. It is the best forum.”
- Everyone

ohai wrote:

OP, oh I didn’t realize you had an “algorithm” that definitely works and that you’re just “losing money” by not trading. In that case, yes please continue.

It’s okay we all make mistakes. 

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Nerdyblop wrote:

currency is a medium of exchange. so if you use gold coins to say buy your everyday transaction then i guess you can call it that. but nowadays with fiat currency, why would anyone mint gold coins or any coins for that matter (althought we still got a lot). if anything they’d melt that **** down and print paper! 

https://www.washingtonpost.com/news/wonk/wp/2014/12/15/it-cost-1-7-cents...

anything can be a reserve. Foreign-exchange reserves (also called forex reserves or FX reserves) is money or other assets held by a central bank or other monetary authority so that it can pay if need be its liabilities, such as the currency issued by the central bank, as well as the various bank reserves deposited with the central bank by the government and other financial institutions.[1]

^Thanks for the copy pasta but take a look at any central bank’s fx reserves and find an asset that’s not currency/gold. They don’t hold art at the Fed.

I’ll concede gold is not a practical currency…until the zombies arrive.

I second that…I traded for a bit on Oanda..lost 20k in a month and never thought of trying it ever again. (btw i manage a pretty decent hedge book for work)

anshulnagar48 wrote:

I second that…I traded for a bit on Oanda..lost 20k in a month and never thought of trying it ever again. (btw i manage a pretty decent hedge book for work)

Guess covered interest rate parity held then? 

OMG though that’s brutal. Care to share how? 

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The nice thing about Oanda is you can pick your leverage and also use really small exposures if you want.  You can literally trade in a unit as small as $1 lol!  Give your algo a run using small units…. see how it does without exposing yourself to intolerable risk.

Also, most FX is commission free BUT you have to consider the spread (where the exchange makes its money)  Some pairs (specifically USD pairs) have smaller spreads.  This is definitely something to consider when picking which pairs you want to work with.  That said, not sure how frequently your algo trades… if less than once a day, these concerns are negligible, of course.

Why options on currencies?  

Let me know if you have any questions… I was a **** trader but I know tons about different platforms, tools, and product liquidity.

"But I don't think of you"..... Howard Roark

CEO10K-DAY wrote:

ohai wrote:

You would probably trade gold using futures, so I doubt you’d have a problem with not being able to expose yourself to enough volatility. FX are generally less volatile than equities. You can measure this through historical or option implied volatility. However, if you are looking to trade options, you would be able to afford more options for a less volatile underlier. So this doesn’t mean you would have to take less risk.

I’ve only traded FX through tools that are not available to retail customers, so can’t recommend any specific retail broker. As in most of these brokerages though, the Top 5 or so are probably about the same. 

Also, I know you didn’t ask, but this is probably a bad idea, since it is pretty clear that you don’t know what you’re doing. It’s your money though.

Well I sort of agree with you. I just know that the same algo I have to trade equities with works well with currencies. So I’m effectively losing money sitting here and not trading. I opened up a FX account and started trading a few pairs. I’m only using $1k to start. and risking no more than 5% a trade. So with a 70% win rate theoretically I should be able to at least make some dough over time. 

I’m skeptical of what you are saying here. With a 70% win rate your wins must be TINY…. or your are misinterpreting what your risk is.  Typically a high win rate is associated with greater risk taking.  When you say you are risking 5% do you mean your position size is 5% of your capital or do you mean you will let the exposure move against you by the amount of 5% of your account before you stop it out.  I would argue the later value is more meaningful because it accounts for leverage. 

"But I don't think of you"..... Howard Roark

He’s done studies, you know. 70% of the time, his algo works every time.

Image result for panther odeon

Algo, by Odeon.

'A flute with no holes, is not a flute. And a donut with no hole, is a danish'

I actually did laugh at all your jokes despite y’all being my heroes and all..not anymore though. . In my defense, it’s 2018, who DOESN’T have an algo? You guys trying to act like you’re stock pickers? I’m not doing anything that is over the top fancy with this, it’s a basic “buy high, sell higher” algorithm. And slow & steady wins the race…. 68% of the time. That’s not an OUT THERE kind of statement either… Now excuse me, I need some more avocado toast.

KMeriwetherD wrote:

CEO10K-DAY wrote:

ohai wrote:

You would probably trade gold using futures, so I doubt you’d have a problem with not being able to expose yourself to enough volatility. FX are generally less volatile than equities. You can measure this through historical or option implied volatility. However, if you are looking to trade options, you would be able to afford more options for a less volatile underlier. So this doesn’t mean you would have to take less risk.

I’ve only traded FX through tools that are not available to retail customers, so can’t recommend any specific retail broker. As in most of these brokerages though, the Top 5 or so are probably about the same. 

Also, I know you didn’t ask, but this is probably a bad idea, since it is pretty clear that you don’t know what you’re doing. It’s your money though.

Well I sort of agree with you. I just know that the same algo I have to trade equities with works well with currencies. So I’m effectively losing money sitting here and not trading. I opened up a FX account and started trading a few pairs. I’m only using $1k to start. and risking no more than 5% a trade. So with a 70% win rate theoretically I should be able to at least make some dough over time. 

I’m skeptical of what you are saying here. With a 70% win rate your wins must be TINY…. or your are misinterpreting what your risk is.  Typically a high win rate is associated with greater risk taking.  When you say you are risking 5% do you mean your position size is 5% of your capital or do you mean you will let the exposure move against you by the amount of 5% of your account before you stop it out.  I would argue the later value is more meaningful because it accounts for leverage. 

Wins can be anywhere from 1-300%, and I always like to walk away at negative 50% - this is in regarding options. I like to keep it so that my max loss is never more than 5% of my total portfolio. That way, even if I have a string of losses, I’ll still be alive to fight another day. But that intuitively makes sense to me, whereas I have to arbitarily decide what that 5% loss would look like in this landscape. Although, I think what would suit me best is spread betting??

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Al Gore rhythm

you basically need to come from a target school pedigree/work at prestigious firm in the US/have a really good connection.

- AF hivemind

brain_wash_your_face wrote:

Al Gore rhythm

Ya think that’s how turd dances? 

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currency imo is gambling and your gambling on **** prospects cuz they’re all fiat money where the central bank can print a ton to cause inflation etc etc. the buying power of $1 100 years ago is now equivalent to a nickel today. 

gold which imo is not really a currency appreciates just a tad faster than inflation cuz its more fixed.

I love my cheese. I got to have my cheddar.

Nerdyblop wrote:

currency imo is gambling and your gambling on **** prospects cuz they’re all fiat money where the central bank can print a ton to cause inflation etc etc. the buying power of $1 100 years ago is now equivalent to a nickel today. 

gold which imo is not really a currency appreciates just a tad faster than inflation cuz its more fixed.

If I agree with you, can we go back to posting dope gif’s? Truthfully, I DO agree with you. But I can’t quit my job because of those things called bills right? I’d rather have the freedom to just trade options on a basket of 20 stocks and sit back and relax. But compliance probably wouldn’t even approve of me buying Enron. They literally don’t let us trade jack sht. It’s wrong. This is not want I wanted to go into finance for. But, instead of just sitting here all day with my pipi in my hands, I’m going to do at least SOMETHING to get my trading buzz on. So right now, it looks like it’s currency. 

I’ll be hoenst though, I would have at least suspected there would be more support for this than trading crypto currency? but maybe that’s my best move. 

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LOL….we’re just jealous that you’re having fun and have this urge to make you as miserable as we areindecision

"But I don't think of you"..... Howard Roark

by all means do as you please. im just giving the 411 from what i experienced. 1k is really nothing. i mean when i was in college. i was buying and selling options my junior year. i had like 5k total at about 500 to 1k per trade with 9 mos+ options. i ended with 6k and an ipad. it was suppose to be a lot more though. i think my highest balance was 10k, all within a year. i prolly spent 1k in comissions. the ipad cost like 500 bucks and spent like 300 dollars on stock apps. i bought this really cool $80 app that tracked how time decay affected an option. i quit doing it because it felt really dumb that half of my profits essentially went to comission. but my exposure to the subject lead to an internship for me my senior year.  i was hired to collect data on option premiums for different stocks, essentially covered calls. lol. anyways i quit the internship cuz i got a job offer at a sas consulting firm b4 i graduated. my main focus was just to get charter and learn at work. so just because you dont have skin in the game doesnt mean you’re not learning. but you also learn more about yourself when you have skin in the game so i guess its best to do it when you are only risking very little!

I love my cheese. I got to have my cheddar.

Nerdy is on point.

Even though I personally failed in markets, I am really glad I had the experience and the lessons I got out of it.  My perception of risk vs reward, data analysis, bias, statistical validity, and academia vs experience have all been molded for the better.   I use what I learned ALL THE TIME.   I too took small risks or learned though testing/ paper trade so I am able to enjoy all I got from the experience without the large cost.  Sounds like you have better luck than me when it comes to what products/ strategies you focused on but do be careful! Technically based edges have a shelf life!   I hope it all works out, but even if it does not, you will end up as I did with the consolation prizewink

Also, actually don’t know much about spread betting….. It was big with the UK traders though.  

"But I don't think of you"..... Howard Roark

Nerdyblop wrote:

dont do it.

currency is a **** investment. its all speculation.

I like the assessment from my old IBer boss, who was a big shot FX guy back in the day…

Nobody knows WTF is going on. Oh…and never hedge.”

It’s a total cluster, I just admit I’m 100% ignorant, and stay away from it as a separate asset class.

Account is sitting at a realized gain of +3% after one month. I think that’s pretty good considering this is the stupidest crap shoot investment you could ever make.  

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3 percent is good for a month. A cagr is 43 percent per year. The key is if you can keep it up.

I love my cheese. I got to have my cheddar.