FOREX Trading

Nigel_Butcher

Hi All,

Does anyone have any thoughts on FOREX trading for the small investor? I'm just looking at the £ versus the Euro and US$ - it currently stands at 1.13 and 1.49 respectively. I wouldn't mind backing the £ to return to a 'par score' of 1.45 against the Euro and about 1.75 against the US$ over the next 12 months.

Anyone know how I would go about 'buying' £'s is that the world of options and futures??

Best,

Reaper

Have you considered spread betting since you have a clearly defined expectation. While I don't know much about Forex spread betting is not going to cost you as much in charges. Just be sure you understand how it works before diving in, in particular that your profit/loss can be more than your stake.

Nigel_Butcher

I've always been a bit scared of spread betting, in terms of the potential loss, but I might investigate a bit further...do you know any decent firms? cantor index rings a bell???

Dagobert

To get a basic understanding of Forex trading, have a look at https://www.babypips.com. They are specifically targeted at beginners. They have a "school" to get to grips with basic terminology such as leverage and margins etc.

I would also recommend joining the https://www.forexfactory.com forum. People are very helpful and by going through some of the threads you will get a better idea of the pitfalls and possibilities.

Most people seem to be using Forex brokers. However, other than with spread betting, any gains (if you are good enough to make any!) are subject to Capital Gains Tax. Spread betting is illegal in the US and so you will not find much about it on American facing fora.

In any case, both brokers and spred firms offer demo accounts and you shouldn't play with real money BEFORE you have proven that you can demo trade profitably!

And when you do go live find a spread betting firm that allows you to use really small stakes. £1 stakes are lethal, particularly in Forex markets if you don't know what you're doing!

Nigel_Butcher wrote:

I wouldn't mind backing the £ to return to a 'par score' of 1.45 against the Euro and about 1.75 against the US$

Do you want to bet or learn how to trade Forex?



PS: You will have to remove the link from your signature line. I am pretty sure that is against MSE forum rules.

97trophy

IG Index are a great broker.

purch

Anyone know how I would go about 'buying' £'s is that the world of options and futures??

It all depends on what size you want to trade. You can trade OTC Options in major FX pairs on many trading platforms (BARX, Sucden SMART, etc) but not in small amounts, £100K would be the smallest, so you would typically be paying quite a lot in premium for the option.


P.S. Back in the 'olden' days (mid 90's) you could walk into Barclays on Gracechurch St and buy a Put or Call on GBP/USD in small amounts. Now that was a real Over The Counter trade.

Nigel_Butcher

Thanks guys!

justpaper

read http://forums.moneysavingexpert.com/showthread.html?t=1674851&highlight=

http://forums.moneysavingexpert.com/showthread.html?t=1101143&highlight=

IGK

Looks to me that the spread betting route would be the easiest.
The trouble with buying pounds is that it is the currency you already have. For example, if you thought the dollar was due for a move up, then you could take some pounds, and sell them for dollars. If you're the other way round. i.e. you think the dollar will weaken, and you don't have any to sell, the you have to borrow the dollars first. Doing this is highly risky as you could lose an unlimited amount of money in the worst case. The worst case in the selling pounds scenario would be the amount you sold...

justpaper

the best ECN for low min account opening i can find is WH selfinvest

whselfinvest.com 2500£ to open accound, linked with Barclays for fund clearing read it about its forex product here http://www.whselfinvest.com/en/Forex_retail_investors.php

mzqa395

Retail Broker VS ECN Broker:

A retail forex company acts as the market maker for all your trades. They shade prices, widen spreads arbitrarily, and trade against you. Their basically modern day bucket shops. The advantages retail brokers provide are that you can open an account with very little money, they give you crazy leverage, and usually you can demo trade on their platforms until you learn what you're doing. Most of them also have micro and mini lots so you can trade very small sizes.

An ECN is like an interbank broker. They don't trade against you so there is no need to manipulate the price. They consolidate bank quotes and show you the best bid and offers available. Spreads are tighter, but you have to pay commissions. When you make a trade they pass it through to interbank, so the counterparty is a real trader. Leverage is generally lower and minimum balances are higher. Interbank trades in $100,000 increments, so you need to be large enough to fit $7-10 per pip trades into you rmoney management.

http://www.youtube.com/watch?v=BIYk8v_l_VM&eurl=http%3A%2F%2Fwww.hkreporter.com%2Ftalks%2Fthread-771101-1-1.html&feature=player_embedded