Forex Is Chic?

June 8, 2008

Here’s one trader’s perspective of what big banks will mean to Forex.

I actually think the development of the big banks coming to Forex is a good thing. They delayed their entry for years because of the "reputational risk" that exists when average joe trader does not like a fill or Trusting Joe lets Shady Jim blow, I mean manage his Forex account, and post nasty things about the dealer.  The good thing is that their entry makes Forex chic to a huge number of people who did not know about forex or who were sitting on the fence. Their marketing budgets are much deeper than that of the large FCMs. With more traders coming on board, the clout of retail trading will just get much bigger than the 10% of the daily turnover that we currently represent. I think a thing or two should be said about the "smart money" that is already part of the system. The logic is: smart money -> more operational sophistication -> more safety for investors. Of course, money alone will not be sufficient to make Forex free of Refco-like implosions, but it will make it less likely. Several very well funded private equity firms are equity partners of multiple Forex dealers: Gain Capital: 3i, VantagePoint, Tudor Ventures, Edison Venture Fund, Cross Atlantic Capital Partners, and Blue Rock Capital; FX Solutions: Francisco Partners; Interbank FX: Spectrum Capital; Oanda, GFT, the list goes on. . . most FCMs with $10m or more in adjusted net capital today have private equity money helping them to compete with the likes of DB and Citi. I think it makes it very interesting for all of us going forward.

Forex On Top Back From Hiatus

June 2, 2008

Forex on Top was updated this evening with the latest and greatest traffic rankings. Check them out at http://www.forexontop.com

Citi and Goldman Break Into Retail FX

June 2, 2008

Citi has been in the retail FX market for a couple of months now but it signals a continuing trend of big financial institutions trying to get a piece of our forex action.  Deutsche Bank was the first big bank to get in a couple of years ago (from what I remember) but it’s interesting to note that all these big banks did was partner with the bigger forex firms.  They blew up the sub-prime mortgage business, will they do the same to Forex?

Here are the notable partnerships between big banks and forex specific firms: 

Deutsche Bank is partnered with FXCM.

ABN Amro and UBS are partnered with Oanda.

Citi is partnered with Saxo Bank.

Goldman is partnered with CMC Markets. 

A Good Start

June 2, 2008

It’s only one day but after a terrible May, I’m committed to consistency.  I have systems that literally take a couple of minutes a day to look at so if I don’t put an order in, I’ll have to consider it laziness.

I started this oath of consistency by placing an order yesterday and broke my seven trade losing streak with a profitable trade.  

With that said, don’t be surprised to see little bits of blog posts from me.  I need to start writing more again and I find that starting out a little at a time gives me a mild sense of accomplishment that will hopefully get the creative juices flowing again.  

I can’t believe that this summer will mark three years of trading forex for me.  It hasn’t been uninterrupted but I’m still here.  Keep plugging away… 

Success

June 2, 2008

It’s only one day but after a terrible May, I’m committed to consistency i

Trading Forex Can’t Be a Part-Time Job

June 1, 2008

Trading forex takes a lot of commitment and unfortunately in May I lacked it.  I paid for this dearly with my worst month in a long time, losing 10% of my equity.  While this is disappointing, it’s understandable.   On the surface, I didn’t step outside of my trading or money management plan yet what I did was plain reckless.  I traded sporadically throughout the month, watching the market and opening positions some days and ignoring the market altogether other days.  Trading strategies are meant to be followed.  While trading sporadically could have just as easily put me up 10% instead of down, the point is that if you have confidence in your strategy, each and every signal should be acted upon.  In doing so, a balance can be obtained.  On the days that I ignored the market, I could have possibly profited by opening a position.  I only opened 8 positions this month compared to my average of about 20-22.  Typically I’ll open a position each and every day but look at the dates of my last 7 losses:

May 7, May 13, May 14, May 15, May 16, May 27 

There are huge gaps here where trades could have been profitable.  I would have most likely had losses also but there is no balance here and that’s the problem. 

So the bottom line is that trading forex cannot be a part-time job.  I’ve treated it as such this month and it hurt me.   The great thing is that I don’t have to go back to the drawing board or work hard to find out what’s wrong.  In June, the solution is to follow the market each and every day and follow my trading plan.  

So this ought to be a lesson to all of you traders.  Remain consistent or face the consequences of losing a majority of the profit you made the previous 4 months.  Out of the 80 or so trades I made between January and April, seven inconsistently spaced trading days in May wiped out most of my profit.