Ok, I'll answer this a bit out of guilt lol.. Been a bit of an as$ I guess but it wasn't fun seeing the thread go offtopic for 2 pages.

You can be as active as you want but yes, you do have to be active.
There are time frames you can chose to trade in.
1m-5m-15m etc 1h-4h-1d-1w- etc etc.
Each time the tf has done it's time it starts on a new candle.

On second thought this answer till need way too much explaining I just realized and I don't know exactly how much knowledge you have, Maybe you don't know even what a candle is.

But you can trade as often as you like but you have to be active on the time frame you trade in.

great thread bro

I'll just say that I in no way approve this thread or endorse anything here and some of the concepts he tries to explain are either a) explained badly, or b) he doesn't know what he's talking about. Its interesting that people get involved in forex without understanding the basic market structure concept, ie how dealers swap and trade, how spreads are managed, and what underlying factors dictate the order flow.

Cool man, I care.

Seriously, don't post if you don't got anything to add, is that how you got so many posts? Just because you have to post something in every thread?

Tell me about: basic market structure concept, ie how dealers swap and trade, how spreads are managed, and what underlying factors dictate the order flow.

For a mod, you sure do **** up a lot of threads.

As a newbie, I'd actually love to hear about this. Are there many good forex resources out there or is it pretty much up to me to Google for scraps of information from various forums, etc.? I mean, I can just Google terms like "basic market structure," but having a list things of topics to Google would be pretty cool too. >.>

to be honest, i'll take a stab...but i worked for one of the "founding" currency consultants turned hedge funds (they were trading currencies before soros "took down" the ERM via the pound) and i barely understand what is being asked.

Basic Market Structure:
- art, i guess what you're going for here is how there are 2 exchanges? one OTC, one regulated by CME and other market centers? If this is the case then sweet. The spot market, to my knowledge, is run by a system of dealers from all over that process something like a tril/day in FX orders. the exchanges, however, trade far fewer $ worth (most is done otc). When you see those bids/asks flash across your screen w/o the "last trade" moving, that's b/c there are too many dealers around trading and no central mechanism to know which was the last trade (at least this is how it is for me in IB).

For the exchanges, they do mostly futures as I understand it (does the CME give spot quotes etc.?). At least that's what I've used them for in the past for whatever reason (took our USD/JPY bets that way a while ago).

For the other topics:
- how dealers swap and trade--> I don't know. I couldn't actually even describe a dealer, how they get their orders etc. All I know is that if i wanna buy some AUD/EUR, i double check my calcs and click "Bid" on the EUR.AUD line in the workstation lol.
- how spreads are managed--> again I guess I don't know this.
- and what underlying factors dictate the order flow--> same.

I guess it's possible i do know this stuff but don't recognize the manner in which it is being asked but I think i may also just now know (and maybe get reamed by stinkypete lol).

obv i didn't use google but isn't it a fair bet that if the OP wanted to he could and it would all be there (too lazy to check atm).

Barron

???

I trade USD.CAD as a side line...
Close to 100 trades/day and ramping up...
It costs me $2.50 to trade $100,000 on IDEALPRO...
It costs me $2.46 to trade a $94,000 CME contract...
Same rate even if you make 1 trade/year.

The average spread on IDEALPRO might be 2 pips...
The average spread on CME might be 1.5 pips...
So that averages out to 1.75 pips...
Simply scalping off the market a few pips...
While staying very close to market neutral...
A simple variation on market making...
Nets you the full spread...
Less if you suck... slightly more if you're good...
$17.50/100,000 less $5.00 roundtrip = $12.50/100,000...
Multiply $12.50 x 100 = $1,250/day.

And this is an experimental side line.

Just program the Bot and ramp up...
That's how trading firms make milllions $$$...
Consistently with close to zero risk...
They provide liquidity in return for the spread.

The only resemblance to poker...
Is being the casino and collecting rake.

The mistake that >>> 90% of day traders make...
Is CHOOSING the role of gambler instead of casino...
For reasons completely lost on me.

Are u doing market orders or limit?

I actually do a variation of this.

What kind of roll do you need for that type of scalping redman/cwar?

$5k per car (assuming a $12.50/tick CME contract) on the really aggressive side. $10k/car would be pretty safe and $20k/car on the nitty side.

I use a max stop loss of around 6 ticks and an average loss of about 3. Im still relatively new at this so I assign a pretty high probability to myself doing something stupid so thats a major BR consideration though, $5k would be relatively safe otherwise. I also dont use a market neutral perspective but I definitely take advantage of those edges RMP is talking about.

huh

Only Limit Orders...
Out of > 1,000,000 stock trades...
And about 10,000 Forex Trades...
I've probably placed < 100 Market Orders.

Back to Forex. I've been thinking about this: WHY am I successfully scalping such liquid markets... because if you don't know what your competitive advantage is... you don't have one.

A Limit Order 3-4 pips off the market often gets filled on a small move, meaning the spread has widened on the move... so you are not only capturing the spread... but often capturing a "widened" spread. This might apply to the CME on volatile days like last week.

And I get price improvement on IDEALPRO as much as 1/3 of the time... so I'm doing better than the average spread there on a continuous basis. The key here is to trade Forex ONLY on a legit ECN... of which there are just a handful open to retail.

but you can still have 20 losing trades in a row if you pick the wrong direction, no?

Assuming you are 50/50 (and you would be better than than that) losing 20 in a row would be very rare, like better than 1 in a million.

Asking questions of a guy claiming forex trading is a better way to make a living than poker is ****ing up a thread now?

I understand if you don't want to talk about it too much, but I'm assuming you use a bot as well? I'm just wondering if you did the programming yourself or not? This is really interesting to me and I obviously was aware the larger institutions used these methods, but I never really thought too much about individuals putting these methods to use.

How long does it usually take for your order to get filled?

Also if I understand this correctly you are paying 2.50 per lot on all usd pairs. So you are on making $10 or so per trade?

Do you trade exotics where they are wider spread? The wider the spread the better for u?

hey RedManPlus,

Are you trading the full contract or the CME e-minis? Do you have a program that finds the right conditions for the widened spread and then executes via IB api? 100 trades a day by hand seems kind of difficult. I trade e-minis right now and am working on an automated system based on a somewhat similar idea, but slightly less scalping based. If anyone wants to talk about automated trading/building trading systems PM me and we can bounce ideas off eachother.

I currently execute all my trades by hand on a Ninja DOM with ATM strategies.

This should probably be stickied and be mandatory to have posted in every BFI investing thread.

I scalp as well, and this is next to impossible to ever have happen. I've followed some blogs of scalpers, and it seems most people correlate scalping with super high volume. IMO there are definitely better and worse trades to scalp, and the vast majority of scalpers make waaaayyyyyyyy too many trades. They see a setup on a very small timeframe chart, and they go after it with no consideration for the bigger picture. Lots of your success as a scalper is directly influenced by the regions you choose to take those "setups"... you seem really savvy with Forex/trading in general (much better than myself), so I suppose I don't need to tell you how important it is.

In sum, scalping != making a bajillion trades. If you could choose the best 4-5 scalps in a given day, and make 10-20 ticks consistently, you are doing very well for yourself. If trades blow up in your face, you should re-examine why and figure out if you're in a spot where you should re-enter or you made a mistake on your initial read of the market. Obviously the key is to have this analysis done beforehand, so you can focus 100% of your efforts on execution.

You really don't want to bot. As I said in my last post, it's all about taking the cream of the scalping crop, not just mindlessly blasting away at any shooting star pattern etc.

I come from a CS background, and in my market studies, the one thing I can say definitively, is that creating an automated program is the absolute toughest way to make a profit... although it certainly has some high rewards and is possible (they exist!), it's just never the right way to start out.

If you can't successfully trade discretionarily, you will have an almost impossible time making a bot that works.

I created many different strategies when I was starting out, and only one exhaustion based program showed any real potential. Without any optimization it beat quite a few markets for the 3+ months I backtested (100 tick, so it's lots of data) for like 2-3%, which barely covers overhead. That said, it had tons of room to be optimized, but at the same time I discovered that it was a waste of time and effort to try to come up with some holy grail strategy. Plus, this thing I made just doesn't trade very often...certainly not enough to make a livable wage.

Forex is different to poker in a LOT of ways. You can start off in poker with a basic understanding and probably beat the micro stake games. With forex you jump right into the deep end and are competing with central banks and massive hedge funds.

Because of the leverage available, MM is even more critical than poker. It would be like a 25nl grinder using leverage so that he can play high stakes, if that makes sense.

If you are serious about forex, check out the Jacko and James16 price action threads on forex factory and obviously keep up to date with fundamental analysis and learn how different markets inter-relate. Also, nobrainertrades.com is a good website.