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Is it safe to trade Forex for Living ?

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  • Is it safe to trade Forex for Living ?

    Hi..
    Need your opinion, guys..

    Nowadays NFA has several statements that seems to disadvantage the retail traders. First no Hedging policy and then FIFO policy.
    I just wonder.. Since most of us including me have goal to trade forex for living, is it safe and is it still allowed to trade forex with relatively small of money. (below USD 10,000).

    Because my fear, if someday only big dogs and institutional are allowed to trade forex, so how about us the retail traders who already leave daily job and just depend our income on Forex ?

    Do you have any comments or opinion about this ?

    Regards..

  • #2
    Re: Is it safe to trade Forex for Living ?

    Originally posted by adrian1974
    Because my fear, if someday only big dogs and institutional are allowed to trade forex, so how about us the retail traders who already leave daily job and just depend our income on Forex ?
    I think it won't happen. But it would be a good idea to invest time and efforts not only in forex, just in case :-)

    Comment


    • #3
      Re: Is it safe to trade Forex for Living ?

      I can't see retail brokers disappearing any time soon.

      The NFA rules will probably clear out some of the smaller (and hence more risky) US brokers, however there are plenty in Europe and other parts of the world where the NFA has no say in what they do. If you're switching broker from the US to a broker in another country then you need to do some due dilligence to make sure that they're large enough not to go bust overnight. Normal low capital retail accounts are still available all over the place. Lots of folks are switching from Alpari US to Alpari UK and from FXCM US to FXCM UK to avoid the annoying NFA restrictions.

      I'm not sure how much you need to earn to live off per year, though a making a living from a trading pot of less than $10,000 would be impossible for a lot of folks.

      Even if your worst nightmare happened and all retail brokers disappeared overnight, then there are other options for manual trading such as spread betting (common in the UK, though I'm not sure about elsewhere) or trading forex futures direct on the CME via a futures broker.

      Comment


      • #4
        Re: Is it safe to trade Forex for Living ?

        I believe that Forex is the future- I had left the world of stocks because of the restrictions in the US markets. There are cheap penny stocks too, but they tend to stick to one's hand when trying to sell them, so currency seems to make the most sense to trade, especially if you wish to trade short as well as long. Stay out of the NFA member brokers though, they are the ones with the new restrictions...I have transferred all investment capital out of the US, which really is a waste, but that's the way they seem to want it. Good luck to you!

        Comment


        • #5
          Re: Is it safe to trade Forex for Living ?

          Originally posted by soundfx
          I can't see retail brokers disappearing any time soon.

          The NFA rules will probably clear out some of the smaller (and hence more risky) US brokers, however there are plenty in Europe and other parts of the world where the NFA has no say in what they do. If you're switching broker from the US to a broker in another country then you need to do some due dilligence to make sure that they're large enough not to go bust overnight. Normal low capital retail accounts are still available all over the place. Lots of folks are switching from Alpari US to Alpari UK and from FXCM US to FXCM UK to avoid the annoying NFA restrictions.

          I'm not sure how much you need to earn to live off per year, though a making a living from a trading pot of less than $10,000 would be impossible for a lot of folks.

          Even if your worst nightmare happened and all retail brokers disappeared overnight, then there are other options for manual trading such as spread betting (common in the UK, though I'm not sure about elsewhere) or trading forex futures direct on the CME via a futures broker.
          Great response.
          Thanks a lot Soundfx..

          In Indonesia we can trade for living just only 10 pips a day in standard lot. Why ?
          Suppose we gain only 10 pips /day, that means we earn USD 100. Just averaging all profit in 25 days (profit = Win - losses) and the result we just get only 100 pips (means USD 1000).
          Then at the end of the month we are making Withdraw (minus USD 20 TT charge) so the result are USD 980. And in Indonesia USD 980 equal IDR 9,898,000 (according current rate at this morning)
          That's the sallary of Middle Manager, and we can make living on that.

          And if we have enough confident to grow our skill and psychology and offcourse MM, we can get more than 10 pips.

          That's why I think It's possible to trade for living in Indonesia.
          What I fear about regulation is only if they change the rules so it's difficult for us the retail trader to trade with small money.

          Yes maybe stock is the alternate, but huge money needed.
          By the way what is Spread Betting? I just hear that.

          Thanks all..

          Comment


          • #6
            Re: Is it safe to trade Forex for Living ?

            Originally posted by gpcode
            I believe that Forex is the future- I had left the world of stocks because of the restrictions in the US markets. There are cheap penny stocks too, but they tend to stick to one's hand when trying to sell them, so currency seems to make the most sense to trade, especially if you wish to trade short as well as long. Stay out of the NFA member brokers though, they are the ones with the new restrictions...I have transferred all investment capital out of the US, which really is a waste, but that's the way they seem to want it. Good luck to you!
            Hi Gpcode,
            Interesting one..

            Suppose we move to European based brokers, do we have to change our capital to EURO ? Because it can be a disadvantage when our rate weaker than EUR.
            And is there any "NFA - like" in European country ?

            Thanks..

            Comment


            • #7
              Re: Is it safe to trade Forex for Living ?

              Dear all...

              Please narrow our discussion to NFA statement or Trading Regulation.
              We are not talking about system, Money Management, but more intense in trading regulation, specially in Forex retail trading.

              Because nowadays, NFA has released their new disadvantages rules to their member. And ironically, we choose broker who are the member of NFA. Because we think it will be saver to put our capital to them.

              But thanks anyway for all comments.

              Comment


              • #8
                Re: Is it safe to trade Forex for Living ?

                Adrian1974,

                That's great if you can earn a living from less than a $10,000 pot - life is certainly different in Indonesia !

                Spread betting is popular in the UK because it's curiously classed as gambling and hence not relevant for capital gains tax. I've used it before for spread betting in Stocks, Index moves and Currencies.

                I use IgIndex for spread betting, though there are various other companies. It's very similar to Forex trading, though instead of actually buying/selling currency in the market using leverage from a broker, you're betting on the the move of the currency pair. Hence you don't buy lots of a currency pair, you place a Long or Short "bet" for $1 a pip or $10 a pip or whatever. You can close your trade at any time and can adjust targets and stops just the same as when FX trading.

                You can use all the normal ordering facilities such as limit/stop orders etc., however I don't know of any spread betting companies which use MT4, so you have to use their own charting facilities (which can be pretty good though there's not much scope for automated trading).

                The spreads for spread betting companies used to be a bit wider than some FX brokers, which has made them unattractive in the past, however these have been recently improving significantly for majors such as EUR/USD and GBP/USD. These are 1 and 2 pips respectively at IgIndex in the main session for the UK and US.

                Comment


                • #9
                  Re: Is it safe to trade Forex for Living ?

                  Originally posted by adrian1974
                  Hi..
                  Need your opinion, guys...Because my fear, if someday only big dogs and institutional are allowed to trade forex, so how about us the retail traders who already leave daily job and just depend our income on Forex ?

                  Do you have any comments or opinion about this ?

                  Regards..
                  Hi Adrian1974,

                  It depends on how you want to look at it. From a standpoint of; is our money safe in our broker's hands? it all depends on the broker and the circumstances. No matter how many regulations you have, no broker is totally safe (remember REFCO?) but these new NFA minimum requirements for funds of 20 M$ will certainly weave out the small (and sometime unreliable) brokers. Is this really good? I'm not sure because often those "big" brokers are the worst offenders. FXCM for instance, as been penalized many times by the NFA for all sorts of reasons.

                  If you’re looking at it from the perspective of safety for traders long term survival, then no, IMHO it’s unsafe. Actually, trading in general, and particularly FX trading, is extremely unsafe to do, and this in almost all areas; It's dangerous for our financial health because it's so easy to loose all our money through greed, fears, etc (>90% of traders fail), it’s dangerous for our physical health (trading can put immense stress on our bodies) and it’s even dangerous for our mental health (traders can become the equivalent of pathological gamblers)

                  Having said that, it can also be immensely rewarding if we can overcome these obstacles! BUT still, if one of my friends would ask me advice on whether he/she should quit their day job to start trading I would definitely answer: Are you nuts??? Learn trading a few years, make sure you are profitable, and then maybe, just maybe, quit your regular job to trade full time. BTW, I doubt very much that big dogs/institutions and even governments would ban trading for small investors like us because they have way too much to loose by stopping us. They created the retail FX market because it's another way for them to make money from us. A kind of tax on the “hopefuls”

                  Comment


                  • #10
                    Re: Is it safe to trade Forex for Living ?

                    Sincerely speaking your fear is justifiable. I dont know what the regulators are after. I myself have started to have a rethink. Pls let us spk up on this issue.

                    Comment


                    • #11
                      Re: Is it safe to trade Forex for Living ?

                      Sincerely speaking your fear is justifiable. I dont know what the regulators are after. I myself have started to have a rethink. Pls let us spk up on this issue.

                      Comment


                      • #12
                        Re: Is it safe to trade Forex for Living ?

                        The US regulators are trying to make FX trading more "respectable" by preventing unscrupulous brokers from preying on newbies who hedge their trades rather than taking an initial loss, hence paying spreads twice. The conclusion being that since 95% of new traders eventually blow their account that both of the trades which are entered are likely to end up being losers and the gullible punters are being encouraged to hedge their trades as protection against risk by brokers who want them to lose every trade.

                        It's common practice with retail brokers to gather all trades together and place an opposite trade against the consensus direction of their customers. Again, the brokers being aware that most traders lose, ensure that they make a tidy profit on this ruse. The NFA can't prevent this sort of action, so they've gone for the simplest target which is the perceived unnecessary spreads encountered in hedging.

                        I completely disagree with their rule, however I can see that was the only thing that they could do (to prove their worth and prevent a bunch of redundancies) given their remit.

                        Whatever happened to people taking responsibility for their own trading (and lives) ? The US are entrenched in a "someone else's fault" society and the plague is spreading fast (soon every other person will be a lawyer lol). If you're a bad trader and blow your account by hedging it's really noboby else's fault other than your own, so why on earth do we need regulatory jerks telling what we can and can't do ?

                        I personally use hedging from time to time for specific reasons, e.g. If I have a Short trade currently in drawdown which is experiencing quite a big loss in the morning and I have to go out all day with no access to a computer screen, then I will hedge...why ? It "freezes" my loss against market action that I can't see. I will only do this if I believe that my Short trade is going to come good soon based on recent price analysis. If a recently formed Long trend was storming into the stratosphere, then I would have closed my short for a loss. Why take a potential big loss when I don't need to, particularly when I'm the one controlling the Buy/Sell buttons ? Fortunately I don't have any FX accounts based in the US, but if I did they'd be moved to the UK, Europe or Asia (in order of preference).

                        The NFA's remit is to clamp down on unscrupulous practices in the US only, so hedging is still freely available for brokers which are not based in the US - so why worry ?

                        What's happening is that the US brokers are establishing (or utilising more) "divisions" of their companies which are are registered in the countries in which they are based. For example, hedging on MT4 is still freely available with FXCM UK accounts, but not with FXCM US accounts. The fact that FXCM is a primarily US company makes no difference - the NFA can only apply to US based brokers.

                        Comment


                        • #13
                          Re: Is it safe to trade Forex for Living ?

                          Discipline I agree with, because if you are trading a system which you believe to have an edge over tossing a coin (I assume from assiduous backtesting) then you must follow your system to the letter. Don't just give up on the system when it has a losing trade (or several in a row depending on the system).

                          Money management is another matter altogether. What's the first rule of "money management" you learn as a newbie ? Always place a stop loss and as close as possible to minimise your risk lol.

                          What a joke this is. The problem is that without an appreciation of the typical market moves, tight stop losses always mean big losses in your trading account. Conversely, stop losses placed at strong areas of support or resistance are sensible. The point of a stop loss is to get you out of a trade as quickly as possible when you're definitely wrong - if you always place a stop at 10 or 20 pips etc. then you're destined for failure.

                          The side of money management which is most important is the proportion of your account you put on each trade. It's no good going for gold and betting 50% of your account on a trade with a 20 pip stop loss, you may be lucky a couple of times and feel like George Soros, however ultimately your account will be toast.

                          "Slow and steady wins the race" in trading. Particularly if you're trading for a living then consistent stable income is much more important than trying to achieve the equivalent of breaking the bank at Monte Carlo.

                          What percentage of your account you stake is up to you, some traders never risk more than 1% of their account on any one trade even though they may have $100,000's in their accounts. Where did those big accounts come from I wonder...? ;-)

                          Comment


                          • #14
                            Re: Is it safe to trade Forex for Living ?

                            Hi guys.

                            Before I say anything I want to remind you that what I'm going to say is just an opinion.

                            First of all, Forex industry is a very mysterious business. You need to learn a lot so you can manage gaining money. Of course as long as you gain money you will lose some. This is very normal. Now ask yourselves, how long would it take to be a good trader?? Normally on average, it takes about 3 years to be very good trader because as you know good traders always want to learn new things about forex such as strategies, new ideas, new indicators...etc, but there is always an exception. Smart people can make a shortage to all that so they can be good traders in less than the half of that period of time.

                            All what I mentioned can be true, but also can be on the other way. I mean if someone has just started Forex with big amount of money say 50K and knows how much to use (say 1~3%) it is possible and very possible that this newbie trader can make money from Forex for living.

                            In conclusion, Yes it can be good business for living and not depending on the circumstances.

                            I hope you guys work the hardest you can to get as much knowledge as possible so you can make money for living.

                            All the best.

                            Scarafce

                            Comment


                            • #15
                              Re: Is it safe to trade Forex for Living ?


                              Hi Gpcode,
                              Interesting one..

                              Suppose we move to European based brokers, do we have to change our capital to EURO ? Because it can be a disadvantage when our rate weaker than EUR.
                              And is there any "NFA - like" in European country ?

                              Thanks..
                              with most brokers in europe you can open an account in usd dollars. In europe we have also something like nfa. But they don't have such crazy rules.

                              Comment

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