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Confused,…… or Forex / Currency Trading Question,….. or Efficient Inefficiencies 😛


lol gotta love that pic i found 😛

and no thats not me 😛

ok i used to trade the foreign exchange markets a few years ago. infact thats how i first got into the whole financial market world.

while i’ve scaled back my activities, i do still dabble on occasion, scalping a few points here and there.

but on the whole, for me its a crap shoot…… no matter how much analysis you do theres always going to be a 50% chance that the trade wont go your way,…… you may be right,….but the market does what it wants and if youre lucky it might vindicate you somewhere down the line……

if youre not broke by then that is 😛

having said that there are people who do make a decent living off of it, and i’ve resigned myself to the fact that i simply dont have their skills in the forex markets…..

i personally like the fact that i can visit the companies whose stocks i hold, sniff around and watch their business grow,….

and you cant really do that with currencies,….. ummm unless you want to call your summer holiday research 😛

anyway, i’m not going to argue the forex risk vs reward thingy cos its different for different people,… and betting on currency i know is not really my thing. (but coming from a forex background makes the stock market as easy as pie :P, see karma :D)

having said that,….

when i first started out,….edit that to:

when i first started losing money,… i had a thought,….the same thought that every newbie has:

eur/usd goes up,….usd/chf goes down,…. almost perfectly.

almost,….

so i asked the age old newbie question:

well why dont i put position on both, so one loss is canceled by one gain,… a hedge.

and before i finished the question,… the answer is apparent,….

cos you wouldnt make any money ya moron !!!

now in a perfect world,…. it should be zero.




but heres the thing,… eur trades at $10 a pip while chf trades at $8.50.

plus something i learned the hard way,…. all markets, whether forex or stocks or the chabra where you get your zucchinis are inherently inefficient.

ok to you non-traders who managed to read this far,…. the sentance above is like declaring my religion in trader ga ga 😛

so armed with my inefficient market place theory and the difference in price, i figured there must be something that i can take advantage of,…..

so i fired up a demo account,…

and without looking at charts or anything, i went long on the euro and long on the swissy,….

that was the whole point of this, market neutral, not to care which way it goes.

this was last night at about 2 am when i couldnt get the idea out of my head.

it ran slightly negative for the 30 minutes i watched it after placing the order. the negative got bigger to around -$150/170.

then i went to bed, woke up and it was around minus $50

so there was a move!

now if the market was efficient the balance between two trades should have been zero or almost zero. but its not, and coupled with the price differential,…. made me go hmmmmmmmmmmmmmmmm……

its been running all day, and the balance between the two trades hit a high of plus $189,…..

right now, its plus $115.

now i know theres something there,….. but i cant figure out why this is working or why it swung from negative to positive within 12hrs.

i also dont know exactly what is causing the difference in prices cos i doubt my simple inefficient market theory and eur/chf spread is all there is to it.

so i’m stumped, and i’m not gonna use real money until i figure this out.

so if anyone out there is a forex dude/gal, do drop me a line, i’d love to know what you guys think.

oh one more thing,… lets not get bogged down in arguments of how $100 a day is not worth the risk, cos :

a- a couple hundred dollars appears to be all the risk there is on the two units

and

b- if $100 is possible every 24 hours, then thats $500 a week, $2,000 a month, $24,000 a year ( approximately :P)…… and thats if you only ever use two contracts,…. what if you did 4 or 8 or 16 ?!?!

and

c- if after all that you still think its not worth it, then you surely wont mind giving me KD30 a day for every working day for the rest of my life would you ? 😛



so if anyone knows:

would it make sense for a trade like this to swing from minus to plus all day?

i could have gone short on both and be plus during the day but down now.

i dont get it,….

it cant be this easy, cos like i keep saying,…. karmas a bitch 😛

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3 Comments

  1. scaled, dabble, scalping, vindicate, hedge, pip, zucchinis are inherently?

    What’s with the Karma? You never mention Karma nowadays!

    I don’t get it, must reread some other day. Or you can explain it to me 😀

    How come you don’t have any comments here?

  2. Oh and then you wrote another post about Karma, it makes more sense.

  3. scalping in this context means taking a few dollars profit.


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