Short Term Forex Trade – No Chance

If you’ve ever logged in to an actual forex trading platform you’ll have noticed right away – a number of wonderful options for “entering your order”.

You’ve got trailing stops, market orders, limit orders….then of course the “one cancels other order” – and the ever so complicated  “if then? one cancels other order” – just to name a few. Each “order option” complete with its own little drop down menu’s providing you with “predetermined stop values” as well “predetermined take profit values” such as -25 pips, -50 pips etc……

Have you lost your mind?

The vast majority of Forex brokers act as “trading desks” – and in that small amount of time between you “placing” your order , and waiting anxiously to ” get filled”  – your brokerage has placed the exact “opposite order” on their own behalf – trading straight against you, and more or less banking on the fact that you are dead wrong.

The “predetermined stop values” and “take profit areas” are seen across the entire platform – and targeted daily!

Ever wonder why no matter how hard you try to trade the smaller time frames / short-term action – you wind up getting cleaned out? Duh! – You are showing your broker ( who is actively trading against you ) exactly the level to hit your stop!

Add this little nugget to the list, throw in the current volatility and complete “gong show” we call the market – and once again take heed.

Do not try to trade this!

5 Responses

  1. David May 16, 2013 / 7:32 pm

    Hey Kong, great post.
    I remember learning all about this years ago in one of my trading books called “Beat the Forex Dealer”; I used to wonder why my stop losses were sometimes hit on the pip, only for the position to quickly reverse and go in my favor leaving me out of profit and money. I no longer trade with Stop/loses; of course I use mental stops like most everyone else who has been trading for a while. I only leave my Take Profit orders in now and some market orders, as I’m a contrarian and if I like a pair that initially goes against me I just see it as a deal, much like an item that went on sale. This of course only works well with a pre-planned scaling strategy filling smaller position sizes..

    • Pot Stock Watch May 16, 2013 / 7:42 pm

      Fantastic David – you’ve clearly “run the gauntlet” and now have a “better than fighting” chance. Great work.

      I too trade in a scaled fashion with no stops…..and also look to add when a trade provides “further opportunity”.

      I hope other readers will learn something from our experience.

  2. schmederling May 16, 2013 / 9:36 pm

    Aussie just can’t find a bottom – my long-term Squeeze seems for now to be playing out on the short side is it tells me! & Down she goes down, down…. if we do not bottom tonight or tomorrow well you know…

  3. David May 17, 2013 / 9:22 am

    Hey Kong,

    Do you still like the Yen here on what should be an eventual market sell-off? I’ve been scaling in (short USD/JPY) since we’re 103 now, could be the top, or possibly 105 before dipping/testing 100 again.

    Also, just wondering if your views have changed on whether or not the USD will go down along with the market as you’ve been talking about before. I kind of think the market is just lagging the USD strength and that the USD will continue to gain when the market finally weakens. This is based off the fact that QE wind down should (and it seems the talk has) strengthened the dollar, which makes sense since QE is what played a large role in weakening it anyway.

    • Pot Stock Watch May 17, 2013 / 11:17 am

      It would be impossible to scale back / taper “QE” as markets would simply implode…although I must say – the “media spin” once again makes fools of most of us, and again the FED gets it’s way.

      We’ve now got a “rock strong dollar” and an equities market at it’s highs – go figure…..perhaps Ben isn’t as stupid as we assume.

      Now that USD has broken the trend of “lower highs” – anything is possible.

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