Where Is Gold Going In This Market

[midas]

i have no idea what "people" did in the case of Richard Nixon and Bill Clinton. but if one of my dogs tells me it was the neighbour's cat who stole the missing sausage in our kitchen i'd be skeptical and would try to get more detailed information.

in other words... whatever the clowns of World Gold Council have to say with reference to Gold. a banKster telling me "let me handle your investments" a lady in a bar suggesting she would "lubb me long time if i mally her" a politician promising whatever he promises... i'd be very skeptical

You are making my case for me. This is why I said why concentrate on the messenger?

If something makes economic sense the facts alone should warrant that you are least think further

about what is being said and make your own assessment even based on further research not

simply dismiss it because you don't happen to like the person or organisation that is presenting the information.

my view is that the messenger who conveys a message voluntarily -without being ordered to do so- should use due diligence before presenting the message. the internet is full with rubbish information and if rubbish is passed on without checking the "rubbish rubs rubbish" on the messenger.

this thread is loaded with rubbish invented by those with an agenda and presented by messengers who have an agenda, respectively wet dreams. e.g. notwithstanding the fact that Gold is down big compared to other investments since one year the messengers keep on presenting "X bought gold, Y bought gold, Z is buying gold, A says gold will be up big, B recommends buying gold, C claims gold will skyrocket..."

p.s. how does "country x paid off all mortgages" relate to the threads title "where is gold going...?"

p.s. how does "country x paid off all mortgages" relate to the threads title "where is gold going...?"

it doesn't does it because that was posted in the financial crisis thread?

Edited September 3, 2012 by midas

[Naam]

p.s. how does "country x paid off all mortgages" relate to the threads title "where is gold going...?"

it doesn't does it because that was posted in the financial crisis thread?

habb sorryness too mutt. my mistake!

[OriginalPoster]

notwithstanding the fact that Gold is down big compared to other investments since one year the messengers keep on presenting "X bought gold, Y bought gold, Z is buying gold, A says gold will be up big, B recommends buying gold, C claims gold will skyrocket..."

yep... in the meanwhile I just cashed in my 20k USD profit from friday - that was not too much due to an unfavorable buy price plus the USD losing slightly against CHF in my USDCHF FX hedge.

I will wait a bit before going in again, maybe at around 1670, 1660.

I've never been on the wrong side of a trade either.

[manarak]

notwithstanding the fact that Gold is down big compared to other investments since one year the messengers keep on presenting "X bought gold, Y bought gold, Z is buying gold, A says gold will be up big, B recommends buying gold, C claims gold will skyrocket..."

yep... in the meanwhile I just cashed in my 20k USD profit from friday - that was not too much due to an unfavorable buy price plus the USD losing slightly against CHF in my USDCHF FX hedge.

I will wait a bit before going in again, maybe at around 1670, 1660.

I've never been on the wrong side of a trade either.

I have been wrong many times, but I must say in the last months I surprised myself with the accuracy of my instincts, considering I got rid of my AUDCHF at 1.03 (price now: 0.978) and switched to gold instead.

I only regret I didn't have enough balls to short the AUD, I'd already have 5% profit.

Edited September 3, 2012 by manarak

[Jayman]

notwithstanding the fact that Gold is down big compared to other investments since one year the messengers keep on presenting "X bought gold, Y bought gold, Z is buying gold, A says gold will be up big, B recommends buying gold, C claims gold will skyrocket..."

yep... in the meanwhile I just cashed in my 20k USD profit from friday - that was not too much due to an unfavorable buy price plus the USD losing slightly against CHF in my USDCHF FX hedge.

I will wait a bit before going in again, maybe at around 1670, 1660.

I've never been on the wrong side of a trade either.

I have been wrong many times, but I must say in the last months I surprised myself with the accuracy of my instincts, considering I got rid of my AUDCHF at 1.03 (price now: 0.978) and switched to gold instead.

I only regret I didn't have enough balls to short the AUD, I'd already have 5% profit.

My biggest issue with shorting the AUD is the stupid negative swap I have to pay.

[manarak]

I have been wrong many times, but I must say in the last months I surprised myself with the accuracy of my instincts, considering I got rid of my AUDCHF at 1.03 (price now: 0.978) and switched to gold instead.

I only regret I didn't have enough balls to short the AUD, I'd already have 5% profit.

My biggest issue with shorting the AUD is the stupid negative swap I have to pay.

ah, come on... 4.5% annualized interest on negative cash balances... peanuts!

[Jayman]

I have been wrong many times, but I must say in the last months I surprised myself with the accuracy of my instincts, considering I got rid of my AUDCHF at 1.03 (price now: 0.978) and switched to gold instead.

I only regret I didn't have enough balls to short the AUD, I'd already have 5% profit.

My biggest issue with shorting the AUD is the stupid negative swap I have to pay.

ah, come on... 4.5% annualized interest on negative cash balances... peanuts!

Let's not forget that forex is traded on leveraged accounts and you will pay the daily interest on the full leveraged amount of your positions. This is fine if you close your trade the same dame you open it but if you intend to hold the position overnight then the swap rate must be considered. Why would I want to short the AUD and pay daily interest when I can buy the AUD and earn daily interest?

[Naam]

^{Metal commodities goes up 10-12 years then down 20 years, in cycles. Gold is going down, maybe not today, or tomorrow. Im talking about longer trends, 10, 20 year cycles. Yes I believe in technicals, TA. I dont care about university mumbo jumbo that says its impossible.}

pssst, not so loud.

but what relevance are 20 year cycles when so many world major economies are mired in debt ?

when in history have we ever been in this situation before?

I mean if this guy wants to talk about trends the only trend I can see is that the debts are just getting bigger

with no light at the end of the tunnel

and we invest in................? a bullet perhaps?

we buy a rope and use it to shoot ourselves.

[craigt3365]

Several off topic posts have been removed from view. Keep it civil guys!!!

[Lost in LOS]

I love my gold

[manarak]

I have been wrong many times, but I must say in the last months I surprised myself with the accuracy of my instincts, considering I got rid of my AUDCHF at 1.03 (price now: 0.978) and switched to gold instead.

I only regret I didn't have enough balls to short the AUD, I'd already have 5% profit.

My biggest issue with shorting the AUD is the stupid negative swap I have to pay.

ah, come on... 4.5% annualized interest on negative cash balances... peanuts!

Let's not forget that forex is traded on leveraged accounts and you will pay the daily interest on the full leveraged amount of your positions. This is fine if you close your trade the same dame you open it but if you intend to hold the position overnight then the swap rate must be considered. Why would I want to short the AUD and pay daily interest when I can buy the AUD and earn daily interest?

Is this a trick question or what?

4.5% IS the annualized negative balances interest rate (I will disregard the "swap" rate because nowadays, only the AUD pays an interest worth mentioning, except the Forint).

So for one million AUD short the overnight interest will be 4.5%*1/360*1000000 = only 125 AUD.

And if the AUD loses 0.1 % vs. your currency, the price difference is 1000, and your profit is already 1000-125=875 AUD.

If I had shorted one million, 5% * 1000000 = 50.000 AUD, minus about 15 days of interest, 1875 AUD, LOL.

Since I pay only 0.5% interest on CHF and get 3.3% on AUD, my previous moderately leveraged strategy that involved a raising AUD against CHF was very juicy for me.

I'm sad about the trend reversal of the AUD, but it could not appreciate forever.

I did some profit on the gold move, but now I'm out of the market again, sitting in CHF cash, waiting for an opportunity.

Edited September 4, 2012 by manarak

[Jayman]

My biggest issue with shorting the AUD is the stupid negative swap I have to pay.

ah, come on... 4.5% annualized interest on negative cash balances... peanuts!

Let's not forget that forex is traded on leveraged accounts and you will pay the daily interest on the full leveraged amount of your positions. This is fine if you close your trade the same dame you open it but if you intend to hold the position overnight then the swap rate must be considered. Why would I want to short the AUD and pay daily interest when I can buy the AUD and earn daily interest?

Is this a trick question or what?

4.5% IS the annualized negative balances interest rate (I will disregard the "swap" rate because nowadays, only the AUD pays an interest worth mentioning, except the Forint).

So for one million AUD short the overnight interest will be 4.5%*1/360*1000000 = only 125 AUD.

And if the AUD loses 0.1 % vs. your currency, the price difference is 1000, and your profit is already 1000-125=875 AUD.

If I had shorted one million, 5% * 1000000 = 50.000 AUD, minus about 15 days of interest, 1875 AUD, LOL.

Since I pay only 0.5% interest on CHF and get 3.3% on AUD, my previous moderately leveraged strategy that involved a raising AUD against CHF was very juicy for me.

I'm sad about the trend reversal of the AUD, but it could not appreciate forever.

I did some profit on the gold move, but now I'm out of the market again, sitting in CHF cash, waiting for an opportunity.

You are obviously a different level than myself if you are trading 10 lots (1 million units) at a time. Not sure how you are applying the 4.5% rate to all your trades since the rate varies from broker to broker. I still maintain that paying 125 AUD per day in interest is not peanuts. Of course if every trade you open closes in profit and you are comfortable with the reduced profit due to interest payments then great. Not everyone feels this way.

[yoshiwara]

I love my gold

and I love income.

[Jayman]

I love my gold

and I love income.

As opposed to those that love losses?

[manarak]

You are obviously a different level than myself if you are trading 10 lots (1 million units) at a time. Not sure how you are applying the 4.5% rate to all your trades since the rate varies from broker to broker. I still maintain that paying 125 AUD per day in interest is not peanuts. Of course if every trade you open closes in profit and you are comfortable with the reduced profit due to interest payments then great. Not everyone feels this way.

Ah, I'm not trading futures, I'm trading cash (no lots), so when I short a currency, the account goes negative.

Getting always 4.5% on negative cash balances is easy... I use the same broker for all my trades (interactive brokers).

And applying the rate is even more easy. Daily interest = [negative balance] x 4,5% / 360.

But the rate changes every day of course, following the spot-next rate plus the broker's cut. 4.5% is the current average I pay for AUD debits.

BUT: during the rise of the AUD, I used to trade the other way around. Holding a positive AUD balance against a negative CHF balance, getting almost 4% interest on AUD and paying 0.5% on CHF.

So I profited a lot from a positive swap for a long time, it is only natural that the game changes when I reverse positions.

I'd like to add that people shouldn't think too much about interest rates when doing directional trading.

When the rates aren't in your favor, just wait until the market proves you right and get out with a profit or close your position ASAP when the anticipated events do not occur.

Edited September 4, 2012 by manarak

[yoshiwara]

I love my gold

and I love income.

As opposed to those that love losses?

...which appears to be the case with gold bugs for whom up is up and down is up.

[manarak]

I love my gold

and I love income.

As opposed to those that love losses?

...which appears to be the case with gold bugs for whom up is up and down is up.

*scratchhead*

now you lost me...

[yoshiwara]

*scratchhead*

now you lost me...

That might not be too difficult.

Edited September 4, 2012 by yoshiwara

[Jayman]

You are obviously a different level than myself if you are trading 10 lots (1 million units) at a time. Not sure how you are applying the 4.5% rate to all your trades since the rate varies from broker to broker. I still maintain that paying 125 AUD per day in interest is not peanuts. Of course if every trade you open closes in profit and you are comfortable with the reduced profit due to interest payments then great. Not everyone feels this way.

Ah, I'm not trading futures, I'm trading cash (no lots), so when I short a currency, the account goes negative.

Getting always 4.5% on negative cash balances is easy... I use the same broker for all my trades (interactive brokers).

And applying the rate is even more easy. Daily interest = [negative balance] x 4,5% / 360.

But the rate changes every day of course, following the spot-next rate plus the broker's cut. 4.5% is the current average I pay for AUD debits.

BUT: during the rise of the AUD, I used to trade the other way around. Holding a positive AUD balance against a negative CHF balance, getting almost 4% interest on AUD and paying 0.5% on CHF.

So I profited a lot from a positive swap for a long time, it is only natural that the game changes when I reverse positions.

I'd like to add that people shouldn't think too much about interest rates when doing directional trading.

When the rates aren't in your favor, just wait until the market proves you right and get out with a profit or close your position ASAP when the anticipated events do not occur.

I'm not talking about futures either I'm talking about leveraged forex trading. With forex trading your trade sized is stated in "lots". 1 standard lot is 100,000 units (base currency). This is why when you say 1 million I say 10 lots. That would be the trade size. At 10 lots, you are gaining (or losing) $100 per pip. If you shorted AUDUSD at 1.0224 and closed at 1.0200 then you just booked 24 pips = 2400usd in profit on a 10 lot (million aud) trade. With a 500:1 leverage you would be required to put up 2045.4 USD to open the 1 million aud trade. As for the swap (daily interest) on this 1 million aud trade, on one of my brokers (TDFX) you are looking at a neg swap of 2 pips per lot on a short AUDUSD position. Swaps are not quoted as a % as you have done but as pips per lot. So, 2 pips per lot is $200 per day that you pay to hold the position open during daily rollover. The swap is charged triple on wed rollover to compensate for the weekend. So every day you hold this position open you will have to make an extra 2 pips just to break even. The swap is charged while the trade is open so you are paying the swap regardless if your trade is positive or negative. So on the given example of shorting 10 lots of AUDUSD at 1.0224 and closing at 1.0200, if you hold the trade open for 12 days then you would just break even (the $2400 in profit would just cover the $200 a day you paid in swap). Any more than 12 days and you will book a loss even though your trade closed with a gain.

All of this is why unless I am trading a short term (intraday) position then I would much rather open a position on pair that pays me a swap rather than charging me one. And that means selling (shorting) currency with a low interest rate to buy a currency that has a high interest rate.

In forex trading, when your account goes negative (as you keep stating) then your positions are liquidated to cover the loss (margin call). Maybe I am misunderstanding what you are doing exactly. Maybe you are talking about 1 million in cash that you have your bank convert from one currency to the other and then hold in an account that pays you daily interest on the balance.

Edited September 4, 2012 by Jayman

[yoshiwara]

You are obviously a different level than myself if you are trading 10 lots (1 million units) at a time. Not sure how you are applying the 4.5% rate to all your trades since the rate varies from broker to broker. I still maintain that paying 125 AUD per day in interest is not peanuts. Of course if every trade you open closes in profit and you are comfortable with the reduced profit due to interest payments then great. Not everyone feels this way.

Ah, I'm not trading futures, I'm trading cash (no lots), so when I short a currency, the account goes negative.

Getting always 4.5% on negative cash balances is easy... I use the same broker for all my trades (interactive brokers).

And applying the rate is even more easy. Daily interest = [negative balance] x 4,5% / 360.

But the rate changes every day of course, following the spot-next rate plus the broker's cut. 4.5% is the current average I pay for AUD debits.

BUT: during the rise of the AUD, I used to trade the other way around. Holding a positive AUD balance against a negative CHF balance, getting almost 4% interest on AUD and paying 0.5% on CHF.

So I profited a lot from a positive swap for a long time, it is only natural that the game changes when I reverse positions.

I'd like to add that people shouldn't think too much about interest rates when doing directional trading.

When the rates aren't in your favor, just wait until the market proves you right and get out with a profit or close your position ASAP when the anticipated events do not occur.

I'm not talking about futures either I'm talking about leveraged forex trading. With forex trading your trade sized is stated in "lots". 1 standard lot is 100,000 units (base currency). This is why when you say 1 million I say 10 lots. That would be the trade size. At 10 lots, you are gaining (or losing) $100 per pip. If you shorted AUDUSD at 1.0224 and closed at 1.0200 then you just booked 24 pips = 2400usd in profit on a 10 lot (million aud) trade. With a 500:1 leverage you would be required to put up 2045.4 USD to open the 1 million aud trade. As for the swap (daily interest) on this 1 million aud trade, on one of my brokers (TDFX) you are looking at a neg swap of 2 pips per lot on a short AUDUSD position. Swaps are not quoted as a % as you have done but as pips per lot. So, 2 pips per lot is $200 per day that you pay to hold the position open during daily rollover. The swap is charged triple on wed rollover to compensate for the weekend. So every day you hold this position open you will have to make an extra 2 pips just to break even. The swap is charged while the trade is open so you are paying the swap regardless if your trade is positive or negative. So on the given example of shorting 10 lots of AUDUSD at 1.0224 and closing at 1.0200, if you hold the trade open for 12 days then you would just break even (the $2400 in profit would just cover the $200 a day you paid in swap). Any more than 12 days and you will book a loss even though your trade closed with a gain.

All of this is why unless I am trading a short term (intraday) position then I would much rather open a position on pair that pays me a swap rather than charging me one. And that means selling (shorting) currency with a low interest rate to buy a currency that has a high interest rate.

In forex trading, when your account goes negative (as you keep stating) then your positions are liquidated to cover the loss (margin call). Maybe I am misunderstanding what you are doing exactly. Maybe you are talking about 1 million in cash that you have your bank convert from one currency to the other and then hold in an account that pays you daily interest on the balance.

An interesting discussion. Would it not be fair to say that your preferred position might on occasion be the wrong one on a selected pair and that manarak's might be the appropriate one, however you will pass due to the added risk of rollover loss?

[Jayman]

You are obviously a different level than myself if you are trading 10 lots (1 million units) at a time. Not sure how you are applying the 4.5% rate to all your trades since the rate varies from broker to broker. I still maintain that paying 125 AUD per day in interest is not peanuts. Of course if every trade you open closes in profit and you are comfortable with the reduced profit due to interest payments then great. Not everyone feels this way.

Ah, I'm not trading futures, I'm trading cash (no lots), so when I short a currency, the account goes negative.

Getting always 4.5% on negative cash balances is easy... I use the same broker for all my trades (interactive brokers).

And applying the rate is even more easy. Daily interest = [negative balance] x 4,5% / 360.

But the rate changes every day of course, following the spot-next rate plus the broker's cut. 4.5% is the current average I pay for AUD debits.

BUT: during the rise of the AUD, I used to trade the other way around. Holding a positive AUD balance against a negative CHF balance, getting almost 4% interest on AUD and paying 0.5% on CHF.

So I profited a lot from a positive swap for a long time, it is only natural that the game changes when I reverse positions.

I'd like to add that people shouldn't think too much about interest rates when doing directional trading.

When the rates aren't in your favor, just wait until the market proves you right and get out with a profit or close your position ASAP when the anticipated events do not occur.

I'm not talking about futures either I'm talking about leveraged forex trading. With forex trading your trade sized is stated in "lots". 1 standard lot is 100,000 units (base currency). This is why when you say 1 million I say 10 lots. That would be the trade size. At 10 lots, you are gaining (or losing) $100 per pip. If you shorted AUDUSD at 1.0224 and closed at 1.0200 then you just booked 24 pips = 2400usd in profit on a 10 lot (million aud) trade. With a 500:1 leverage you would be required to put up 2045.4 USD to open the 1 million aud trade. As for the swap (daily interest) on this 1 million aud trade, on one of my brokers (TDFX) you are looking at a neg swap of 2 pips per lot on a short AUDUSD position. Swaps are not quoted as a % as you have done but as pips per lot. So, 2 pips per lot is $200 per day that you pay to hold the position open during daily rollover. The swap is charged triple on wed rollover to compensate for the weekend. So every day you hold this position open you will have to make an extra 2 pips just to break even. The swap is charged while the trade is open so you are paying the swap regardless if your trade is positive or negative. So on the given example of shorting 10 lots of AUDUSD at 1.0224 and closing at 1.0200, if you hold the trade open for 12 days then you would just break even (the $2400 in profit would just cover the $200 a day you paid in swap). Any more than 12 days and you will book a loss even though your trade closed with a gain.

All of this is why unless I am trading a short term (intraday) position then I would much rather open a position on pair that pays me a swap rather than charging me one. And that means selling (shorting) currency with a low interest rate to buy a currency that has a high interest rate.

In forex trading, when your account goes negative (as you keep stating) then your positions are liquidated to cover the loss (margin call). Maybe I am misunderstanding what you are doing exactly. Maybe you are talking about 1 million in cash that you have your bank convert from one currency to the other and then hold in an account that pays you daily interest on the balance.

An interesting discussion. Would it not be fair to say that your preferred position might on occasion be the wrong one on a selected pair and that manarak's might be the appropriate one, however you will pass due to the added risk of rollover loss?

Yes.. that would be fair to say. Unless I feel a large move will happen in a short time frame then I am biased from opening positions that I have to pay a swap on. Instead, I would look for a different opportunity on a pair that paid me a swap for holding.

Of course, for intraday trades this is a non issue and on Wed this is 3x more an issue than any other day.

[manarak]

The dicussion is a bit confusing for me.

I'm a former bank trader with official trading licenses on 2 major derivatives exchanges (options/futures) and 2 classic cash exchanges (stocks/bonds/warrants). I also traded a fair bit of commodities and forwards (OTC) and I studied financial products.

Yet Jayman (who obviously knows his way around FX) and I seem to use different terminologies, which I find strange, but maybe this is because I have never been too much into the FX and interest rates side of the markets. When I was trading, I spoke about "lots" as an equivalent for "contract" on derivatives and commodities markets, meaning one option contract or one future contract = one lot.

Regarding what I do: I trade FX spot. This means when I buy 1 million USDCHF, my broker (interactive brokers) credits my USD account with 1 million USD and debits my CHF with the equivalent amount of CHF (plus their commission). That's all, nothing more happens.

Overnight, the daily interest rates are applied to positive and negative balances, nothing gets liquidated or whatever and there is no rollover of positions, because there are no futures contracts to rollover (I understand "rollover" as rolling over a position from one futures expiry to another later expiry, for example rolling over your BUND March position into BUND June).

BTW, Interactive brokers seems to be using GMI as their subledger for financial markets transactions, which is exactly the same that was used by my bank when I was a professional trader (and member of the exchange). So I feel at ease with their method of reporting.

Edited September 4, 2012 by manarak

[Jayman]

The dicussion is a bit confusing for me.

I'm a former bank trader with official trading licenses on 2 major derivatives exchanges (options/futures) and 2 classic cash exchanges (stocks/bonds/warrants). I also traded a fair bit of commodities and forwards (OTC) and I studied financial products.

Yet Jayman (who obviously knows his way around FX) and I seem to use different terminologies, which I find strange, but maybe this is because I have never been too much into the rates side of the markets. I spoke about "lots" as an equivalent for "contract" on derivatives markets, meaning one option contract or one future contract.

Regarding what I do: I trade FX spot. This means when I buy 1 million USDCHF, my broker (interactive brokers) credits my USD account with 1 million USD and debits my CHF with the equivalent amount of CHF. That's all, nothing more happens.

Overnight, the daily interest rates are applied to positive and negative balances, nothing gets liquidated or whatever and there is no rollover of positions, because there are no futures contracts to rollover (I understand "rollover" as rolling over a position form one futures expiry to another later expiry, for example rolling over your BUND March position into BUND June).

BTW, Interactive brokers seems to be using GMI as their subledger for financial markets transactions, which is exactly the same that was used by my bank when I was a professional trader (and member of the exchange). So I feel at ease with their method of reporting.

I've no doubt you have a solid understanding of what you are doing. I am just a retail trader and it sounds like your background is in more the commercial side of things. Perhaps that is where the confusion lies. My terms all come from retail forex trading. What you do sounds to be much bigger and professionally managed than what I'm talking about.

I just want you to clarify something for me about this statement..

Regarding what I do: I trade FX spot. This means when I buy 1 million USDCHF, my broker (interactive brokers) credits my USD account with 1 million USD and debits my CHF with the equivalent amount of CHF. That's all, nothing more happens.

It sounds like you have multiple accounts each denominated in a different currency. Is that correct? So when you buy 1 million USDCHF they take funds from your CHF account, convert at the current rate, and deposit into your USD account. Is that correct? There is no obligation to go any further with this right? You have no obligation to reverse the transaction.

For retail forex when you buy or sell a pair you are entering a contract. If I buy USDCHF what is happening is I am borrowing CHF to buy USD with. The contact is not completed until I close the trade and sell the USD and pay back the CHF. If the rate moved in my favor then I get to keep the profit generated from the difference. Every day I hold the trade open I will be paying/receiving a swap based on the difference of the interest rates between the 2 currencies in the pair being traded. For long term trades I will be looking to borrow from low interest rate currency like USD or JPY and use that to buy and hold a high interest rate currency like AUD. By doing this, I will get paid a daily swap fee regardless of how my trade ends and how much is gained/lost. This is why I prefer to hold long positions in AUDUSD rather than short positions. If I go short AUDUSD I will be borrowing AUD (at a high interest rate) to convert and hold in USD (low interest rate) meaning that I will pay more interest to borrow than I will gain from holding.

So while a trade is open the gains/losses are unrealized and as long as the unrealized loss does not exceed my account equity then I am fine (if not, margin call). The rates can go up and down all they want but my gains/loss are not realized until I close my trade (complete the contract) or hit margin call and my contact is closed for me at max loss.

Of course, all this is done on leverage. When I buy 1 million in USDCHF I'm not required to actually have the 1million CHF. At the 500:1 leverage I get I am only require to put up 2000usd to control the 1Million. I still earn or pay daily interest on the full 1 Million of my position while only 2000usd of my equity (margain) is being held.

Of course the risk of trading on margin is that I could lose all my equity if the price moves more than my equity can bear. It sounds like for you, you are never at risk of losing your entire 1Million investment as you will always have your 1 Million USD no matter what the USDCHF rate does.

Edited September 4, 2012 by Jayman

[manarak]

I'm not talking about futures either I'm talking about leveraged forex trading. With forex trading your trade sized is stated in "lots". 1 standard lot is 100,000 units (base currency). This is why when you say 1 million I say 10 lots. That would be the trade size. At 10 lots, you are gaining (or losing) $100 per pip. If you shorted AUDUSD at 1.0224 and closed at 1.0200 then you just booked 24 pips = 2400usd in profit on a 10 lot (million aud) trade. With a 500:1 leverage you would be required to put up 2045.4 USD to open the 1 million aud trade. As for the swap (daily interest) on this 1 million aud trade, on one of my brokers (TDFX) you are looking at a neg swap of 2 pips per lot on a short AUDUSD position. Swaps are not quoted as a % as you have done but as pips per lot. So, 2 pips per lot is $200 per day that you pay to hold the position open during daily rollover. The swap is charged triple on wed rollover to compensate for the weekend. So every day you hold this position open you will have to make an extra 2 pips just to break even. The swap is charged while the trade is open so you are paying the swap regardless if your trade is positive or negative. So on the given example of shorting 10 lots of AUDUSD at 1.0224 and closing at 1.0200, if you hold the trade open for 12 days then you would just break even (the $2400 in profit would just cover the $200 a day you paid in swap). Any more than 12 days and you will book a loss even though your trade closed with a gain.

ok, I understand what you're saying.

3 remarks:

- keeping a position open 10 days on a negative swap for a gain of just 0.0024 is something I wouldn't do. Either I'm right within 2 or 3 days or I'm out

- paying 2 pips a day is a huge rip-off on AUD. pips are a forex broker's easy way to confuse clients about real costs and to rip them off. I did this before as well. It becomes blatant when you calculate the pips back into annualized interest

- the pros usually do not pay or receive their swaps in pips (because of reason #2), they finance their position for interest, and the differences in interest for currency pairs are expressed in base points (bips) and not pips. One bip is one percent of a point, i.e. 1% of 1%, meaning 1/10000. That's why I feel much more comfortable with paying 4.5% annualized interest rather than 2 pips (brrr).

Edited September 4, 2012 by manarak

[manarak]

It sounds like you have multiple accounts each denominated in a different currency. Is that correct? So when you buy 1 million USDCHF they take funds from your CHF account, convert at the current rate, and deposit into your USD account. Is that correct? There is no obligation to go any further with this right?

Yes, correct, I got separate sub-accounts for AUD, CAD, USD, CHF, EUR, GBP, JPY, etc.

But I do also trade on leverage, meaning I can maintain negative cash balances in various currencies as long as my total account assets' risk-based evaluation is higher than the overnight risk carried by my short positions, as calculated by a SPAN simulation for example.

Depending on your trading profile, this might be a better broker for you:

www.interactivebrokers.com

P.S. your explanation about having just one currency account and trading "contracts" makes perfect sense and explains why you are talking about lots. What you are trading are some kind of OTC FX one-day forwards denominated in lots and settled in a different currency than the traded currency pairs and therefore are charged a swap rate, and that's also why you have a "rollover" of positions, because you have open contracts and not cash.

Edited September 4, 2012 by manarak

[manarak]

just for fun: what's your broker's current spread on EURUSD or XAUUSD?

mine's at

EURUSD 1.24260 - 1.24265

XAUUSD 1693.50 - 1693.55

(I can trade gold and silver as FX pairs)

BTW, gold has been flirting with the 1700 USD mark during the day.

Some bad news from the EU and it catches fire, QE3 and it explodes for sure.

But I'm not sure about bad news from the EU, and the FED will for sure downplay the impact of QE3.

But if I bought XAUUSD, I would at the same time short USD against my CHF and also buy gold, this would be a double gain...

Hmmm...

If only I had the balls...

It would work well against CAD too...

Edited September 4, 2012 by manarak

[Jayman]

I'm not talking about futures either I'm talking about leveraged forex trading. With forex trading your trade sized is stated in "lots". 1 standard lot is 100,000 units (base currency). This is why when you say 1 million I say 10 lots. That would be the trade size. At 10 lots, you are gaining (or losing) $100 per pip. If you shorted AUDUSD at 1.0224 and closed at 1.0200 then you just booked 24 pips = 2400usd in profit on a 10 lot (million aud) trade. With a 500:1 leverage you would be required to put up 2045.4 USD to open the 1 million aud trade. As for the swap (daily interest) on this 1 million aud trade, on one of my brokers (TDFX) you are looking at a neg swap of 2 pips per lot on a short AUDUSD position. Swaps are not quoted as a % as you have done but as pips per lot. So, 2 pips per lot is $200 per day that you pay to hold the position open during daily rollover. The swap is charged triple on wed rollover to compensate for the weekend. So every day you hold this position open you will have to make an extra 2 pips just to break even. The swap is charged while the trade is open so you are paying the swap regardless if your trade is positive or negative. So on the given example of shorting 10 lots of AUDUSD at 1.0224 and closing at 1.0200, if you hold the trade open for 12 days then you would just break even (the $2400 in profit would just cover the $200 a day you paid in swap). Any more than 12 days and you will book a loss even though your trade closed with a gain.

ok, I understand what you're saying.

3 remarks:

- keeping a position open 10 days on a negative swap for a gain of just 0.0024 is something I wouldn't do. Either I'm right within 2 or 3 days or I'm out

I just used those numbers as an example to illustrate my point of why a neg swap is something I consider before opening a trade.

- paying 2 pips a day is a huge rip-off on AUD. pips are a forex broker's easy way to confuse clients about real costs and to rip them off. I did this before as well. I becomes blatant when you calculate the pips back into annualized interest

- the pros usually do not pay or receive their swaps in pips (because of reason #2), they finance their position for interest, and the differences in interest for currency pairs are expressed in base points (bips) and not pips. One bip is one percent of a point, i.e. 1% of 1%, meaning 1/10000. That's why I feel much more comfortable with paying 4.5% annualized interest rather than 2 pips (brrr).

I've no doubt that the retail brokers are milking their clients for all it's worth. the pro's wouldn't stand for that but us small retail traders don't know any better and often times don't have access to the resources the Pro's have.

It doesn't surprise me that the retail brokers have changed many terms to confuse the small retail traders. Most of these retail forex brokers are setup to take money directly from the clients they claim to be brokering for. They make money from the swaps, commissions, spreads, and many times are taking the opposite side to your trades rather than passing them off to the liquidity providers to get filled (betting against you).

thanks for the referral to IB. they are certainly not new to the game and have built up quite a name for themselves. of course a quick google of "scam interactivebrokers" will find many negative story and comments about them. http://www.forexpeacearmy.com/public/review/www.interactivebrokers.com

This also can be said for just about every other broker out there.

Edited September 4, 2012 by Jayman

[Jayman]

just for fun: what's your broker's current spread on EURUSD or XAUUSD?

mine's at

EURUSD 1.24260 - 1.24265

XAUUSD 1693.50 - 1693.55

(I can trade gold and silver as FX pairs)

BTW, gold has been flirting with the 1700 USD mark during the day.

Some bad news from the EU and it catches fire, QE3 and it explodes for sure.

But I'm not sure about bad news from the EU, and the FED will for sure downplay the impact of QE3.

But if I bought XAUUSD, I would at the same time short USD against my CHF and also buy gold, this would be a double gain...

Hmmm...

If only I had the balls...

I have several accounts with different brokers around the world. The ones with the best spreads come with a per trade comish. Some of my accounts ahve fixed spreads while others are floating.

http://www.myfxbook....-broker-spreads

that will give you a realtime idea of different brokers and their spreads.

The account I have with the lowest overall spreads is with Alpari and is a NDD/ECN account (pay a commish per trade). With them, the EURUSD spread is typically under 1 pip (.8 pips right now). ATM the spread on gold is 30 pips.

I will be honest that I have never seen a spread on gold as low as what you have shown. 5 pips is amazingly low as you can see by looking at that link I posted most brokers have from 30-80 pips spread on XAUUSD.

edit: maybe we should start up a forex thread as it sounds like you have a ton of experience and knowledge that I'm sure others on TVF would benefit from.

Edited September 4, 2012 by Jayman

[manarak]

edit: maybe we should start up a forex thread as it sounds like you have a ton of experience and knowledge that I'm sure others on TVF would benefit from.

Do you mean something like that?

[Jayman]

edit: maybe we should start up a forex thread as it sounds like you have a ton of experience and knowledge that I'm sure others on TVF would benefit from.

Do you mean something like that?

http://www.thaivisa....e-forex-thread/

yes.. exactly like that