Andrea Unger here, and we’ll talk a littlebit about currencies.
Talking about currencies, the first thingis: shall I work on futures, on currencies or on Forex? There are pros and cons on both.
On Forex, if you are not extremely capitalized,you have opportunities to trade because of the scalability—the downsize scalabilityon Forex—you can trade with mini-lots, micro-lots; so, you can really adapt the position to thelevel of capital you have on your account with no problem.
You can’t do that on futures, of course.
You can trade one contract, not 0.
1 of it.
But futures is a regulated market.
Forex is over-the-counter, and somebody might feel uncomfortable in trading on an over-the-counter market; but it’s up to you to decide.
In any case, this is the list, the first listthat come into my mind on currency futures.
Eurodollar, British Pound future, JapaneseYen future, Australian dollar, New Zealandese dollar, Swiss franc and Mexican peso.
The most important and easy to trade in asystematic way are obviously Eurodollar and British Pound; they adapt to both trend-followingand counter-trend strategies.
I can tell you that in the latest years, theybecame a little bit more difficult to trade anyway.
So, stay tuned on them, but consider thatit’s easier to find good models that worked in the past and that are harder to produceprofits today.
In terms of stops, normally if you developintraday or overnight, you should stay somewhere around 100 pips—or 100 ticks if you talkabout futures—which is a reasonable level.
And you go down to 70 up to 130, but the areais around 100 pips.
So, consider that, obviously, when you developstrategies.
Japanese Yen is an interesting market becausesometimes it rises very, very largely.
If you’re in the right position in thatmoment, you obviously enjoy it very much; but it’s not easy to find good models.
Mostly, you should look for counter-trend stuff, but in any case, it’s not the easiest market to develop on.
A bit easier is Australian Dollar for trend-following.
It became liquid enough now, so you can easilyaccess it with no fear of not getting enough players.
Same thing on New Zealandese dollar—in termsof liquidity it became better, but it moves worse than the Australian dollar.
So, it’s more difficult to find workingmodels on it.
Swiss franc has no cap anymore with Eurodollar,so actually it’s free.
But it’s an interesting diversificationin alternative to Eurodollar.
Find some models: counter trend, trend following,but if you trade the Eurodollar, I would not include Swiss franc or vice versa.
Mexican peso is a nice market—very liquidactually—future, but it’s difficult to develop; it’s difficult to find a workingmodel that fits that market or find something where the market responds in a positive wayto our input.
So, it’s here in the list because it’simportant, but I would not consider it to develop too much because it’s not easy.
On the other side, another thing that yousee, this is a limit in this.
On Forex, you have many more pairs.
Actually, think about Euro/Yen; there is noEuro/Yen here.
Maybe there is a future but I’m not sure about that, but I think it’s not even considerable in terms of liquidity.
But in any case, on Forex you have many morecrosses.
So, you can actually diversify that in a completely different way, and you have other kinds of opportunities to develop.
So, that’s another reason why you couldprefer Forex to futures.
Again, if you feel comfortable in tradingover-the-counter, fine; you can do it.
But these are the regulated markets, theseare the markets I personally focus on, and I think you have enough also here, even alittle less than what you find on Forex.
But in any case, apart from the currencies,there are many other markets.
You find them in our videos: some are there,some more are to come.
Enjoyed it? Click the link below and you will be noticedas soon as new material is available.