Monday, April 27, 2009

EUR AUD, 09:55ET- Liquidity And Currency Confusion.




Still haven't quite figured out the ins and outs of currency calculation when it comes to the spot forex market...especially when the trade involves two currencies other than the base currency of the account (USD).

This causes some risk management issues as I'd like to know I need to know my exposure in the base currency. This allows me to proactively manage my risk in every trade (for me, this means always keeping it the same...others might choose to augment risk with higher probability setups) So IB will soon have me pestering them for a full explanation!

Aside from that, there is also different minimum sizes for the various currency pairs that I need to know BEFORE I pull the trigger. Otherwise I end up missing my often fleeting ideal entry. Couple that with a large spread relative to my "playing field" (distance between my stop and target) and liquidity problems, making it difficult to enter and exit the market (probably due to small size...will play with that to confirm) and I feel lucky to have got out of this trade with an 14 tick gain on 18K.

1 comment:

Blogger said...

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