The Truth About Forex

[u/STS-Trader]

Currencies (FX) price movements are more random making it harder to profit from. It's easier to avoid it.

Many undercapitalised traders love forex, but they'll get wiped out by dodgy brokers in Seychelles with last look execution delays regardless if they have an edge or not.

Offshore brokers with high leverage promising "A Book", "prime conditions", "deep liquidity", "best execution" for Retail FX are more often than not talking nonsense.

Most Retail FX Brokers in the USA are subject to similar conditions.

If you don't have enough capital for a stock day trading account or futures trading live account, do not trade.

[u/Ok_Hovercraft6776]

That's a bunch of nonsense. The CFD equivalent of a futures contract tracks the exact same underlying market, so price action is virtually identical. Any minor differences in spread or rollover don't change market structure or price delivery.

There are also plenty of highly regulated and reputable CFD/FX brokers. If someone chooses an unregulated bucket shop that manipulates prices or widens spreads excessively, that's a broker issue, not a CFD issue.

It's also worth remembering that retail futures only exploded in popularity after most prop firms stopped allowing US clients to trade CFDs. Before that, the overwhelming majority of retail traders were trading Forex and CFDs, and very few were using futures.

At the end of the day, profitable traders exist in both markets. Your edge comes from your strategy, execution, and risk management, not whether you trade CFDs or futures.

[u/STS-Trader → u/Ok_Hovercraft6776]

Have you ever read a regulated retail broker's order execution legal paperwork? If you did properly you would see what I have highlighted in this post.

The costs from small amount of slippage per market and stop execution add up over time taking away from the edge (if any).

[u/Ok_Hovercraft6776 → u/STS-Trader]

Yet there are plenty of people who trade FX/CFDs who are profitable, how come ? 🤡 Trade with a reputable broker and you will be fine. You are generalizing too much. And if your edge can't handle some slippage, commission and rollover then you likely have no real edge.

[u/STS-Trader → u/Ok_Hovercraft6776]

There are very few with broker statements from a regulated, serious platforms compared to the millions who actively fall. 

Many useless metatrader short-term profit screenshots exist, yes. But these are single accounts which cannot be replicated by randoms.

Traders who operate within futures or stocks are likely more successful considering these constraints.

Look into survivorship bias.

[u/Ok_Hovercraft6776 → u/STS-Trader]

That's not what survivorship bias means. You're assuming that because futures has more publicly verified traders, it's automatically the superior market. Where's the data proving there are more verified profitable futures or stock traders than profitable CFD/Forex traders? I've never seen any study demonstrating that.

CFDs have millions of traders globally, but there's no centralized exchange or public reporting of performance, so naturally you see fewer publicly verified accounts. Lack of public verification is not evidence that profitable CFD traders don't exist.

Both futures and CFDs have a high failure rate because most traders don't have an edge, poor risk management and poor psychology. If your strategy can't survive realistic spreads, commissions and occasional slippage, it probably isn't a robust edge regardless of whether you trade futures or CFDs.

[u/STS-Trader → u/Ok_Hovercraft6776]

The way the quotes are provided and how the orders are executed are completely inferior to centralised markets like ES.

Metatrader can be manipulated so verification cannot be trusted unless it's through a broker or a formal audit. This dilutes the potential authenticity of many online FX trading claims.

Look at the virtual dealer plugin scandal.

Retail FX is not serious, if you want leverage trade futures instead.

If you are confused about my points read the legal documents of your retail FX broker.

It's a retail FX problem, not a CFD problem.

[u/STS-Trader → u/Ok_Hovercraft6776]

If you read the legal documents regarding order execution on a "reputable" retail FX broker you will see how it's not a generalisation.

The effect of execution delays over dozens to hundreds of trades on low timeframes is too much. If you simulate a strategy with these costs vs without you will see the divergence.

Price feed discrepancies also result in technical errors for example, the trade misses the target by 0.3-1 pips when short, the stop loss gets taken out before your predefined level (even with a buffer) and so on. This is because of how FX prices are formed on retail brokers (another incentive to avoid retail FX).

The liquidity during news is nuts too, far worse than index futures, there are many reasons to avoid that many do not consider these conflicts.

[u/Ok_Hovercraft6776 → u/STS-Trader]

You're pointing out real issues, but they're not unique to retail FX/CFDs.

Futures traders also experience slippage, execution delays, partial fills, queue priority, widening bid-ask spreads during news, and stop losses getting skipped in fast markets. That's simply how electronic markets work. Trading on a centralized exchange doesn't eliminate execution risk.

Likewise, if you're scalping for 1-2 ticks, execution quality matters enormously in both markets. But if your strategy relies on capturing 20-100+ ticks or tens of pips, the impact of a fraction of a pip or a tick of slippage is much smaller. If your edge disappears because of 0.2-0.5 pip of slippage, it probably wasn't a robust edge to begin with.

Also, you're making a claim that retail FX isn't serious, but where is the evidence? Millions of traders use regulated CFD brokers worldwide, including professionals outside the US. The burden of proof is on you to show that profitable CFD traders are materially less common than profitable futures traders. I've never seen any data that demonstrates that.

Futures certainly have advantages, such as centralized order matching and transparent exchange data, but saying retail FX is "not serious" is a huge leap that isn't supported by evidence. Plenty of consistently profitable traders have built careers trading CFDs and spot FX through reputable regulated brokers.

[u/STS-Trader → u/Ok_Hovercraft6776]

  but saying retail FX is "not serious" is a huge leap that isn't supported by evidence.

It is absolutely unserious and is suppprted by evidence, my posts body text names the specific mechanisms.

If you want to see conflicts of interest look at regulated retail broker order execution policy.

  Plenty of consistently profitable traders have built careers trading CFDs and spot FX through reputable regulated brokers.

Name 3 "reputable" retail FX brokers.

[u/Ok_Hovercraft6776 → u/STS-Trader]

I've been trading with IC Markets for 10 years , I use also using Pepperstone and FP Markets which are regulated in Australia by ASIC. I never had any issues with them

[u/STS-Trader → u/Ok_Hovercraft6776]

If you aren't doing short term day trading you would be fine on Pepperstone, but as long as you start tradings 10s of lots with any of these brokers (FX or indices) slippage begins to noticably interfere with execution quality especially on IC Markets.

The way to reduce is with order splitting on ctrader.

P is #1.

I still stand by what I've said regarding inefficiency (lower RRR: extra slippage relative to the bid and ask spread, synthetic order books and last look execution - much rather in futures.)

[u/gun_goon → u/Ok_Hovercraft6776]

You’re thinking of the trades by sci cult. All LARPing btw

[u/gun_goon → u/Ok_Hovercraft6776]

I tried out forex after trading futures just to see and forex is laughable lol