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Learn Forex Trading / Currency Trading Tips
Forex
Trading vs the Stock Market
Forex trading is appealing to many more people
than the stock market does and for many reasons. Among
the reason is the chance of a much greater return. Foreign currency
fluctuations of just one or two percent, occurring on a daily
basis, have a chance of returning great rewards to an investor
who catches a wave of change and properly plans his entrance
and exist strategy. Many people also like the fact that more
leverage is available with foreign currency exchange. For example,
10,000 dollars can be leveraged to purchase as much as 100,000
dollars through margins. This allows the chance of great returns,
even at only one percent, with less risk than might otherwise
be necessary.
Also the market is open
24 hours a day for forex trading while
the stock market is only open during business hours. Also many
people point out that most forex trading is done without paying
commissions, which can amount to significant savings.
Many people who don’t understand forex and have some experience
with the stock market immediately think that it is risky and
has low profit margins, some would say tiny. They get this
idea however because less information in available on forex
than other types of trading. Forex requires a trader
to education himself. Rather than just turning on CNN or CNBC, a forex trader
needs to read newsletters and find other ways of self-education.
Being open 24 hours a day and simply being huge is a big benefit
for forex trading. A forex trader can literally work 24 hours
a day, moving from the Asian market to the European to the
American. Couple this with the leverage opportunities then
the chances of large profit with forex are phenomenal.
Of course stocks have their advantage in that a person can
invest in the stock market without really knowing that much
and probably do fine. If an investor buys blue chip stocks
they are unlikely to go down in value. For long term savings
stocks are fine, but the short term large gains are definitely
to be found with forex.
Many people don’t realize how large the forex market is. It
is so huge that no single investor can corner the market as
has happened in the past with some stocks, and also with some
precious metals and commodities.
Forex
is considered by some people however to be risky. Pension
funds rarely invest in forex. However for the smart investor
who has time to become educated, forex can be the way to go.
The billionaire George Soros is a prime example of someone
who has done well with forex. He shorted the British pound
sterling and made $2 billion in profit at one point. He also
makes over 60% returns on the Quantum Fund, which he owns and
has over $4 billion under management. Of course, Soros has
also lost money, but he says “I simply make a lot of money
when I am right…and lose as little money as possible when I
am wrong.” Soros admits to being right only about half the
time, but does very well when he is right. Soros’s philosophy
is to look at a country and its stock market and see if current
trends are wrong. If he believes that a current trend is overshot
then he goes opposite it, and makes a killing.
In October 1987 the stock market crashed and
Soros lost a staggering $200 million in just one day! His
reply to this
was stoic, "I made a very big mistake, because I expected
the crash to come in Japan, and I was prepared for that, and
it would have given me an opportunity to prepare for the falloff
in this country, and actually it occurred in Wall Street and
not in Japan. So I was wrong!" While this mistake cost
him a great deal, it wasn’t the end of the world. Soros philosophy
is if he is right, he makes a ton of cash, and if he is wrong
he pays for his mistake and keeps on moving. A prime example
of how good money can be made in forex by investors who are
willing to study, learn, invest and take risks. While not for
the timed, the chances of a good return from forex make it
the place for daring entrepreneurs to try their hand.
# # # # # SolveYourProblem.com : 2007
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