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Skill and Luck in Forex Trading

Posted by : Premraj | Posted on : Wednesday, August 5, 2015


Regardless of what you understand about investment, you probably already know that there are risks involved. Investment is all about risk and reward. Some investments, like bonds, have virtually no risk associated with them. They’re based on a fundamental aspect of a nation’s finance system. The only way an investor would lose his or her money on a bond investment would be if the underlying financial system crumbled suddenly. But in a case like this, losing one’s investment would be the least of your worries, as there would be widespread social chaos.

So “No Risk, No Reward” applies to this example in that bond investments will provide very little reward, because there is very little risk involved. Bonds are usually an investment strategy of people who simply want to preserve the buying power of their money, as in the case of an older investor who can’t risk losing what they’ve built just before retiring. Stocks, usually packaged as ETFs and mutual funds, have more risk associated with them than bonds, but not that much. These are reliable ways to get the sort of returns that people need to retire on, all while providing a risk level that these same people can tolerate without losing sleep.

The problem with mutual funds/ETFs is that it takes years, or even decades, to see these returns. If you’re a beginning investor who wants to learn how to LIVE off of your investments, in the here and now, you’re going to have to practice a form of investment that pays off a lot more quickly. To do this, you’ll have to tolerate more risk than the more conservative investor. But that just means you’ll have to learn more and acquire more skill. You can do that. Here’s how.

Forex investment is done in minutes or hours. The Forex investor, using a Forex Broker like CMC Markets, will take a look at a bunch of currency pairs, like Euro/USD. The relative value of these currencies, at the present time, will be displayed. What the investor will then do will be pick a timeframe, and invest upon how these currencies will change in value relative to one another during that time period. If the investor gets it right, he or she will see returns relative to the amount invested, also losses.

The reason this is a great introduction to investment for the new investor who wants returns now is multifaceted. For one, Forex teaches you about all forms of investment. Because all investment insight is based upon anticipating the value outcomes of real world events, Forex gives the investor the opportunity to test out these insights many times over a short duration of time. The Forex investor can also develop his or her skills using free tutorials, which mimic real investment in every way, just without the financial risk. Finally, Forex investors can begin with just a little money. Most Forex brokers demand minimal first investment, meaning that you won’t have to be rich to become an investor this way. You just have to be skilled.

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