Take your profits (and stick to banks)

Take your profits (and stick to banks)

Banks do it. Insurance companies do it. So do the big brokerage houses. They do trillions of it. You can get a piece of it too.What am I talking about? Currency trading. The foreign exchange market. Otherwise known as the Forex market.

Listen, this is huge. The FX market is all electronic and does not stop continued yesterday afternoon to Friday night, moving sequentially around the world. The total capital involved dwarfs our little bit Dow, S & P and Nasdaq. Why do not you hear it? Probably because greedy Wall Streeters do not want to get the juice train.

Good. It can be risky. That is what scares most people off. You can lose your shirt and more in a hurry. But if you think that the big guys lose money on this? Sun Sun Here's why.

Currency trading is done in pairs. You borrow money from one country (currency 1) and lend money to another (currency2). Kicker is that when you trade currencies your money is leveraged. What that means is that for every dollar you invest, you control $ 100 of currency. (You can choose how to leverage more on that later). So only $ 1000 dollars gets control of the 100 Grand! So, if your bubble that extent, the slightest whiff of change in interest rate or make you pack your tank or expense to zero. But the big guys do not do it that way.

Here's what they do and are doing for years, ever since Japan got caught in a deflationary spiral. What did the Government of Japan to fight deflation? Why, they cut interest rates, of course, to stimulate the economy. Many times. To no avail. The economy kept tanking. To the point where they borrow money at zero interest. Can you believe it? Did not interest!. So what our friends in Armani suits do? They borrow money for free from Japan and give them money as the dollar, the rate will be somewhere between 3 and 4%. Big deal you think. And you also think you need a boatload of money to make any kind of dollars here, and your right, but listen to this. Forgot expanded. 100-100 You get leverage on your investment, not to control a boatload of money, that's the key. You spend $ 100 on the 100-100 support, you control $ 10,000 dollars. 10 large and controlling 1 million. Now, here is a key issue, which is the interest you earn ten grand? Or a million? Are you following me. Your not getting 3-4%, your getting more, much, much more. As 300%.

Now, in reality the banks do not support that much, it's too risky. Say, 30-1 leverage is typical. Thus they can weather fluctuations in interest rates and easy. And they still rake in.

But see, you can do the same exact thing the banks do. And the proliferation of online trading makes it easy to compete in this market just as the big guys Sun You have to be careful, though, and I'll explain more later.




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