I know that currency speculation is a good way to make extra money and potentially lots of it too because of the leverage that currency speculator companies can give, in some cases up to 1:200, so even small moves in currency can make lots of money.
If say you were to buy currency at its lowest price, and sell high, for example using 1:200 leverage, and say you had £10,000 and took control of £2m with it, and traded the £ agains’t the $, and the dollar was trading at $1.40 to £1 and you bought into it with the £2m giving you control of $2.8m, and the $ moved up to $1.50 to £1 in, say 3 months, you would then have turned your $2.8m into $3m - the $2.8m of borrowed cash - 20% tax you would have realised a profit of $160,000 / $1.50 to £1 = £106,666.66 + the original £10,000 = £116,666.66.
Would this work? Please give a good understandable answer.
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August 4th, 2009 at 5:09 am
Well of course it would work. All you have to consider now is what happens if the trade goes against you. Clue; you lose a similar amount.
August 4th, 2009 at 5:09 am
Yes, it "can" work, but the 1:200 leverage works both ways - you can go 116k in debt just as easily as making 116k profit.
A very good site for learning all about the Forex market:
http://www.babypips.com/school/
It’s a US site, written in a very casual prose/style, but has a tremendous amount of valuable information.
DO not start trading until you are confident of your knowledge in this market. Most Forex brokers offer a "practice account" - take advantage of it, and trade with fake money until you are confident in your abilities.
August 4th, 2009 at 5:09 am
It certainly would not work, since opening a £2m position with a £10 000 account would automaticaly activate a margin call and your position would be closed if only 1 pip (0.0001$)goes against you.
Keep in mind that 2m units in trading forex is worth 200$/pip so you would lose 10000$ if price goes 0.0050 (50pips)against you, and you would need at least 20000$ in your account to lose that 10000.
Now do you know how many times price goes up and down 50 pips?many. And how hard it is to get in at the right time ? very.
aliochacanada@yahoo.ca
August 4th, 2009 at 5:09 am
They can easily wipe you out if you don’t control your risk on each trade because of high leverage. It’s good to just use 5 -10 % of your margin for each trade.
There are also Forex robot that can trade for use automatically:
How to Choose The Right Forex Autopilot Robot Trading System and Broker
http://www.ehow.com/how_5149233_choose-robot-trading-system-broker.html