One of the most compelling reasons for trading Forex is leverage. Leverage gives you the ability to control large assets with little of your own cash.
Typically in Forex the leverage is 100 to 1. What that means is that with as little as $1,000 you have control of $100,000. A 1 % move will produce a 100% profit. As you can see by the tables provided a 1% is typically the average move per day. Yes that’s per day.
When you combine leverage with the magic of compounding - the results are astonishing. A $10,000 account that produces a mere 3% profit per day will be worth over $7 million in a year.
This is the allure of Forex: Leverage & Compounding. However, to make it work requires discipline, persistence and a plan. Profits such as these are not produced by treating Forex trading as a hobby. Actually quite opposite is true. Half hearted efforts will leave you disappointed and most likely without capital. Leverage is a double edged sword, it cuts both ways. It can work in your favor or against you. When it goes against you it usually is quick final.
The key is to master the use of this double edged sword and use it with skill. Fortunately this can be taught just like any other skill. It requires discipline and commitment, both of your time and money. However the end result is worth the exercise.
Ivan Cavric
Excerpt Taken From
No comments:
Post a Comment