Forex Trading - Is Their Loss Your Gain? By Ferris Malone At Isnare.com Ezine Articles

In the business world there are many venues in which speculation is regularly exhibited. Let’s clarify what is meant by a “speculator.” This is a business person who is willing to take sizable risks in order to realize great monetary gains. Two prominent markets for this practice are commodity futures trading and foreign exchange trading. The latter is commonly known as Forex trading.

Leverage Can Move Mountains

There is one plain reason why these two markets are considered to be above others. The reason is LEVERAGE. The leverage in these two areas stands head and shoulders above any other type of market. So, what is leverage and why is it important?

Leverage, simply put, is earning the most profitable return for the smallest possible commitment on the investor’s part. You begin with a capital outlay that is very minimal. The outcome provides you with one of two things: a HUGE profit or complete loss of the initial contribution. Well, with this scenario it is reasonable to ask how you can best ensure that you are on the winning side of the deal.

Realistically there are multitudes of others playing the same odds. Many are seasoned professionals, highly trained and well paid for their shrewd business tactics. BUT, you can beat the odds and win. And it’s fairly simple to do. Let’s take a look at two instances.

Their Loss Is Your Gain

In 1995, a prominent British bank, Barings Bank, which, by the way, is the Queen’s banker, was wiped out by Nick Leeson, a banking professional who traded up a loss of 827 million pounds sterling. This is equivalent to US $1.4 billion. Quite a sizable sum. Since speculation amounts to the fact that when someone loses, someone else wins, that immense amount of money was up for grabs. With the exception of some commission fees, it could have been you who took a good portion of those winnings home.

January 2008 tells another vivid story. Jerome Kerviel was in the uncomfortable position of explaining to his superiors at Societe Generale SA why and how he unfortunately was responsible for losing $7.9 billion of theirs. He admitted to putting over $82.2 billion in unauthorized futures trades. Again, their loss had to be someone’s gain. It could have been you.

These are stand-out cases. On the whole, professionals merely attempt to balance their order book, securing their arbitrage profits. They are not so concerned what their opponent, which is you, is up to. Actually your trade benefits them as it is your business that often enables them to square up their books. It minimizes their losses and they look better to their bosses.

Yes, But What About You?

The question is: Should you get into speculation? Think it over. Take an honest look at your personality and business style. Are you hesitant and fearful, overly cautious of taking any risk? Well, if so, perhaps Forex is not your venue. However, if putting together a great deal and the excitement of spending a little capital with the prospect of tremendous increases appeals to you, then you probably have what it takes to succeed in Forex. Forex is THE largest market worldwide and is growing exponentially. There is wealth to be captured with the investment of a little capital and the guts to think BIG. Investors like this have often been known to trade on a bank bill with a face value of $500,000 when they have opened the deal with only a small outlay of $500. How does that sound for a profit margin!

The key is this: do your research on the Forex market. Know your opponents’ strategy and anticipate their actions. Then beat them to it. Sure and simple, but effective. Follow your intuition and gut business instincts all the way to success. It works for Forex trading. It can work for you. Look into it and make your future happen by taking action immediately. Forex can be the vehicle for accomplishing your greatest financial goals. Make it happen!

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