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About FOREX |
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The FOREX market (or FX Market) is the largest
financial market in the world. Each day over $3Trillion is traded,
mainly electronically, via OTC (over the counter) contracts.
The sheer size of the FX market makes it extremely liquid, volatile
and it offers low transaction costs. The potential returns on
offer make it an attractive alternative to traditional Equity,
Bond and Mutual Fund investments. However, wherever the potential
exists for high returns the risk increases.
FOREX is considered a risky investment, and only risk capital
should ever be used to speculate in the FX market. It is a well
known fact that 90-95% of FX traders do not make money, so having
a professional who does make money trade your account is an
absolute must. Although the FOREX seems exciting to newcomers,
it is an extremely volatile and highly leveraged market, and
strict emotional control is required to be consistently successful
in the FOREX.
Many investors simply do not have the time required to make
a consistent return trading currencies, as it operates 24 hours
per day 5 days per week. It also takes years to develop strategies
and discipline to successfully trade the FX market.
On major part of any investment strategy is periods of drawdown.
A drawdown is a drop in equity from a peak to a trough, and
these are the times that test both investors and Money Managers.
A good Money Manager will trade through a drawdown with confidence
as he knows that he has a solid strategy that will get him through.
A poor Money Manager will change his strategy through panic
or depression, and end up digging a larger hole.
It is also vital that Investors realise the potential for periods
of drawdown, and also do not panic and withdraw funds, as this
is the worst possible time to do this. |
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