Forex Trading: Speculative Operations Part 1
Every fourth milliard condition in the world is earned on financial markets. Perhaps, most risky of them and potentially to the most profitable is the forex exchange market.
The maximum speculative profits bring investments in assets price fluctuations on which occur most often and have the maximum amplitudes. In other words, the more actively “goods” rise in price and become cheaper in unit of time, the more it approaches for the speculator. Today the individual investor or the speculator has access practically on any financial market, including on the international. Perhaps, the most volatative from among the most accessible is the market of futures. Price fluctuations on separate papers in the most active days can exceed 10 %. However the greatest possible profit of the investor isn’t limited to this limit.
At trade in the urgent market it is possible to make transactions, for example, on 100 thousand dollars, bringing only 15-20 % from this sum. That is if to start in turnover of 20 thousand dollars and to purchase contracts on 100 thousand each percent of a gain of their cost will give 5 % of a gain of your capital. Accordingly on 10 percent of growth of quotations the capital can be increased in one and a half time.
The market forex is a virtual trading platform on which 24 hours a day operations are made on currency purchasing-sale. It is the most volume and a liquid market on a planet. Today on the market forex any person having the small capital can get an access to it. Unlike exchange rate fluctuation market of futures are absolutely insignificant. For example, the maximum day disorder of quotations of pair euro / dollar (EUR/USD) this year has been fixed on March, 17th and has constituted only 2,38 %. For the exchange market it is a lot. The average day amplitude for EUR/USD in 2003 has constituted about 0,9 %. Thus to manage to catch “bottom” and “crest” it is almost unreal.
It is possible to consider as good result to “ride out” half of this wave, that is on the average 0,45 % for a day. Profit is absolutely frivolous. However on forex it is possible to increase it, for example, in 100 times, using so-called credit shoulder – the borrowed funds given to the client by bank or the broker. In this case each movement of the market in your party doubles your capital on 1% (without costs). And some companies can offer even more “big shoulders”. At the same time movement of the market against your position (upwards if you sell short rate or downwards if trade is led on increase) on 1 % can lead to complete loss of the capital. Therefore forex also is the most risky financial market. And at the same time it is potentially extremely profitable market.
For example, on steam EUR/USD this year for one day with a shoulder 1:100 it was theoretically possible to earn 238 % (adventurouses you can transfer these figures in annual). However it is only the theory. In practice the exchange market no means always supports your idea about future growth or falling of a rate of this or that currency.
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