Traditionally, experienced investors have always gravitated to what they've considered safe havens during the more uncertain financial times. They correctly recognized the necessity to keep their money producing for them especially through the most hazardous of market conditions.
In years past, investing in real estate had been the no-brainer during stock market meltdowns and extended periods of high inflation. Even before the boom in the 90's, real estate made sense because you were essentially investing your money in something real.
As most artificially created bubbles, the greed of the few with promises of quick and easy profits, non-proportional to the natural ebb and flow of the free market has brought this safe haven investment vehicle to a screeching halt for the foreseeable future.
More recently, gold and other precious metals have been the preferred hedge against a devaluing U.S. Dollar midst unprecedented world events and uncertain financial markets.
The bottom line is that times are changing, but the time tested common sense principles passed down by our grandparents still apply. They taught us to prepare for rainy days, do our homework before we invest and not to put all your eggs in one basket. So, we do our best to educate ourselves and in the end we go with our gut.
Financial experts have recommended holding up to 25% of your investment portfolio in the spot currency market, better known as currency trading accounts.
They said this because the currency market is immune to the decreasing value of the U.S. Dollar. Unlike stocks, you can make money no matter if the market or the Dollar goes up or down and you have the flexibility of holding your funds in U.S. Dollars, Swiss Francs, British Pound Sterling or the Euro Dollar etc.
Unfortunately, once again the hype of windfall profits made it all to easy to believe the snake oil salesman and their claims of doubling or tripling our money in just a few short months, although neglecting to properly emphasize the downside risk. Because one of those time tested principles of investing is that risk and reward are severely proportional and a like our grandparents said, “A fool and his money are soon parted”!
These practices have tarnished the industry in the minds prudent investors and the only reason some are now beginning to return is due to the overall state of affairs in markets in general. The fact of the matter is that currency trading accounts remain a viable investment outlet to diversify and safeguard you funds.
However, it's still “Buyer Beware”, because the smoke and mirrors have only been given a new look. Many of us have now been conditioned to depend on so called verified results, live broker statements and the latest trend of live platform feeds. Even though we all say we're aware that past results can't predict future performance, we tend to rely on what we can see and touch and wind up throwing our common sense out the window.
In actual fact, professionally audited and certified trading accounts are so cost prohibitive that only the most prestigious firms can afford to do it. They are reserved for institutional type investors with minimum deposits well in excess of $50,000 and are never broadly promoted to the general public.
This is a zero sum game, for every winner there is a looser. No trader or firm worth their salt would ever divulge their successful trading strategy upon request without the investor first providing written intent and verification of his or her net worth. So, I'm very sorry to tell you that this too is just another smoke screen of hype and illusion.
So what to do and who do you trust? Trust no one until they earn it. You use your common sense and don't stray from the basics, that's what you do! If something sounds to good to be true, it most likely isn't. If it looks like you're being promised the moon, run in the other direction! Take the time to do your proper due diligence and if you see something you like, don't commit the farm. Seed the account and see what sprouts and if you like what you actually get decide from there.
The fact that most traders and signal services don't want you to know is that it's really not their win/loss percentage that matters, that is if they know that themselves or even care. The proof of the pudding always lies in the money management! A trader can have the best system in the world and can still loose money if his money management is poor. He can have a mediocre trading strategy and still make money using proper money management.
Also, please realize that the best trading system in the world only lasts until the market shifts. This is why trading robots will destroy your account eventually, no matter what anyone tells you. The market is unforgiving and loves greedy traders. It doesn't give up anything easily and it “is” out to get you! So, don't worry if you're feeling paranoid, this instinct is correct!
To use a baseball analogy, it's better to go for the singles and doubles and steel a few bases now and then. To play what's called “small-ball” and have a great defense, than to go for the home run all the time. Swinging for the fences increases your strikeout percentage and as with any leveraged vehicle it's always mathematically more difficult to dig yourself out of a deficit than to take the slow but stable growth approach.
This game changes without notice and you only get so many strikeouts. It's the money management that keeps you in the game. It's the only constant you can count on!
For more info, please see my article on “Equity Friendly Forex Accounts” on the web or view all articles and performance on our website.
Kind Regards,
Jim Gilberti
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