High Rate of Return Trading Comes from Short, Well Timed Bursts
In choppy markets a high rate of return is most likely earned by making quick strikes and exits in the market. Although the market should be in a long term uptrend after the chaos of 2008-09, there is no guarantee any individual security in the market won't be subject to the kind of unbelievable bad news we have seen in the last 12 months of trading.
Find a Small Sure Thing and Leverage to the Hilt to Make It a High Rate of Return
Whenever I want to get a high rate of return (read:always) with a minimum amount of risk I inevitably look for a small, but 99% sure thing gain in the market, then I borrow as much money as I possibly can to increase the amount of purchasing power I have (I use leverage) to buy as many units of that small gain transaction as possible. Perhaps an example will help.
Jane has $10000 invests in currency A, which gains 1%, producing $100 profit.
Kim with $10000 buys $2000000 of currency A (on margin) which gains 1% producing a $20000 profit (200% return on Kim's initial $10000). This would be considered a 200:1 leverage ratio. Kim has bought 99.5% of her investment on margin (with borrowed funds).
Long Term Investors Have Become Long Term Sufferers
Face it, we've all been made suckers. I would hope it is easy to see why long term investors like Jane get nowhere investing in the market while other more savvy investors like Kim leverage the small gains to be had from short term returns into high rate of return trades. There really is no other way to get a high rate of return by investing long term. In today's market the risk of financial fraud, economic upheaval, and general executive incompetence makes investing in 2009 a trader's endeavor only. Understanding and then applying leverage to small inequalities in the market is the way the best traders are making money today.
The people who learn to find small gains and then use leverage to increase their purchasing power for short bursts stand the greatest chance of being able to make headway in a market which has not rewarded the patience of longer term investors.
Find a Small Sure Thing and Leverage to the Hilt to Make It a High Rate of Return
Whenever I want to get a high rate of return (read:always) with a minimum amount of risk I inevitably look for a small, but 99% sure thing gain in the market, then I borrow as much money as I possibly can to increase the amount of purchasing power I have (I use leverage) to buy as many units of that small gain transaction as possible. Perhaps an example will help.
Jane has $10000 invests in currency A, which gains 1%, producing $100 profit.
Kim with $10000 buys $2000000 of currency A (on margin) which gains 1% producing a $20000 profit (200% return on Kim's initial $10000). This would be considered a 200:1 leverage ratio. Kim has bought 99.5% of her investment on margin (with borrowed funds).
Long Term Investors Have Become Long Term Sufferers
Face it, we've all been made suckers. I would hope it is easy to see why long term investors like Jane get nowhere investing in the market while other more savvy investors like Kim leverage the small gains to be had from short term returns into high rate of return trades. There really is no other way to get a high rate of return by investing long term. In today's market the risk of financial fraud, economic upheaval, and general executive incompetence makes investing in 2009 a trader's endeavor only. Understanding and then applying leverage to small inequalities in the market is the way the best traders are making money today.
The people who learn to find small gains and then use leverage to increase their purchasing power for short bursts stand the greatest chance of being able to make headway in a market which has not rewarded the patience of longer term investors.
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