Why individuals should stick to investing rather than bother with trading
Posted by John Forman in Pips Weigh In, tags: insider trading, investing, market manipulation, money management, stock market, Trade Leaders
I’ve written a couple times in recent weeks (The Benefits of Investing in Successful Traders and Investing in Forex vs. Trading in Forex) on the subject of looking at forex from an investing perspective rather than just as a trading vehicle. Yesterday, though, I read this article which used the recent insider trading related developments as support for why individuals should stick to investing rather than bother with trading. It made me think of a couple more benefits to the Currensee Trade Leaders program. These are more from the avoiding disaster perspective than the pursuing alternative opportunities one.
No Malfeasance
The forex market is a refuge for those looking to get away from all the corporate scandals which impact individual stocks. The numerous developments in the post-Tech Bubble era (Enron, etc.) are a big reason why retail forex trading took off in the early 2000s. Currencies have no managers behind that who can operate in illegal and/or unethical ways that can destroy them in a virtual blink of an eye. Sure, we can make the argument that governments and central banks can cause currency devaluations. Their actions are very public, though, and the impact of those actions tend to only come through over time. You won’t wake up one day and see that the euro has lost half its value overnight.
In terms of the Trade Leaders, not only do you see exactly what they are doing all the time, but their incentives are in line with your own. If a Trade Leader loses money for you, he is firstly doing it for himself. And on top of that, he only gets rewarded for producing profits in your account. It’s not like a CEO whose incentive structure may not be aligned well with shareholders.
Limited Market Manipulations
Yes, there are currency interventions. They are, however, generally well telegraphed. For example, we currently see the Brazilian central bank buying dollars twice a day to stem the appreciation of the real. Everyone knows it’s going to happen and can act accordingly. Even in the case of “surprise” interventions, of the sort the Swiss and Japanese have done in recent times, there is considerable “verbal intervention” which goes on ahead of time.
These sorts of moves are a far cry from the sort of market manipulation we can see in the stock market, either in terms of intentional efforts to influence prices (pump-and-dump, etc.) or in less intentional ways (algos and high frequency trading in some ways) which end up having the same sort of result. You won’t see any flash crashes in the forex market. Furthermore, the Trade Leaders program has a built in automatic cut-off that protects your account from taking more than a 30% loss even if the markets go completely haywire.
No Ponsi Schemes
Worried about a Madoff situation investing your money with someone else? There’s no risk of that with the Trade Leaders program. All the money is in your account. You can see exactly what trades are being done. You can even close open positions yourself, if you want (though it’s not recommended). You can see the performance of the Leader(s) you’re following in real time. They can’t be fudged, and since you have complete control, you can switch in and out of following a Trade Leader whenever you want.
The point is the Trade Leaders program provides protection from the sort of manipulation and fraudulent activity which at time plagues the stock market and other sorts of money management vehicles. It ensures the alignment of incentives, protects against your money disappearing, and gives you complete control over everything. How many other investment programs can offer that?
=====
Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results.
-------
Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.
Entries (RSS)