Tag Archives: money management

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?

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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.

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Currensee and FXCM present: Money Management for Popular Strategies with DailyFX Quantitative Analyst David Rodriguez tomorrow at 1PM EST. Click here to register.

Good money management comes down to one all-too-popular trading aphorism: let your profits run and cut your losses short.  Almost every popular trading guide says this, but all too few give the reader good examples of what constitutes proper money management. Of course, part of the difficulty comes from the fact that there is no definite answer or definitive guide on what to do. Our job is to establish analysis techniques that allow us to determine what to do in specific situations.

In this webinar we will use FXCM’s Strategy Trader platform to analyze best money management techniques for the Moving Average Crossover Trading Strategy on the Euro/US Dollar pair. Using readily available code, we will generate backtest results and see which types of stops and limits would have produced the best performance in the past 10 years of trading. In doing so, we hope to establish best practices on using similar trend trading strategies and learn more about these popular trading styles.

Click here to register.

About our guest presenter:
David Rodriguez is a quantitative analyst for DailyFX.com, specializing in statistical studies in currency trading markets and algorithmic trading systems for the Managed Accounts Programs offered by parent company, FXCM. He holds a degree in Economics from Williams College with heavy emphasis on quantitative methods and began trading financial markets in the tech boom and bust of 1999-2001. Since then, David's primary focus has shifted from equities to currency markets, but he continues to trade futures and futures options on a broad range of asset classes as well as currencies.

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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.

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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.

I came across this blog post and apparently there are trade training programs out there targeting successful online poker players. The main assumption is that playing poker is all about risk management and money management. You never have the certainty that you have a better hand, but with proper money management and risk management you can decide on the better move to play.

It sure seems like trading is providing similar qualities as gambling: “It's easy to participate, difficult to sustain success. Many just play for the thrills of winning and losing; relatively few systematically learn from experience and build skills over time,” or at least according to Brett Steenbarger.

All of this makes perfect sense when I see the success that eToro, a gambling site for Forex traders, is giving traders the thrill they want and the ability to easily participate in the Forex arena.

The big question I have is while there are so many people trying to make a living from trading, is treating trading as gambling the right approach? What do you think?

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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.

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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.