Why Bother to Trade Currencies?
Mar 18th, 2008 | By Sean Hyman | Category: US Dollar & Forex TradingIn yesterday’s A-Letter, I gave you a few quick stock investor tips for trading currencies. But in the wake of the whole Bear Stearns mess over the weekend, you may be considering switching over to my favorite market all the more now.
So let’s take a look at some more reasons why currencies can pad your portfolio, when stocks just don’t provide the profit potential they once did.
For starters, you can earn DAILY interest by buying these currency pairs rather than earning QUARTERLY dividends in the stocks. This is a huge advantage. You’ll also enjoy better fills on your orders (even market orders) because the currency market has more volume than all stock markets of the world combined.
You’ll also enjoy the benefit of the extra leverage. Generally in stocks, you can leverage 2-to-1 or 4-to-1. In currencies, you can leverage up to 400-to-1. (But 100-to-1 leverage is much more common.)
Of course, you don’t have to use such a high leverage. You can use a conservative leverage of just 10-to-1. That way, you’re also greatly increasing the DAILY interest that you receive on your position. Plus, if you’re right in your assessment of where the market is going, you’ll gain far more than you would in the actual stock index that it tracks.
You can buy or sell a currency pair 24 hours a day Sunday evening through Friday evening. So if you hear of some bad news after the stock market is already closed, you can still exit your currency position while the stock traders can only bite their nails and wait for the opening. There are minimally several times a year where this facet could be of great help to you.
SEAN HYMAN, Currency Director
P.S. That really is just a glimpse at how you can escape the turmoil of stocks with currencies. For more on trading currencies, sign up for our FREE currency E-Letter, My Two Cents.
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[...] Original post by Sean Hyman [...]