Quote:
Originally Posted by Kenny B!
Trade on margin is the worst advice you can give anyone. That's how I got killed back in 2001, I was trading huge volume on margin and making great money until the crash.
I had to sell good stocks to cover the bad ones that had margin calls. Once you sell, it's gone and you can't ride it out.
I still hold some stocks that I picked up in 2008 and am doing well on them, they are my long term holds, but that doesn't represent much of my overall asset base.
I am not doubting the skills some of you guys have, I have learned that I personally can't time the market. So real estate it is for me.
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Slow down a minute and look at it again. First of all, the margin is much larger on for the Forex market. I think Oanda maxes out at 50:1 but most go to 200:1.
Now go look at a chart and how much a pair moves in a day / week / month. Let's say one goes up and down 30 or 40 points at a time then moves big at 200-2000 points either direction.
You might put $1000 in and buy / sell with $200 on margin to control $10,000 worth of contracts. If it goes down say 50 points (pulling out of my ass) your margin call shuts you off. If it goes up you can turn $1,000 in to $5,000, $10,000, $25,000 in no time. It doesn't take many winners at 25 times your total risk to get way ahead and have a nice chance of staying there.
Let me say it like this, I've taken a sum of money on Oanda and bought gold with one while shorting it with the other. Because they were in separate accounts the wins didn't pay for the others losses. At some point one margins out and the other is already say 50 points ahead. You can throw your remaining margin behind the current winner and give it even further that it can backtrack before losing. This gives it more room to fluctuate before going the direction you want / expected.
I don't have the screenshot anymore but last time I put a pittance in this when I thought Eur/USD would cruise up and 2 years later I was thousands of points ahead on the one that won. If I had thrown even $1000 at it I would be sitting on a giant pile of cash.
The best thing about Oanda is that you can go test this with $5 or something. You can trade 1 measly unit there, unlike others. I only trade for fun but damn is it fun.