..compared to stocks
Here - http://forum.bodybuilding.com/showpo...&postcount=136. And here - http://forum.bodybuilding.com/showpo...&postcount=174
What do you guys think? I disagree, but I don't know enough about how the markets work to really explain.
Here - http://forum.bodybuilding.com/showpo...&postcount=136. And here - http://forum.bodybuilding.com/showpo...&postcount=174
QuoteDislikedWith both stock investing and forex trading, there is a commission, right? There is sometimes a flat fee, but also a percentage fee. Like you might buy 910 Yuan for $1.00, but if you sell the 910 Yuan back immediately you will only get $0.995. That is called the bid-ask spread. So, if you bought and sold repeatedly, one million times a day, your money would eventually dwindle to $0, with stocks and forex.
The difference between forex and stocks, is that forex has an EXPECTED return of zero. Over time, you expect that currency rates will be pretty stable, but with plenty of volatility. So, if you buy 901 Yuan today, it will likely still be worth about $1 in 5 years. A stock, however, has an expected return of about 8% annual. That is because there is an underlying company behind the stock trying to make profits. So if you buy $100 worth today, it will likely be worth $147 in 5 years (could vary greatly).
So if you trade currency, you will likely have ups and downs, but in the end, you will break about even. Then, when you factor commissions, you will lose money. It is similar to playing roulette, in that eventually the house (market makers) will win. But if you buy and hold a diversified portfolio of stocks, you will likely make money over the long-term.
Questions?
Can you show me a study of forex traders making money on the average?
QuoteDisliked1. My contention is that you cannot know where the exchange rate is going to go during that short time. It might go way up, it might go way down. But, the expected exchange rate on average, will be exactly what it was when you bought it. So that doesn't really change anything.
2. I understand the commissions can be lower. Thus, I would expect the average trade to lose 2 pips, which would very slowly lose you your money.
3. Why would you do something where the odds are so stacked against you? Did you know that there is no 30 year period in history where stocks lost $ overall? If you buy and hold stocks for the long-term, you are almost guaranteed to make $ over the long-term.