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MAKE A KILLING? Why invest in a managed currency portfolio when the same amount could 'make a killing': the same dollars could buy 100 times as much in currency (if used entirely for margin) and gain a huge profit? Anyone tempted to pursue that path would have to face the two core problems in currency trading: Greed and Fear. First, greed will induce you to buy a bigger position than you can emotionally handle. What do you do when you are wrong? Most likely, fear will set in. You will liquidate your trade, lick your wounds and leave the market alone for a while. In the mean time the currency may have started a major move in the other direction and you may be "at a loss" in deciding when to finally commit yourself again. Successful speculators handle fear in ways that are essentially different from unsuccessful speculators. What they are capable of doing is to maintain an optimal distance from the fear. Unsuccessful speculators either deny that fear completely by splitting it off (the overly confident), or are so overwhelmed by the fear that the anxiety becomes intolerable (the constant worriers). |
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