consider myself a forex trader. In the recent Standard Bank Webtrader currency trading competition, winner Ricky Jacobsohn turned 100 000 into more than.3 million in just 30 days. So, basically, a platform that encourages a high trading strategy is there to make money out of you. The answer is leverage.
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He explains that, if you take a position that the dollar will strengthen against the rand and you are paying a 10 interest rate, the rand must depreciate by more than 10 to make a profit. He says that, like any skill, it takes time to learn the techniques and strategies. If the rand suddenly strengthens to R12.50, you can wipe out nearly 80 of your entire investment. Just like an investor can trade stocks or commodities, an investor can trade currencies and try to profit from the difference in the exchange rates between 2 countries currencies. Duncan says people also dont understand the costs of carry, which is the interest rate you effectively pay for holding a position. Forex transaction: IT'S ALL IN THE exchange. The reality is that they are trading aggressively and closing positions daily, which just adds to the cost of trading.