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Thursday, November 3, 2011

You too can trade FX like the Primary Dealers

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MF Global.. leverage 40 to 1

Jefferies.. leverage 13 to 1

Why so much leverage?

Deep pockets, that's why.. When you get all the free fiat and bailouts you want from the Federal Reserve Bank you NEVER have to accept a losing trade!

These guys "bet wrong" all the time but they simply, strategically, add to their losers until they can either achieve a break even trade or make a profit.

You can trade this way too!

But I NEVER use even 13 to 1 leverage.. Due to account size and risk.

Once in a great while I may get to 4 or 5 to 1 but, generally speaking, by then I'm quite terrified! LMAO

If you have a 300,000.00 account you can very comfortably trade 10.00 per pip..

A 30,000.00 account? 1.00 per pip

A 3,000.00 account? 0.10 per pip

A 300.00 account? 0.01 per pip

Using this technique you can pretty much do whatever TF you want in the market without fear of being virtually destroyed by one or two bad trades.

3 lots = no leverage. 6 lots = 2 to 1. 12 lots = 4 to 1. Etc etc..

Leverage is VERY important and often overlooked or not properly understood.

Be careful out there for God's sake!

Greg

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