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I just met a gal tonight who, took a course or two, read a few books, and
spent a few years trading foreign exchange (which I know zilch about), and
claims to make well in excess of 1000% a year, with >70% winning
trades. This sounds like the typical vendor scam, I know, but she seems
like a straightforward person and doesn't appear to have anything at all
she's interested in selling me. Just a local gal who can't seem to believe
her own good fortune. This kind of unjaded "cheeriness" does not match the
demeanor of the other successful traders I've known. Fortunately, she
invited me to come over and watch her trade, so I guess I'll find out what
the real scoop is soon enough.
But I've got a couple of questions right from the beginning:
1) Where does the huge leverage (100 to 1) come from? What are the
mechanics of the foreign exchange game, that allow for this?
2) One of the broker sites bragged about the thin spreads and the nearly
infinite liquidity. My acquaintance said that this is true, and that it's
a far less manipulated market than stocks, for that reason. I'm always
interested in a fairer deal. Comments from you futures traders?
3) She claims that the foreign exchange markets are trendier and more
predictable than other markets. Hard for me to believe that anyone's
giving anything away for free! You'd think that "infinite" liquidity would
mean that you've got a ton of huge, highly sophisticated, trading
operations looking to squeeze a dollar out of every penny. I'd expect a
less fair slippage deal, but a better trendiness deal, from smaller
markets. Comments?
4) What should I read to acquaint myself with the realities of this market,
good and bad, before going over to hang out with her? Books, industry
propaganda, websites?
Thanks for any insights.
Paul
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