It is not logical to live with only forex; it is unlikely to make a monthly income, and I will never count on it as my first and main source of income.
Is it wise to rely on Forex only?
- Thread starter Waylen
- Start date
The larger your stack gets, the harder it is to maintain returns in. Those guys are pretty much forced to heavily diversify. If they were to stay fully invested/leveraged with that much money in limited instruments they couldn't help but move the market before they had a respectable position on. When you're a small trader, that isn't an issue and you have the advantage of trading anything without changing the situation that attracted you to the market.
Simons has said as much. (I heard him mention on a YouTube video how he had to limit the size of his trades. Though of course, he personally retired from Renaissance in late 2009, and stepped down as non-executive chairman in 2021). And of course, the Medallion Fund has been closed to outside investors since 1993.
Hi all, hope you're well.
Understanding forex trading is complex yet beautiful. It gives us a sense to predict where the world currently is and where it could go next.
However, I think we have a misconception of forex. We miss what makes it so big and how do the numbers actually work.
What makes it big
In any currency pair, such as EUR/USD, the first currency (EUR) is known as the base currency, and the second (USD) is the quote currency. The price of the pair indicates how much of the quoted currency is needed to purchase one unit of the base currency.
When we see EUR/USD trading at 1.1000, it tells us the exchange rate between the Euro and the US Dollar. Therefore, to buy 1 Euro (base), you need to spend 1.10 US Dollars (quote).
When a currency is expected to offer higher returns through economic strength, demand for that currency goes up, and so does its value. Conversely, if a currency is seen as offering lower returns due to economic troubles, its value compared to other currencies may fall.
The goal of perfecting every prediction is not probabilistic but by staying informed, analyzing market sentiment, and employing sound risk management strategies, we can navigate the forex market’s unpredictable nature more effectively.
To know more, have a look at the links below. Hope it helps!
-> what makes forex as big as it is
-> how do the numbers work in forex
Understanding forex trading is complex yet beautiful. It gives us a sense to predict where the world currently is and where it could go next.
However, I think we have a misconception of forex. We miss what makes it so big and how do the numbers actually work.
What makes it big
- Forex is the largest financial market in the world. According to some estimations, its total size is approximately $2.4 quadrillion, about 30 times the combined US stock and bonds market.
- The forex market operates 24 hours a day, five days a week, accommodating global participants across time zones.
- It is influenced by Individual Retail Traders, Large Institutions (Hedge Funds, Investment Managers), Central Banks, Commercial and Investment Banks, Multinational Corporations, and Governments.
In any currency pair, such as EUR/USD, the first currency (EUR) is known as the base currency, and the second (USD) is the quote currency. The price of the pair indicates how much of the quoted currency is needed to purchase one unit of the base currency.
When we see EUR/USD trading at 1.1000, it tells us the exchange rate between the Euro and the US Dollar. Therefore, to buy 1 Euro (base), you need to spend 1.10 US Dollars (quote).
When a currency is expected to offer higher returns through economic strength, demand for that currency goes up, and so does its value. Conversely, if a currency is seen as offering lower returns due to economic troubles, its value compared to other currencies may fall.
The goal of perfecting every prediction is not probabilistic but by staying informed, analyzing market sentiment, and employing sound risk management strategies, we can navigate the forex market’s unpredictable nature more effectively.
To know more, have a look at the links below. Hope it helps!
-> what makes forex as big as it is
-> how do the numbers work in forex
I think wise people won’t rely on Forex trading only because they know how hazardous the market can be for them.
Relying solely on forex trading can be risky as it exposes you to the fluctuations of a single market. Diversifying your investment portfolio across different asset classes such as stocks, bonds, commodities, and real estate can help mitigate risk and improve overall stability. By spreading your investments, you can potentially reduce the impact of adverse movements in any single market and enhance long-term returns.
Relying solely on Forex trading for income can be risky due to the market's inherent volatility and unpredictability. Diversifying your investments across different asset classes can help mitigate risks and provide more stable financial returns. It's important to have multiple streams of income and a solid financial plan to ensure long-term financial security.
Relying solely on forex trading for income can be risky due to the market's volatility and uncertainty. Diversifying your investments across different asset classes, such as stocks, bonds, and commodities, can help spread risk and provide more stable returns. Having multiple streams of income outside of trading can provide financial security and reduce dependency on forex trading alone.