Posted on March 8, 2010.
High rate of return comes to negotiating short bursts Timed well In turbulent markets, a high rate of return is probably won by strikes and fast exits the market. Although the market should be in a rising long-term after the chaos of 2008-09, there is no security guarantee anyone on the market will not be subjected to this kind of incredible bad news that we have seen Over the last 12 months of negotiations.
Find a Sure Thing and small leverage to the handle to make a high rate of return
Whenever I want to get a high rate of return (read: always) with minimal risk, I shall not want to find a small, but gain 99% thing is certain in the market, then I borrow all the money as I can to increase the amount of purchasing power that I have (I use leverage) to buy as many units <i> this operation small gain as possible </ i>. Perhaps an example will help.
Jane invests $ 10,000 in currency A, which earns 1%, producing $ 100 profit.
Kim with $ 10,000 buys $ 2,000,000 of currency A (on margin), which earns 1% to $ 20,000 profit (return of 200% on Kim initial $ 10,000). This would be considered a leverage ratio of 200:1. Kim has bought 99.5% of its investments on margin (with borrowed funds).
Long-term investors have become long-term suffering
Face it, we were all fooled. I hope it is easy to see why long-term investors like Jane to invest anything in the market, while other more sophisticated investors such as Kim leverage small gains to be had statements short-term rates high return trades. There's really no other way to get a high return by investing long term. In today's market, the risk of financial fraud, economic crisis, and the general incompetence Executive makes investment in 2009 will seek an operator only. Understand and apply them to leverage small market inequalities is how the best traders make money today.
People who learn to find small gains and then use leverage to increase their purchasing power for short bursts stand the best chance of being able to grow in a market that does not reward the patience of investors long term.