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The decades old statistical fact still remains, 90+% of
Futures Traders will lose all of their trading capital
within their first year of trading. Now there is a new and
promising alternative.
Enter e-Currency Trading. In simple terms e-currency is
Internet Money. E-Currency allows the purchase of Internet
goods and services at lightning speed and most importantly
with a high level of security. Much higher than credit
cards, bank transfer etc. The demand for e-currency should
only grow as Internet Commerce grows.
So what
does this have to do with trading? There are literally hundreds of
different e-currencies. Each is backed by an underlying Currency or
a precious metal. The need arises to exchange between these
e-currencies or convert an e-currency to hard cash. Much like the
Euro is to the European Union. We can profit from the exchanging
process and profit from the fluctuation of the underlying currency
value.
The same
basic strategies apply to e-currency trading as with futures
trading. Supply and demand dictates price primarily. You could buy
e-currency that has historically performed well (buying the trend)
or go the opposite way and buy those that are under-performing,
looking for a turn-around. You can even chart them if you like.
Leverage,
that double-edged sword that Futures Traders are so familiar with is
also present in e-Currency Trading. You can borrow against your
portfolio to buy more e-currency. The compounding affect is almost
outrageous. Some would argue that you never have to pay back the
leverage. I contend that it is paid back if you closed your
e-Currency account, because your final balance would be less the
amount leveraged. The point here is the leverage in futures trading
is often times the demise of a well intended trader versus the
leverage afforded an e-currency trader combined with the daily
compounding affect creates portfolio growth at a phenomenal rate. It
is not uncommon to see portfolio growth of 20 – 40% per month.
Futures
Trading and e-Currency Trading have a common downside. The learning
curve is huge and can be frustrating and costly. Each has unique
terminology, which is impossible to work around until you have a
good understanding of the meaning. Thankfully in this world of
information, we are able to find resources online and offline that
shorten that curve. How much it is shortened is dependent on how
much time you want to dedicate.
Industry
experts have debated for years the optimum amount one should fund
their futures trading account with. The obvious moving target is
enough capital to withstand the drawdown periods. Many factors go
into this but I´ve seen numbers range anywhere from $10,000 to
$50,000 and up. If this is the case then there is little doubt why
most futures traders lose as most are willing to fund only the
amount required to cover Margin or the Brokers account minimum
usually a few thousand dollars. One of the biggest reasons for small
business failure is being under capitalized, the same holds true in
futures trading.
E-Currency
Trading is different in that the experts recommend starting with a
few hundred dollars and let the system build your account. Whatever
route you choose, only trade with risk capital.
E-Currency
Trading certainly has advantages over traditional futures trading
and may well be worth your serious consideration.
by Mery Thompson
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