Saturday, April 24, 2010

Too Big to Fail.- USA

If you read financial news, you will discover the phrase "Too Big To Fail". What does it mean? Basically, it means if some giant financial institution or country monetary fails, it will create catastrophic for the whole nation or the world.
In Forex Market, political and economic events force the price movement heavily. For the last 6 months, Greece dominated the FX market news. Everyone know Greece has a lousy and unmanageable debt which drag EURO down to bottom and no people wonder why USA have more then USD 12 trillions debt but still consider the most powerful economic nation of the world. Visit this link and you will be shock!! http://www.usdebtclock.org/index.html
Why? The answer is USA is really too big to fail! The whole economic debt and financial web are spiraled by USD. China and other large nations are holding USD dominated papers. If USD value go down, so will these nations assets. Most of the developing countries still rely on the export to USA
Do you still think USD value will go down to drain? In the next 30-50 years, it is impossible!!! By the way, I am not supporting USD but only telling you the facts.


Friday, April 9, 2010

Forex (FX)- Another Asset Class

Most of the investors are familiar of Stock (Equities) Market, Bonds, Options, Future Market or any other derivatives think Forex is only an alternative investment. Forex market offers high reward and passive income if you know how to deal with it. I always heard people who lose money in Forex Market shy away from it and refer FX as a high risk investment. Indeed, I agree with them because they are using high risk way to look for unreasonable return.
In FX market, some people ask me whether I use margin or not. I told them I use 'controllable margin' which I can define the risk and reward accordingly. I don't treat FX market as Casino as most of the players do, I look at it as Gold Mine. Beside risk management, I like to hedge my position once mistakes are made. With all the risk management elements in place, I will make my move and look for opportunities to strike.
Why FX is consider the most valuable asset class in my investment dictionary? Firstly, it is the most liquid asset you have. Heard of 'Cash is KING'?  it is! With plenty of cash in hand, it will increase my bargaining power in any business deal. In fact, one of Warren Buffet's investment philosophy is looking at company with strong net cash flow which can offer lucrative dividend to investors. Secondly, I can shift my asset classes instantly. If I foresee certain country in trouble, I will sell their currency and buy those with strong economy fundamental. It increase my return within days. Third, by accumulating cash, I have freedom to transform it to another asset within second. I can buy anything with cash in hand. Those who own property and other asset will have trouble to sell it if they need cash urgently. I contend FX consider as the most ultimate asset class in my portfolio. 

Thursday, April 8, 2010

Formula 1 = Forex Market

Imagine you are the Formula 1 driver, what is the feeling when you ignite the start button and all the 5 red lights turn off one by one?  Forex market is the venue for investors who look for good return. Some investors who look worry when they see their account balance drop. I told them, if you want to look for so-called fix income return, Forex market is not the place. To make money in Forex, it is same like other market, you need time. Even the best F1 driver cannot win straight all the tournaments from Bahrain, Melbourne, Malaysia, Shanghai....... and back to Abu Dhabi.
Look at the last week Sepang race, all the top guns not even qualifed for the top 5 poles. They also make mistakes, sometimes the weather will make them lose focus too. Trading Forex is like driving F1, sometime we are too confident on some trades and lose focus on minor but fatal mistakes. The only way to rectify the problem is using time to 'drive' professionally and patiently to cover the loses. One of the F1 drivers, Lewis Hamilton know about this and will do whatever to get the point in the end of the day.
Once mistake made, I will use my passion and 'drive' patiently to build up the account again. Like F1, there are always another country's currency  for me to 'race' again. So no need worry, sometimes power of attraction will make things worse.
 
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