Page 115 - Ultimate Guide to Currency Trading

Larger Overall Assets

If you decide that you are the type of person who is willing to accept a higher risk in his currency
portfolio in exchange for a higher return, you will first need to see if this type of account is actually
possible. The main requirement for a high risk/high return currency portfolio is that you have a large
amount of investable assets. If you have a large amount of investable assets, then a currency account
that is amped up and tuned for high performance should be no problem. This is because your main
assets, such as your stock and bond portfolio, will be holding their own and providing a slow, steady,
and reliable return.

Since this is the case, the money you put into an FX account can be heavily traded and risked
often enough to squeeze out more returns than a more conservative portfolio. If you have a large base
of secure investments, you can set aside an amount for an FX portfolio. This currency portfolio can
consist of 20-25 percent of your overall portfolio. This 25 percent can be used to press hard, take risks,
and earn returns.

Many financial advisors who work at firms that specialize in high net-worth clients
recommend having some money set aside for risk taking. This money is often put into a separate
account, and is used to trade aggressively. If you desire, you can turn this portion of your overall
investable assets into a currency account.

Many people put money in an account to play with and to trade at will. This money is
often used to trade penny stocks, startup companies, and other forms of very risky stock
that have, a chance of earning high returns, but also a chance of becoming a loss. This
at-will trading pre-vents clients from touching their secure investment accounts.

You can use your currency account to trade aggressively and win big. Of course, in order to
trade aggressively, you will need to take more risks in proportion to the size of the account. A larger
account size will also allow you to sustain larger swings into and out of profit range. Since not all of
your trades will work out all of the time, a larger account will allow you to have a greater percentage
of your account that will be sitting in cash.

You can then trade aggressively with only 10 percent or 15 percent of the account assets. This
would leave 85-90 percent of the account available to soak up any reversals of fortune with your FX
trades without causing a mar-gin call. If you have 85 percent of your account in cash, this leaves a lot
of room for a trade to move into negative territory without the need for you to close out the trade. If
you have the cash in margin, you can allow time to work for you and wait in the trade for the price of
the pair to reverse. Once it reverses, you can then get out of the trade at a profit, or at the very least,
a breakeven.