Page 159 - Ultimate Guide to Currency Trading

percent goal, you would have to trade the absolute minimum. It could be reached with only a few

trading days a month, with only one or two hours of trading at each session.
The secret to getting the safest yet highest gains is to close out of the positions as soon as the

gain is made. Further safety could be provided by using only one-tenth of your margin at each trade
instead of the usual one-third. This would limit your exposure even further and force the chance of

possible loss to be very small indeed. Again, this type of trading takes a certain level of hands-on
monitoring, more than the automated-type trading that is done with more aggressive trading systems.

A good time to accomplish your total return gains is in the early afternoon when the markets are very
slow. This would give you time to react to any trade, up or down in price. Overall, if you would like to

try this type of trading, be ultraconservative, and use the shortest time frame charts such as thirty-
and fifteen-second charts to time your open and closing of the trades.

The One Tenth Solution and T-Bill Investing

If you are like most conservative investors, you will most likely have part of your overall portfolio
invested in bonds, CDs or cash. You might even have your money invested in a bond mutual fund,

which is one of the most popular investments for European investors. Either way, if you are looking for
a good solution to investing between the stability of bonds and the return of stock, then a mixture of

one-tenth currencies and nine-tenths T-bills would be perfect for you.

This mix of risk and risk-free is the one of the methods that is recommended by high net-
worth financial advisors to their big clients. The logic behind it is that there is very low risk to AA-rated
T-bills spread out in a laddered fashion. Since most of your portfolio will be in these relatively risk-free

bills, you will virtually be insuring that 90 percent of your portfolio will never be at risk. This 90 percent

invested in T-bills will earn 0.01 percent-0.2 percent depending upon market conditions.

Even though the credit rating of the United States has been down-graded from AAA to

AA, T-bills still reign supreme as the safest investments available. While some
government bonds are rated higher, these are usually issued in the foreign currency.

Therefore they are not as desirable as dollar-denominated U.S. government debt.