Got into a discussion with someone, he says forex is inherently a losing game
. .compared to stocks
Here - http://forum.bodybuilding.com/showpo...1postcount=136. And - http://forum.bodybuilding.com/showpo...1postcount=174
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Originally Posted by ;
Together with both stock investing and Foreign Exchange trading, there's a commission, right? There is sometimes a percentage commission, but also a fee. Like you might buy 910 Yuan for $1.00, but if you sell the 910 Yuan back immediately you'll just get $0.995. That's called the bid-ask disperse. Consequently, if you bought and sold one million times a day, your funds would dwindle to $0, with both stocks and Foreign Exchange.
The distinction between Foreign Exchange and stocks, is that Foreign Exchange comes with an EXPECTED yield of zero. Over time, you anticipate that currency rates will be pretty secure, but with plenty of volatility. Consequently, if you buy 901 it will likely still be worth roughly $1 in five years. A stock, however, has an estimated yield of about 8 percent yearly. That's because there's an company behind the stock attempting to make profits. Therefore, if you buy $100 worth today, it will likely be worth $147 in five years (could change greatly).
So if you exchange currency, you will likely have ups and downs, but in the long run, you may break . When you factor commissions, then you may lose money. It's comparable to playing roulette, in that the home (market makers) will triumph. But if you buy and hold a diversified portfolio of stocks, you will likely make money.
Questions?
Can you show me a study of Foreign Exchange traders making money on the typical?
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Originally Posted by ;
1. My contention is that you cannot know where the exchange rate is going to go during that time. It might go far up, it might go way down. However, the anticipated exchange rate on average, will be precisely what it was when it was bought by you. So that doesn't really alter anything.
2. I know the commissions could be reduced. I would expect the trade to shed two pips, which would lose you your money.
3. Why do you do something where the odds are stacked against you? Were you aware there is no 30 year period in history? If you buy and hold stocks for the long term, you are almost sure to make the long term.
What do you guys think? I disagree, but I don't know enough about how the markets work to clarify.