Saturday, April 27, 2013

Hi,

Today is a no trading day, but I am still here posting something. There was something going on my mind past few weeks. It was regarding the erratic ways the bling commodities were behaving.

I mean the ever popular Gold and Silver. They both have been going a downhill since past few months, but just a fortnight back, they both just went straight down South, and that too very very quickly.

I know everywhere around people will call that an opportunity, as they both are considered to be the safe havens.

Indeed they are, but to tell you a fact, they both are not meant to be traded on the Forex market.

Not that they do not go up or appreciate, but the reality is that they do not follow much of the rules that the major currency pairs follow.

Firstly, they both require a very high margin, which automatically exposes your account to a risk of losing much or all of your deposits.

Yes, they both go up and down a lot, and with their even very small movements in either of the direction leads to a big loss or gain.

The point here I am trying to make is that the most popular forex indicators like the Elliot Wave Theory and the Stochastics do not follow the same basic principles that they do for the other major currency pairs.

Menaing is simple and clear, the most popular theory that I follow for the trading on Eur/Usd of 3:1 profit vs. loss can be a real dud when it comes to the metals.

I feel metals are a good investment when dealt in tangible or the paper state, but a big no-no if it is the Forex. One is bound to lose more when trading with them.

So my funda is that retail investors should stay away from these.

Regards
Aditi
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