I’m a marketing director for an advertising agency and a part time stock and fx trader.
Our company get a new project, which is to do a web site for marketing fx managed accounts.
Since I’m the only employee that knows anything about fx, is my task to write the text. Thinking about that, I get an idea that I’m not sure is legitimate (but sounds good
).So I would kindly ask you to follow my reasoning and tell me if I’m right or I’m just writing BS.
So my thinking process went this way:
- FX has many advantages when compared to the stock market (the same should be for the difference between fx managed accounts and investment founds):
-Much, much, much better liquidity,
-lover commission cost,
-the possibility to go long or short – a good trades doesn’t care where the economy goes – he has always the possibility to make profit – a fund manager doesn’t.
-is a more logical market since reflects a whole economy vs. 1 stock that could be easily manipulated by only 1 manager or a bad article; that’s makes this market more predictable,
-in a lot of countries there are no taxes for income from trading fx.
- BECAUSE OF THOSE REASONS banks and brokers give you a higher leverage if you open an account to trade fx, than if you open an account to buy shares.
Eg. If I open an account to trade shares, my broker will eventually give me a possibility to buy some predefined certificates on some shares with a leverage of max. 3 (so if I put 10.000 $, I can operate with 30.000), but in most cases – if I want to choose by my self the shares I want to buy – the broker will give me a leverage form 0,5 to 1 (so if I put 10.000 $, I can operate with 15.000 – 20.000).
If, on the other hand, I open an account with the same bank to trade FX, they offer me insane leverages : up to 1:400, 1:600,..
So the difference in the leverage that is offered is enormous : 400 - 800 x !!
- question: can we therefore assume that fx trading is safer? 400 – 800 x safer???
Funds, hedge funds, etc.. over the long run make profits of about 10-15% a year (Although in my country (Slovenija) 100% a year was very often seen in the last 10 years).
The managed account I have to write this promo text makes in average 16,9 % a month.
The worst month in the last year was 12%, the best 19%. So on a yearly basis the difference in profit is app. 40 x .
2. question: can we therefore assume that this managed account is 40x more profitable than founds, and at the same time 10-20x more safe???
Any comments are very welcome. I’m tempted to publish this ‘theory’ but I wound like to blame my self later if some financial geek proves me wrong .
Best regards,
Mitja