Why Forex Trading Is The Best Business In The World
Trading Forex as a Business: Reason #1 – Leverage
A big reason for choosing trading as a money-making endeavor is the leverage that’s readily available.
If you tried to borrow $100,000 from your favorite bank to start a business with no track record, you’d be shown to the door faster than you can say “pretty please?”
Trading provides the lowest-barrier, most efficient access to “borrow” tens, or hundreds of thousands of dollars in your bid to make a profit.
And the only collateral you’ll need for that is a measly 1% – 2% of the asking amount. There is no other business in the world (not even stock or futures trading) that can give you that kind of raw borrowing power.
Of course, as Uncle Ben told Peter Parker (aka Spiderman), with great power comes great responsibility.
The flip side to having so much borrowing power, is that you can financially ruin yourself if you go about it the wrong way.
That’s the Darwinism behind capitalism – the capable traders win, and the incompetent traders lose. It’s the law of the jungle.
Good traders use leverage to advance their goals, while bad traders use leverage to speed up their demise
This is why I always emphasize having a good trading education. It’s the fulcrum that determines whether leverage will help or harm you.
Reason #2 – Limited Downside Risk
One of the biggest risks of running a traditional business is that you personally stand to lose more than your initial investment.
If your brick and mortar business doesn’t work out (for whatever reason), you may be personally liable for the debts of your business – including outstanding payments to your suppliers and contractors.
Imagine you’re running a store that sells custom-made furniture. You’ve ordered a whole bunch of raw materials, got your workers to craft a whole line of new designer furniture, and signed a 12-month lease for the storefront where you’ll be selling your works of art.
Alas, 6 months later you’ve sold only 5 chairs, the business is drenched in losses and it suddenly becomes clear that this business isn’t going to survive.
What are you options now?
Well, you could
1) Remain in operation and pray for a miracle
2) Shut down the business and get sued by your suppliers, workers and landlord for not paying them like you promised. Your personal assets may be seized and sold to pay your creditors. You’ll most likely be declared bankrupt.
3) Quietly sell all your stuff and book a one-way flight to Nicaragua, never to return.
The risks associated with traditional businesses are often too impractical for the average person to consider.
With Forex trading however, your losses are (99.9% of the time) limited to the capital in your trading account. Only under very extreme circumstances will you ever be at risk of losing more than that.
Trading Forex as a Business: Reason #1 – Leverage
A big reason for choosing trading as a money-making endeavor is the leverage that’s readily available.
If you tried to borrow $100,000 from your favorite bank to start a business with no track record, you’d be shown to the door faster than you can say “pretty please?”
Trading provides the lowest-barrier, most efficient access to “borrow” tens, or hundreds of thousands of dollars in your bid to make a profit.
And the only collateral you’ll need for that is a measly 1% – 2% of the asking amount. There is no other business in the world (not even stock or futures trading) that can give you that kind of raw borrowing power.
Of course, as Uncle Ben told Peter Parker (aka Spiderman), with great power comes great responsibility.
The flip side to having so much borrowing power, is that you can financially ruin yourself if you go about it the wrong way.
That’s the Darwinism behind capitalism – the capable traders win, and the incompetent traders lose. It’s the law of the jungle.
Good traders use leverage to advance their goals, while bad traders use leverage to speed up their demise
This is why I always emphasize having a good trading education. It’s the fulcrum that determines whether leverage will help or harm you.
Reason #2 – Limited Downside Risk
One of the biggest risks of running a traditional business is that you personally stand to lose more than your initial investment.
If your brick and mortar business doesn’t work out (for whatever reason), you may be personally liable for the debts of your business – including outstanding payments to your suppliers and contractors.
Imagine you’re running a store that sells custom-made furniture. You’ve ordered a whole bunch of raw materials, got your workers to craft a whole line of new designer furniture, and signed a 12-month lease for the storefront where you’ll be selling your works of art.
Alas, 6 months later you’ve sold only 5 chairs, the business is drenched in losses and it suddenly becomes clear that this business isn’t going to survive.
What are you options now?
Well, you could
1) Remain in operation and pray for a miracle
2) Shut down the business and get sued by your suppliers, workers and landlord for not paying them like you promised. Your personal assets may be seized and sold to pay your creditors. You’ll most likely be declared bankrupt.
3) Quietly sell all your stuff and book a one-way flight to Nicaragua, never to return.
The risks associated with traditional businesses are often too impractical for the average person to consider.
With Forex trading however, your losses are (99.9% of the time) limited to the capital in your trading account. Only under very extreme circumstances will you ever be at risk of losing more than that.
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