Forex System Auto Trading

nicky b January 24th, 2010 at 2:36 am

Try to figure out how he did it. Then everybody else would do it and he would lose all his money, and write a book about it and make a million or so. It would be titled How I cornered the worlds currency market.

SimonC January 24th, 2010 at 3:33 am

Firstly, there isn’t anywhere near enough money on the planet for someone to double their money every day. Do the maths and you’ll see that you end up with well over 10^100 pounds – which is billions of pounds for every proton in the universe!!

But even the greatest traders do not come anywhere near doubling their money in a day. They make profits by trading vast sums on tiny margins. A 1% profit in a day is excellent if you were trading with £10 million.

And in any case there is a limited supply of currency, which is small compared to the reserves held by governments (of their own and other major world currencies). If one trader (or bank) bought up all the available Pounds Sterling, the impact would not be catastrophic. And to do so would mean they probably had to spend all their reserves of other currencies, which is a highly risky strategy.

The national government that issues a currency has a number of defence mechanisms to avoid any possibility of this kind of thing. EG they could set interest rates to zero, meaning the trader holding the currency would not be earning anything on his holdings. So he would have to sell, which would lower the price, so he might end up with a loss. Or a government could take even more extreme measures such as devaluing the currency.