Forex: No psychological limitationsPosted by Nick Niesen on October 29th, 2010 Back when I first started learning about investing, I decided to start from the beginning and read basic books on personal finance as well as ?guides? for understanding all of the investment world in a nut shell. Most of these authors were very knowledgeable and informative, but their investment advice was far too conservative for my taste. They would literally write chapter after chapter talking about the differences between conservative investing, which according to them generally yields somewhere around 5% PA, as opposed to ?risky? investing which usually meant a diversified stock/mutual fund portfolio yielding (in my mind) only slightly higher averages. What kind of returns can you expect in the stock market? Well they say the market has gone up an average of 10% a year since Adam and Eve. Popular indexes like the DOW and the now more popular S&P500 have always, like real estate, ?gone up over time.? Now, these market averages are almost worshiped like golden calves. Repeatedly drilled into my brain was the concept that there were hundreds (if not thousands) of fund managers and other ?professionals? out there with Harvard degrees, decades of experience, millions of dollars under management, and they were all spending 15 hours a day consuming every single bit of market information in the hopes of beating these golden calves by a few points. What chance did I have? If Dr. Fund Guru Jr. who eats, sleeps, breathes the markets and has more credentials than I have individual hairs on my body can?t consistently make 20% a year...well...forget it kid...your chances are slim to none. I guess I?ll buy some shares of XYZ fund and accept the scraps off the table from the stock gurus. NOT! The foreign exchange market offers many benefits that the stock market does not have. Most of these have been beaten to death on various forums, blogs, articles, e-books, etc. However, it?s always good to reiterate the positive (my own personal reason is last): The list does go on, but for me the biggest advantage is a psychological one. I know it probably sounds silly, but fear and intimidation can sometimes subconsciously defeat us before we even begin. I don?t like the idea of having to live up to, and in a way, compete with ?professional managers? who have more knowledge of the fundamentals of the markets than I ever will. It?s almost as if Forex, in some way, levels the playing field. I don?t have to psychologically compete against anyone?s idea of what kind of returns are ?acceptable and realistic? and what kind of returns are ?pure fantasy.? I only have to trade until I can find an acceptable reward to risk ratio, and consistent profitability thereof. The only one I compete against is myself. -Joshua White Like it? Share it!More by this author |