Inevitably, when any sort of traditionalist resurgence takes place, there tends to be a lot of skepticism about the new ways of doing things and wanting to go back to the ways of the past. When it comes to Forex and CFDs, people are often unwilling to give them a go. After all, when you’re in it for the money, what could possibly go wrong?
The truth is that taking a more old-school approach while trading Forex and CFDs can actually be a lot more profitable. Let’s take a closer look at the role that trader alliances and coordinated trading play in the Forex and CFD arenas.
The Dangers of Going It Alone
Let’s start at the beginning: Going it alone is always a risky business, and it’s doubly so when you’re trading. There’s no security net to fall back on if things go wrong; you’re completely on your own. You have no idea what strategies your competitors are using, and you certainly don’t have the resources to implement the same strategies yourself. If you’ve ever heard the expression ‘failing to plan is planning to fail’, then you have an idea of what happens when you go it alone without a plan.
Let’s assume that you’ve decided that you want to go ahead and try your hand at trading, but you don’t want to run the risk of going it alone, so you contact a couple of your friends to form a group. They’ve all been in the same situation and know what it’s like to trade without any experience, so they agree to help you out. In return for your friendship, you offer to help them with their investing problems. Nothing wrong with that, right?
Well, actually, there is. Because what your friends actually need from you is help with their trading strategies. They’ve seen how you manage your personal finances, so they know that you’ll be able to keep your mouth shut if things go wrong. What they don’t need is someone who’s barely competent enough to keep a budget for them. Thanks for thinking of them though; I hope you and your new found companions make loads of money together!
Why Partnering with Friends and Family Doesn’t Always Work
As we’ve established, going it alone is a risky business when trading. It doesn’t matter if you’re doing it in person or virtually; you’re always going to be at the mercy of the markets’ whims. That’s one of the main reasons why going with the flow and following the majority is usually the best approach: at least, you have someone to hold your hand through the tough times. Your trader family/friends will be there to support you, either emotionally or financially, and that’s all you need.
The problem is that not all friendships are created equal when it comes to investing. Some people are simply not capable of putting their own interests aside for the sake of the friendship. They’ll always have investment first and foremost, and the friendship will take a back seat to more objective factors, like how well you do compared to how you would have performed without their help.
What we have here is a failure to plan on the part of the investor. The fact that they trusted you enough to be your friend proves that they must have thought you were capable of handling their money well, but they weren’t really considering your interests at all. If you’re not careful, this can turn into an opportunity to make money without any risk to your own finances. Legally speaking, this is known as ‘pension plundering’.
The Inherent Risk in Commodity Investing
Most people think of investing in stocks or shares when they hear the term ‘investing’. However, there are several different types of investing that exist. One of the more unconventional types is ‘commodity investing’. Simply put, commodity investing involves purchasing a certain product or service – usually some type of a raw staple like grains, oils, or metals – and then simply holding on to it. In most cases, you’ll be rewarded for taking this sort of an approach because the prices of the products that you invest in are prone to dramatic swings. This makes it a bit more exciting than simply following the herd!
You have to be careful when investing in commodities. Just because the price is going up doesn’t mean that it’s necessarily the right time to jump in. If you do decide to invest in commodities, then make sure that you’re doing so in a way that’s right for your personal situation. For example, if you’re looking for an easy way to make a quick buck, then investing in individual crops such as grains may not be the wisest choice. Buying something in large quantities such as ‘futures’ or ‘bars’ (Metal contracts), also known as ‘future contracts’, is usually the preferred method of investing in metals like gold and silver. Knowing how to properly time your investments can be the key to success when it comes to profiting from the markets.
Posse Better Than Going It Alone
Now, here’s where things get interesting. Even though going it alone is a risky business when trading, having a ‘posse’ of friends and family who are willing to help you out can be a viable alternative. The fact is that not all of your friends will be able to keep their hands clean if things go wrong; some of them might even try to swing the pendulum in the opposite direction. It’s better to have a few wolves guarding the henhouse than to have no one at all!
When it comes to trading, you never know what sort of situation you might get put in. You might find yourself short of cash and in need of some quick money, or you might have enough to spare and be looking for ways to make extra profit. Going it alone might be tempting, but in actuality, it’s usually not the best option. If you have the option to work with others, then by all means, take advantage of it! You’re always going to be in a better position to succeed with the help of at least a few like-minded individuals.
Of course, just because you have a couple of options doesn’t mean that you have to go with the flow or play it safe. It’s always good to be prepared and think of alternative plans B and C, just in case the situation you’re in doesn’t take a convenient turn for the better. This might mean that you have to be a bit more vigilant and careful, but as long as you do what you need to do and don’t take on more than you can handle, then you should be able to come out ahead in the end.
In conclusion, not trading alone is always a good idea; there are just some situations where it’s better to have a couple of wolves guarding the henhouse than to have no one at all! Going it alone can certainly be risky, but if you learn how to navigate the financial waters wisely and use the right tools, then it’s more than possible to make a living and even amass some wealth through investing. Just make sure that you’re investing in something that’s right for your personal situation and that you’re not doing anything illegal. Just remember: as long as you play by the rules and use proven, tested techniques, then you’re good to go.