Article Contributed by Merv Thompson
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E-currency Trading - An alternative to Futures & Forex Trading
I find it amazing that nearly everyday I receive something
online or offline that is the greatest break-through in Trading.
You know the stuff. This system or that method has been
thoroughly tested and back-tested
in every conceivable fashion and is wildly successful. Some work
for a period of time but most do not. The decades old
statistical fact still remains, 90+% of Futures Traders will
lose all of their trading capital within their first year of
trading. Now there is a new and promising alternative.
Enter e-Currency Trading. In simple terms e-currency is
Internet Money. E-Currency allows the purchase of Internet goods
and services at lightning speed and most importantly with a high
level of security. Much higher than credit cards, bank transfer
etc. The demand for e-currency should only grow as Internet
Commerce grows.
So what does this have to do with trading? There are literally
hundreds of different e-currencies. Each is backed by an
underlying Currency or a precious metal. The need arises to
exchange between these e-currencies or convert an e-currency to
hard cash. Much like the Euro is to the European Union. We can
profit from the exchanging process and profit from the
fluctuation of the underlying currency value.
The same basic strategies apply to e-currency trading as with
futures trading. Supply and demand dictates price primarily. You
could buy e-currency that has historically performed well
(buying the trend) or go the opposite way and buy those that are
under-performing, looking for a turn-around. You can even chart
them if you like.
Leverage, that double-edged sword that Futures Traders are so
familiar with is also present in e-Currency Trading. You can
borrow against your portfolio to buy more e-currency. The
compounding affect is almost outrageous. Some would argue that
you never have to pay back the leverage. I contend that it is
paid back if you closed your e-Currency account, because your
final balance would be less the amount leveraged. The point here
is the leverage in futures trading is often times the demise of
a well intended trader versus the leverage afforded an e-
currency trader combined with the daily compounding affect
creates portfolio growth at a phenomenal rate. It is not
uncommon to see portfolio growth of 20 to 40% per month.
Futures Trading and e-Currency Trading have a common downside.
The learning curve is huge and can be frustrating and costly.
Each has unique terminology, which is impossible to work around
until you have a good understanding of the meaning. Thankfully
in this world of information, we are able to find resources
online and offline that shorten that curve. How much it is
shortened is dependent on how much time you want to dedicate.
Industry experts have debated for years the optimum amount one
should fund their futures trading account with. The obvious
moving target is enough capital to withstand the drawdown
periods. Many factors go into this but I have seen numbers
range anywhere from $10,000 to $50,000 and up. If this is the
case then there is little doubt why most futures traders lose as
most are willing to fund only the amount required to cover
Margin or the Brokers account minimum usually a few thousand
dollars. One of the biggest reasons for small business failure
is being under capitalized, the same holds true in futures
trading.
E-Currency Trading is different in that the experts recommend
starting with a few hundred dollars and let the system build
your account. Whatever route you choose, only trade with risk
capital.
E-Currency Trading certainly has advantages over traditional
futures trading and may well be worth your serious
consideration. Internet Commerce is in the Billions and is
forecast to triple over the next 10 years. Many are seeing E-
currency Trading as a ground floor opportunity with huge growth
potential.
About the Author
Merv Thompson Author and operator of
www.futures-
brokers-review.com a website providing tools, resourses and
reviews for todays trader.
Additional information on e-currency trading can be found at
e-
Currency Info
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