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Old 11-03-2005, 12:22 PM   #13 (permalink)
Yakk
Wehret Den Anfängen!
 
Location: Ontario, Canada
Quote:
Originally Posted by Lewis
Yes, Forex is foreign exchange.

Personally I'm doing 200:1 but you can do up to 400:1.

Sorry, don't understand the question about security.

Are you likely to get 95% positive results at the casino - in which case, I'd go for it!
Yes, you are likely to get a 95% positive result at the casino.

Of course, the other 5% of the time you'll lose your house.

At 200:1, you are borrowing 200$ for every 1$ you put in. Which means a drop of 10% in one of your investments would cost you 20 times your "investment".

If you invest 100$ and borrow 20,000$ (200:1) at 7%/annum, then make 25$ over the week, what was your rate of return?

A> 25% per week!

B> [25$ + 26$] / (20,000 + 100) = 0.25% per week
(the 26$ is what was required to pay off the interest, and when you worked out your 25$ profit you included the interest cost)

C> [25$ - 26$] / (20,000 + 100) < 0% per week
(if you didn't factor in your interest payments, deferring them to another time)

D> 7% per year (B's result, which is about 14% per year, minus the 7% per year cost of interest on carrying that debt)

In effect, if I expose myself to enough credit danger, I can turn 1$ into 100$ with nearly 100% certainty over a single week. The trick is the hidden cost of the danger to my credit.

Are your trades done from within a limited liability corperation? Are there any assets within the LLC that are used to leverage your investment with?
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Last edited by JHVH : 10-29-4004 BC at 09:00 PM. Reason: Time for a rest.
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