Today I want to tell you a story about an exciting time in my life.
A time when the latest market news would send me running to my computer.
And when trading signals like morning stars, inside candles, and Elliott waves dominated my daily routine.
I am talking about my days as a currency speculator.
I look back on those days fondly and with gratitude for the many lessons I learned.
However, it wasn’t all good times and big profits.
Trading the forex markets was equally the most exciting and the most challenging job I ever had—an emotion-filled rollercoaster of success, failure, and endless market study.
If it weren’t for my stubbornness and naturally cautious attitude, I certainly would have failed.
Now, you’re probably wondering, if I invested so much time and was successful in the end, why did I stop?
First, I was always worried about a flash crash.
This freak occurrence, which happens more often than you might think, can erase a whole account in an instant.
Sure, there are strategies for mitigating this risk, but I didn’t trust them, especially as I had all my wealth at the time invested in my trading account.
In the beginning, I was comfortable taking this risk. It’s part of the job. But, as my account grew, the worrying intensified and began interfering with my daily life.
The concern became overwhelming, and, when I finally decided to stop being a currency speculator, I felt immediate relief.
Today, I speculate with currencies occasionally, but only if I see a trade that’s too good to pass up. And I keep my positions small.
Investing Beats Speculation For Three Reasons
The second reason why I stopped being a full-time currency speculator is that I found something better—the stock market.
Investing in stocks takes less time, comes with less risk, and can provide returns that are just as high. Here’s why…
The first difference is time.
Sure, background research for stocks is just as time-consuming as it can be for currencies and requires careful judgment. However, once I buy the stock, I don’t need to track it every day. My investment horizon is longer, so I can manage my account based on quarterly reports and major news alone.
The second difference is risk.
As a rule, the value of stocks increases over time. You could create a portfolio of a random group of stocks, let it sit for a few years, and then return to it to find that it has appreciated in value. That’s not the case with currencies. While they move around a lot, over long periods, their value stays the same.
And regarding returns…
At first glance, they are higher in the forex markets. However, that’s a result of leverage. If I were to use leverage when investing in stocks, I could get the same super-charged results… and I could do it using less leverage than is required when speculating on currencies.