Chris’ note: Everyone hates when central banks raise interest rates. At least that’s what you’ve been led to believe…
It’s true that rising interest rates hit stocks and push bond prices down. As such, 2022 was a dismal year for most investors. But Legacy Research’s mission is to help you move the needle on your wealth… no matter what kind of market we are inAnd that search led us to the currency market.
Even if stocks and bonds crash, many readers have been given a chance to score a string of profits. is.
Trading legend Larry Benedict will elaborate on the opportunity next Wednesday at the first currency trading event of his career. So if you haven’t already done so, RSVP by simply clicking here.
Below, Larry shows why currency markets are booming right now. And he shares two of his risk management tools that every currency trader should use.
An unusual window is opening to the market…
And those who take advantage of it will do very well in 2023 despite stock turmoil and negative economic news.
It has to do with what is happening to interest rates.
Over the past year, the Fed has raised interest rates at the fastest pace since the 1980s.
It helped crush the stock market. And bond prices (which fall when interest rates rise) fell.
But it’s not all bad news…
This is because, as in the past year, when the interest rate narrative takes hold, currency markets reinvigorate.
And the profit opportunities are immense.
world’s largest market
The currency market, also called foreign exchange (foreign exchange), is the largest market in the world.
And changes in interest rates have a huge impact on this market.
Because it goes where capital is best treated. If in US dollars he can earn 5% interest, but in euros he can only earn 3% interest, where will he go?
Therefore, if one country’s central bank raises interest rates faster than another country’s central bank, the exchange rate will fluctuate significantly.
Currencies issued by more hawkish central banks will appreciate relative to those issued by more dovish central banks.
That’s why the dollar surged in 2022 as the Fed hiked rates more aggressively than other central banks.
The chart below shows how many euros you can buy with one dollar.
The dollar gained 17% against the euro as the Federal Reserve (Fed) hiked interest rates more aggressively than the European Central Bank (“ECB”).
The dollar then fell 12% against the euro as the ECB caught up.
These are massive moves that can be utilized for trading profits.
It’s not just the dollar and euro that are making dramatic moves.
The British pound has fallen almost 12% against the dollar in August-September 2022. The Canadian dollar has also fallen more than 6% against the dollar in just two weeks in September 2022.
So now is the time to get the currency market on the radar. A new “Currency Window” opens up in front of you…
Most people only focus on stocks and bonds. But I don’t want my readers in it.
That is why I am writing to you today. There are many myths about currency trading that prevent the general public from participating.
And the biggest myth is that forex trading is too risky.
How to handle leverage
Like all myths, there is a grain of truth to it…
It’s too easy to blow up your entire account if you don’t know what you’re doing as a forex trader.
This is because forex accounts allow you to easily apply leverage to your trading. This amplifies your profits by winning trades. But it also amplifies your losses.
So I would like to explain the dangers of forex…and show you how to turn them to your advantage.
Most currency brokers will keep a percentage of your trades in your account as a “margin”. For example, if a broker requires his 1% margin, using $1,000 he can control $100,000.
In this example, if your trading volume increased from $101,000, you would have made $1,000 by moving just 1%. Starting capital doubled. that’s nice…
But that’s 100:1 leverage. And as soon as it benefits you… it can also wipe out your account.
In this same scenario, if the trade drops 1% to $99,000…you’ve lost $1,000 when you started. That’s 100% loss. And you are out of the game.
Also, some brokers allow leverage as high as 400:1.
With such leverage, a loss of 0.25% on the above trade is enough to wipe you out completely.
You will no doubt hear stories of people claiming that this kind of leverage is how they made their fortunes in Forex. However, far more traders self-destruct this way than becoming millionaires.
So the first step in managing forex risk is choosing the leverage you can handle.
And risk management is something I know all too well.
As regular readers know, I made a name for myself as an undefeated trader from 1990 to 2010.
For that accomplishment, I was featured in the 2012 book about the world’s best hedge fund managers. The magician of the hedge fund market.
And last year, when the market flipped, I told readers my one ticker trader Chance to close 11 out of 11 winning trades for a cumulative profit of 240%.
In general, 7:1 is the highest level of leverage that we recommend you use as a currency trader. For more conservative traders, 5:1 leverage is sufficient.
It still amplifies your profits. However, you are not annihilated when the deal goes against you.
24 hour market
Another feature of the Forex market is that it is traded 24 hours a day. That is, from 5:00 pm ET on Sunday to 5:00 pm ET on Friday.
So, unlike the stock market, you can open and close currency trading any time during the week, even after 4pm or before 9:30am.
And that brings another risk.
If you’re in bed at 3:00 AM and trading foreign exchange while you’re in bed and you’ve made a nice profit, you don’t want to miss it.
Likewise, if the deal starts to go bad, you don’t want to lose a lot because you were busy sending your kids to school.
Therefore, on each trade, I recommend setting a price level with your broker to take profit or cut a losing trade. I know that I will close the deal on
These ‘Take Profit’ and ‘Stop Loss’ levels are an important part of successful trading. It is imperative to enter with your broker for each trade.
That way, you can get a good night’s sleep…and enjoy your day without obsessively checking how your trades are doing.
window of opportunity
These are the two main risks to watch out for when trading forex…
But I would like to show you, there are ways to manage these risks. You should keep your leverage low and maintain your ‘take profit’ and ‘stop loss’ levels.
If you’re interested in getting started trading currencies, that’s the guidance I want to offer you.
As I mentioned earlier, I have been trading currencies for decades. That’s one reason why, even during the dot-com recession and his 2008 financial crisis, his $800 million hedge fund was consistently profitable.
And the forex opportunities have gotten even better over the past year, thanks to movements in interest rates around the world. After most of a decade of silence, a new “currency window” opens…
That’s why we’re hosting a special conference to explain this unique market…and show you how you can use it to really transform your wealth in 2023.
It takes place next Wednesday, April 19th at 8 PM ET. And I want you to join me.
To sign up with one click, reply here.
We hope you’ve come to see what forex trading is all about.
nice to meet you,
Larry Benedict
Editor, Trading With Larry Benedict
PS Please tune in the channel Crisis summit currency Next Wednesday, April 19th at 8:00 PM ET. Revealing my top picks for trading in the currency market today.
If you want to make sure you haven’t missed anything, upgrade to become a VIP. Sign up to receive free text message updates.
You can access a series of videos that I have recorded to help you with your currency trading training. We’ll show you how to open a forex account, how to trade, how to manage your risk, and more.
Visit here to sign up And upgrade to VIP.
