Learn about the basic costs
The financial sector is very capitalistic. If you think about it, the only things that go through the hands of the financial sector for production are dollars and goods. But those dollars, goods, and other resources are never directly used to produce value-added. There are, in other words, no goods without money in them. And so the first step in any financial operation is to use what the capitalistic system has got for you.
How much money does a successful trader need?
This depends upon the size of the economy, and you may be surprised to hear that at the small scale they have no money at all (the trader buys with equity). But it is not as bad as it sounds. In the larger economies there are plenty of dollars circulating. And if they are invested by the government, it gives them a boost in the form of tax receipts so that they can keep growing.
The biggest obstacle to growing at the large-scale is financing. Here the main obstacle is the government-bond system. Every time a market is opened up, the government takes over the role of making sure that there is enough dollars to go round. These bonds are, in effect, the credit card balances on which the central bank charges interest. The government borrows enough money to give the banks capital to lend, but the government has to keep its promises and there is always the risk that the money will be put in danger by running up inflation. And the interest rate on existing bonds is very large – one of the reasons that this system has proved so much a liability.
One way of circumventing this problem is through the use of derivatives, that is, currency transactions that go beyond what would have been possible without governments or banks taking the risk. There are ways around the government-bond system, of course. The British, for example, have created an entirely new currency called the pound sterling, whose value is determined by the exchange rate between the pound and the US dollar, just like the US dollar. Some people, however, like to see it as a more “traditional” form of currency.
What should a successful swing trader learn?
We do not recommend you to get into trade-making until you’ve become an expert in the following areas.
First of all, the basic principles of business: You’ll be surprised how hard it is to get rich at any scale. The biggest success stories – which we know of – had to get rid
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