Personal Finance & Money Asked by null_pointer on April 3, 2021
Assume two investors with $100,000 each, willing to invest them in Forex as scalp.
Investor (a)
Investor (b)
Both investors execute the same trades.
Are these two strategies effectively the same in terms of risk and expected financial outcome? Will both get to the same final outcome?
Is option (b) safer and therefore recommended to maximize benefit while minimizing risk or does it have any flaw in the logic?
Are these two strategies effectively the same in terms of risk and expected financial outcome?
Nope.
Investor B will have a different outcome - plus or minus - because he will have to pay (or get) interest rate for the leveraged amount. Over longer sideways market this may make a difference that is nontrivial.
That basically is the difference. 2nd investor basically has to borrow the position funds and that can cost (or get) some money.
Answered by TomTom on April 3, 2021
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