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I am a forex trader. My forex experience started 6 years ago when I invested my 500 dollars in the forex market. After losing all of the initial sum I reconsidered my trading and developed a succesful trend trading system. That's when I became profitable. I came back to forex market with a... More
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  • Crisis – problem or opportunity 0 comments
    Nov 24, 2011 8:59 AM

    Crisis is not a very pleasant thing in itself, but depending on how much you know about financial markets and how they function it can be a time for you to start making much bigger money than you could do during an economic bubble. Unfortunately, crisis is presented for us as something terrible that may blow us away. This is done by mass media, various financial gurus and a lot of other guys that are only able to state the facts that they see in economy and financial markets. Very few of them are able to tell you how to take advantage of that and actually make money in bad economic times.

    I do not think I can give you all possible reasons for the crisis that occurred in 2008, but I know that you could have used it for your advantage if you really knew how to trade financial markets. If you do not know how to do that you should always take care to save money and not to spend more than you make. Most people fail to follow the rule and they end up being up to their ears in debt. So, if you do not know how to increase your capital for the time being, do everything that you can to save it and invest your time and energy in finding out methods how to increase your resources.

    You (as a person alone) cannot do anything to prevent crisis. If people never borrowed there would probably never have been the collapse that we saw in 2008. Unfortunately, people did what they did, corrupt financial institutions added to that and we ended up where we are now. However, as a single individual you could also use the opportunities that were there when the crisis hit financial markets. If you looked at the charts of most stocks you will see technical patterns in them that indicated that the boom was over and a downtrend will start. Those patterns were a signal that you had to start selling various securities in various financial markets.

    When trend traders see those patterns at the end of a bubble they know that a crisis is coming and they start building a line of short positions. When markets collapse they increase their positions and when markets continue going down traders do more of selling. You can imagine how much money one can make (using leverage) if he is selling and markets are collapsing. To protect the profits one has to move his stops. Later, markets after they stop falling will naturally hit the stops and your line of positions will be closed with nice profits. So, I hope one can see that crisis can be both a problem and an opportunity.

    If you want to learn more about financial markets I recommend visiting the blog trend and reading: technical analysis, 123 pattern and resistance.

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