Risk and profitability

Profitability and risks

Risk and profitability — these words are always hand in hand accompany the investor throughout his journey. Each investor there is his personal view on the level of "acceptable risk" or "good returns." And if someone tells you that a certain investment instruments "no risk" (which generally cannot be) or the "risks are not high," then do not take his word for it, maybe you are speaking a totally different ideas and views on investment. Among such claims should always be treated with caution. It is necessary to understand the cause of such a statement and make a decision, passing information through the prism of their ideas and goals

It's no secret that everyone puts in front of a completely different problem:

  • because for some initial task is to preserve capital (to protect against inflation), and then to possibly increase. Let us call them Conservatives;
  • and someone came to repeatedly multiply your seed money or lose it all. These investors can be called aggressive.

We describe two extreme on approach to investing, however, most investors are somewhere in between: some a little closer to the Conservatives, and some are by nature inclined to take risks and invest aggressively.

It should be understood that investing in management, trading in FOREX, through the use of margin leverage is a risky occupation, compared with the same bank deposits or shares, but also more profitable. For example, the average return on deposits in Russian banks is about 10% per annum, the market capital of the stock — 10% -20% per annum (depending on the exchange), and on the international FOREX market is considered a good yield returns of 60% per year or more.

Here is a comparison of different conventional investment instruments in the parameters of return and risk.

Here is a comparison of different conventional investment instruments in the parameters of return and risk

The graph shows that the profitability of investment instruments varies in proportion to the risks and investing in FOREX is one of the most profitable ways to invest.

However, do not forget the back side of the coin — the risks. It should be understood that the "Conservative PAMM account on FOREX" is an aggressive tool in relation to the "Properties". Whereas "Aggressive PAMM-account" in relation to the same "Property" can be called a super-aggressive.

The main objective of the investor — find a compromise between their "Want" (profitability) and "Fear" (risks). The main ways of reducing the risks are, on the one hand, diversification (the notorious basket with eggs), and the other — competent selection of investment instruments, consistent with the objectives of the investor and the maximum ratio of risk / return.

Trade-Bowl provides investors with an excellent opportunity to realize their goals. Moreover, the tools for both conservative and aggressive investment for an amateur. We give you a choice of just two accounts, trading in similar strategies, but with different levels of risk in the transaction. The bill p20 can be considered conservative account in FOREX, while the expense of p40 — fits the description of aggressive.

Two bills -> Two possibilities -> Two-way investment, which one to choose depends on you.

Our time-tested strategy. We are investing in our accounts.

Trade-Bowl p20 vs Trade-Bowl p40

Compare accounts from July 2012 to April 2013.

Options Trade-Bowl p20 Trade-Bowl p40
Style Conservative Aggressive
Yield over 10 months (With reinvestment) 65% 165%
Monthly average yield 5,5% per month 11% per month
Max. drawdown -8% -19%

In the ten months of our Conservative PAMM Trade-Bowl(ECNp20) earned a total of more than 65% when adjusted for the capitalization of interest. And we believe that this is not the best result for our strategy to be a minor problem for the New Year holidays 2013th associated with the change and the irrational behavior of the market. But even in these difficult times the maximum drawdown was only 8% agree, not bad value for the risk / return profile..

For the full year yield Aggressive account's Trade-Bowl(ECNp40) left already more attractive (165%), and such profits will likely not seem realistic to those investors who are used to squeeze the whole of 10-15% per annum on the capital markets or the real estate market. However, the increased risks and, in fact, one day investors woke up with a heavy sense of loss of 19%.

We managed to take matters into their own hands, subsidence were played out. And be sure ahead of us still are not small achievements, both on account of aggression, and in the long run with low risk — Conservative. For you is a matter of choosing an investment style based on personal preferences and willingness to go / no go on more risk.