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Currency Trading 1Last update: Tuesday 22nd of May 2012
The rules of this Union were somewhat peculiar and, in some respects, seemed to defy conventional economic wisdom. 3. The ability to limit risk though the use of margins can work against a currency investor. In fact, the number one reason novice investors fail to succeed in the currency markets that your understanding the benefits and pitfalls of the use of margins is one way to leverage a relatively small investment into large potential profits as we discussed earlier. But, the are significant risk with this method and it should be understood at its highest level to be utilized successfully. The LMU was officially dismantled in 1926 - but died long before that. The lesson: a common currency is not enough - a common monetary policy monitored and enforced by a common Central Bank is required in order to pre-empt inflationary pressures. This need arises precisely because these countries share a common currency. In other words, the effects of one member's fiscal decisions are communicated to other members (through the monetary policy) because they share one currency. The currency is the denominator
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