Reductio ad absurdum (Latin: “reduction to the absurd”) is a form of argument that goes back thousands of years, to Aristotle and before. It works like this: to prove a proposition is false, you simply show that its logical implications lead to absurd conclusions. This can be a great time saver for investors.

Look beyond the marketing materials for forex investments

Take, for example, courses that teach you how to trade in foreign exchange (or “forex” investments as course promoters refer to it in the ads). These courses can cost hundreds or thousands of dollars for a day or two of instruction. The marketing materials for these courses suggest that you can make a living in as little as a few minutes a day. Better yet, you can trade in forex investments in your living room.

The “secrets” that the courses claim to provide consist of formulas that show you how to, first, pick “a large proportion of winning trades” and, second, get out of your rare losing trades in forex investments while your losses are still small.

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In theory, it could work. Foreign-exchange trading does come with a lot of leverage. Your winning trades do show an extraordinary rate of return on capital. In reality, however, it doesn’t work. Instead, it consistently fails.

No amateur, part-time trader succeeds at it for any length of time. Eventually, they all lose money. I’m not going to explain how the sand gets in the gears of this particular perpetual-motion machine. It’s simpler to apply reductio ad absurdum.

A simple way to understand the pitfalls of forex investments

The investing business is among the world’s most profitable, so it attracts some of the world’s smartest people. Many of these people spend years studying markets at the world’s highest-rated, most-expensive universities. Many go on to get rich, but it takes decades.

Do you really think these people would go to all that trouble and expense if all they really needed was a two-day course in forex investments?

For that matter, banks and other financial institutions spend untold billions every year to hire market experts, create and sell investment products and so on. Why would they do so if it was so easy to make money “trading forex”?

This leads to an even more basic question: if forex trading really offered an opportunity to make that kind of return, why would anybody work?

It all comes down to a rule that undoubtedly goes back even further than reductio ad absurdum: When a deal sounds too good to be true, it almost certainly isn’t true.

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