Forex investment refers to an investment in trading of foreign exchange. It has to do with the buying and selling of currencies either directly or through an agent. This is done through the forex market through accredited forex brokers who serve as intermediaries to facilitate trade.
THE FOREX MARKET
The forex market is a platform for the exchange of money from one currency to another.. It is a virtual market place meaning it is not a physical location. Forex investment is done here by simultaneously buying and selling currencies. It is not controlled by any institution and not restricted to any particular country. The market brings together all manner of people whose daily businesses involves trade in currencies. It is not just those who are traditionally referred to as forex traders but even when one exchanges a foreign currency for the local currency, he has traded forex. Also there are big businesses with international affiliations, either as suppliers are customers. The forex market represents a very important aspect of international trade making it not only possible but viable.
TYPES OF FOREX INVESTMENT
We have come to the core of forex investment. Most intending forex traders are often at a lost when it comes to how to begin their forex journey, well, we have a simple guide. First of all, it is important the trader considers what he wants out of his trade before he begins. There are basically two forms of investors.
- The retail investor
- The speculator who doesn’t want to manage his account himself
Starting with the first , the retail investor often wants to learn how to trade and handle his own trading, for such a person two accounts are recommended as a start, they include;
- A demo account
This account or forex investment is a way for the beginner to learn the rules and how real trading ids done. No money is invested at this stage, but every other trading activity is the same, except that there is no consequence to his mistakes. It’s more or less a simulation of the main thing.
- A mini account
This is different from a demo because it is a funded account, meaning at this stage money has been put into the account and actual trading began. But the money is very small; the lots are 0,000 instead of 100,000. This is just perfect for the trader who has moved up from the demo account but is not confident enough to place big initial deposits.
This is exclusively for the speculator. This account involves the hiring of a fund manager who trades the account on behalf of the client for a certain fee which varies with mangers. The account holder becomes more like a passive trader, handing over all trade activities over to the account manager with the agreement to get a certain percentage of the return on every trade. This is what is more often practiced by big investors and the managers are usually firms with the specialty. Software are often employed by these firms to ensure consistent earnings as this will keep the inflow of investors and can then permit the charging of high fees.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.