The forex market is by far, people’s favorite when it comes to trading the financial markets. The stock, bond, futures and mutual funds are good options but are largely capital intensive. This is unlike the forex market, where the startup capital is relatively low than that of the other markets, or even free.
THINGS TO KNOW ABOUT FOREX INVESTMENT
The forex market is the most liquid of the financial markets out there.
Currencies are trades in pairs with regards to their rate of exchange
The forex market has greater volatility and risk potential
The forex market exceeds 4 trillion USD per day, asides 1.5 trillion USD of that accrued in form of spot trading
Forex investment is good as the investor could gain millions in 1 hour but the downside is that the investor could also lose millions in less than 30mins.The trader has to be meticulous in trading positions by consulting economic forecast, trends in the markets, charts that show the progress of one pair of currency against the other.
THE PROS OF TRADING THE FOREX MARKET
There must be something good about the forex market judging from the level of attention it gets, and the amount of money the market accounts for on a daily basis. Some of them are
MARKET HOURS AND LIQUIDITY:
Forex market is open 24hrs per day, five days a week offering the investor the luxury of trading position at his/her convenient time. This gives the trader time to do other things, or make extra income.
LOW COST OF INVESTMENT BUT HIGH YIELD
There are different brokers with different spreads in the forex market; but from a general point of view, the brokers offer really low spreads to attract traders. The interest rate of a currency also affects its spread.
FOREX INVESTMENT OFFERS MARGIN- BASED TRADING:
Most of the OTC offers margin based trading. It makes it possible to trade huge positions that would otherwise be impossible based on your account balance unlike in markets like the stock exchange. This leverage could gain potential for returns.
PROFIT REGARDLESS OF MARKET DIRECTION:
With forex, it is easy to enter short scale trading when in the forex market. As a result of this ability, it is possible to make gains despite the market trends. Increase in rate means equivalent increase in profits.
This is one of the reasons the forex market is the largest in the whole wide world. People can invest with just a little amount of money; unlike in other financial markets.
With a relatively low startup capital and no certifications necessary, the forex market is absolutely accessible to anyone that has a piece of laptop with internet connection. This means traders can trade from anywhere at all so long as all these things are available.
Compared to any other market the forex market has the highest number of market investors...This huge number of investors provide enough room for liquidity which means higher gains for different investors in the market. The FX market also provides great volatility since there are increases in number of investment leading to greater gains among the participant investors in the market.
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.