4 Good Reasons To Look At Forex As An Investment

Pips Wizard Pro

These days there are many investors wondering if they should trade the Forex market or not. Many of them believe that Forex is only for large financial institutions, but this is not the case. While there are certainly plenty of big financial companies in the market, there are plenty of small investors in this market also. In reality the Forex market gives equal opportunity to small and large investors.

There are a number of reasons why you should consider putting money in foreign currency. Here are 4 of the best:

Liquidity

The Forex market is very liquid. To give you an idea of the size of the market, an average of $3,200,000,000,000 changes hands around the globe every day in the currency market. Whereas with the stock market you might have trouble getting rid of your investments, this will not be an issue with currency. In other words, there is less chance of getting stuck with an investment as it plummets.

Cheaper

The liquidity also gives you the chance of tighter bid/ask spreads. This means you will minimize the expenses of investing. The majority of broker platforms do not make you pay an individual cost for every transaction, because they earn their money by the spread from the quote for the various currencies.

Save Time

There are lots of Forex trading robots that will actually make your investing decision for you. If you use them then you can earn passive income, because you never have to touch them. Just keep in mind that you should not trust these robots for 100% of your Forex investments. If you have the time, it would definitely be advisable to invest yourself, because a human investor is always more profitable.

More leverage

As opposed to many other financial markets, the Forex market gives you huge amounts of leverage when investing. An investor with just $200-300 can often invest $10,000s of money in the market. But while lots of leverage can make you a huge amount of money, you can also lose a lot as well. So be cautious when using leverage.

Conclusion

Forex trading can be very profitable when used correctly. Investors globally are turing to it as an investment vechicle with stock markets becoming more and more uncertain. Above are 4 reasons which might make you consider putting your money into foreign currency. Just make sure to start slowly and learn as you go, and you will increase your odds of success.

Author Pete Southern is an active trader of forex and stock markets. Pete submits market reports to many online publications like www.forexrate.co.uk and is avid follower of the economy.

VN:F [1.9.22_1171]
Rating: 9.0/10 (2 votes cast)
VN:F [1.9.22_1171]
Rating: +1 (from 1 vote)

Related Posts:

Strategies For Investment In Oil Futures

SetForget Pattern Profit

Movements in oil prices are very volatile. This will not change in the near future either as political and economic worries continue across the globe. Factors such as pipeline or supply disruption, conflict and war are just a few of the reasons why prices can fluctuate widely. If you are trading oil futures it is essential to take steps to protect your investments.

Hedging Your Profit

If the price of oil is fluctuating rapidly it means there is more risk in the market. To account for the added risk traders need to adjust their investment strategy accordingly. Many traders of oil futures look to hedge their positions in the event of volatility. By staying flat on their position and locking in profits allows them to ride through uncertainty and trade out of the position when a stable trend resumes.

Following the Trend

Anticipation of futures prices all depends on direction of the trend. Using a trend following strategy is not always easy in oil trading because of its wild swings however it is proven that when a direction is clear trend following is a very profitable way to trade. Many futures traders look for seasonal effects on prices of oil. Colder times mean higher demand and higher prices, warm means the opposite. There are many other regular patterns which can be forecast over the longer term for those who adapt to this style.

Day Trading Oil

If a trader is looking for shorter term investments in oil futures then they will encounter a very volatile environment. Huge intraday spikes can occur on inventory data being released. Any trader adopting this strategy needs to be aware of the risk that the market can swing against them fast. Protective stops and limit orders are essential to get out of a trade with profit or minimal loss.

Short term traders also need to have charting software. Plotting the oil futures price onto a chart can show them previous levels of support or resistance where the price has turned. Often the price will stall at these areas before deciding its next move which throws up opportunity to hop on board and profit from a ride in a different direction.

As with any investments traders must stay ahead of the news. Keeping up to date with political matters and economic data is essential to having a view on direction. It’s been seen time and time again that news drives prices, often wildly, in the direction of the trend. Don’t fight sentiment, go with the direction and trade the news.

To help keep ahead of the trend www.futuresforecasts.com offers daily directional forecast charts. The site is free and can be a useful guide to the futures market.

VN:F [1.9.22_1171]
Rating: 10.0/10 (1 vote cast)
VN:F [1.9.22_1171]
Rating: +1 (from 1 vote)

Related Posts: