Investing in a FOREX Market:
Things to Know
market or Forex (FX), is among the largest markets in the world and
accounts for more than $4 trillion average traded value each day. It comprises
of commercial companies, banks, central banks, hedge funds, investment firms,
and retail investors. Buying, selling, exchanging and speculating on currencies
constitutes the activities of the Forex Market. There are some things that an
investor must know before investing in a Forex market.
Here are a few things that you should
know about the market.
Forex trading is a 24-hour cash market where
trading occurs in currency pairs. It is also a speculative market that relies
on investors and traders betting on a particular currency to go up and vice
versa. The currencies are bought and sold according to the current price or
exchange rate. It is a place where currencies are traded.
2. It is a future market and
involves institutions, corporations and individual trade, where stocks are
bought and sold based on a standard size and settlement date. In simple terms, contracts are bought and sold between two parties,
with predetermined clauses stated in the agreement between the parties.
The option-holder has the choice to
buy or sell at a future date without any obligation at a specified price in the
future. He may thus handle money for a long time without having to worry about
any other form of expense at his end.
this is a speculative market, no physical exchange of currencies takes place.
All the transactions happen as digital entries in the name of the holder and
this helps the holder exchange one currency into another for multinational
corporations that need to trade currencies continually.
forex market comes with huge returns as well as huge risks attached to it.
However, many foreign currency exchange products which provide exposure to
Forex markets are available, making it possible for the holder to associate
himself with the market. It is a different form of an equities market and
focuses on seven major pairs of currencies namely EUR/USD, USD/JPY, GBP/USD,
USD/CHF, USD/CAD, AUD/USD & NZD/USD
currency Certificates of Deposits are available on individual currencies or and
allow investors to earn interest at international rates. The trading also
allows investing in the bonds of foreign governments that are denominated in
the currency of the country of sale.
This fact proves valuable if the value of
the foreign currency rises relative to the local currency of the investor, as
the interest earned will also increase when the currency is converted.
These are only a few of the major
details of this huge market, and in the digital age, every investor around the
world can invest and make a fortune in Forex Markets by timely actions and
proper market advice.