It is safe to say that if you want to invest your money you aren’t going to be left short of trading options. From standard investments to spread betting, it will all be vying for your attention. One trading avenue that has been growing in popularity since the 1980s is forex. The forex market has become a realm open to anyone and everyone, since the 1990s it is has no longer been the exclusive domain of high rolling banking organisations. The forex market is far from one-dimensional, as there are many factors that needed to be considered in order to find success. The following takes a brief look at the key aspects of the forex market.
The Market that Never Sleeps
Even though it closes its doors on weekends, outside of this the forex market runs 24 hours a day. The forex market never sleeps, so you will never be left waiting for a market to open or sweating on an alteration in an overnight sale price. It allows traders to be increasingly flexible in their trading hours, along with making sure that the market can’t be bullied or monopolised. The forex market really does beat to its own drum and nothing emphasises this more than its round the clock operating hours.
As the market is open 24 hours a day, it means that there are plenty of ways to trade. There are three different markets that you can get involved in on any given day. These are the spot market, the forwards market, and the futures market. If you are an individual trader odds are you are going to stick to the spot market, at least during your early days.
Forex isn’t like other forms of investment, in the sense you won’t expect to rack up large fees by trading it. Forex market trading fees are pretty much minimal across the board no matter what broker you choose to trade with. The low cost elements of forex trading don’t end there either. You can expect your forex broker to offer you not only a free demo account, but also plenty of news, analysis and charts completely free of charge as well. Simply put, forex is definitely a low cost trading option.
When discussing the key aspects of the forex market, you can’t ignore the importance of leverage. Forex only requires a small margin in order for you to buy a contract of a higher initial value. This means that if you are smart you can obtain high returns for a minimal amount of capital investment. Most forex brokers will offer you a leverage of up to 100:1, while some may even push this on further by offering you leverage of up to 200:1. Leverage is a key aspect of the forex market, but it is a two-way street. Even though it can result in profits of minimal capital, it can quite easily swing the other way without the right risk management tools in place.
Spreadbetting, CFD trading and Forex are leveraged. This means they can result in losses exceeding your original deposit. Ensure you understand the risks, seek independent financial advice if necessary. The value of shares and the income from them may go down as well as up. Nothing on this website constitutes a solicitation or recommendation to enter into any security or investment.
Alexander Bowring is a London based writer and a Southampton Solent University Screenwriting graduate. He has worked alongside TV personality and Telegraph feature writer Alison Cork, whilst also having produced content for ITV, This Morning, Canvas8, Who’s Jack, Alison at Home, and Bonallack & Bishop Solicitors. Having a keen interest in investments.