Anyone who has ever bought foreign currency or has ever bought something from a foreign website knows that the value of currency dares to fluctuate quite strongly, especially in the medium term. For example, an iPhone may be more expensive today than it was a week ago, while still costing $ 449. However, the reverse is also possible: an iPhone can now be cheaper while the price in US dollars remained constant. Why trade Forex?
Forex (foreign exchange) is closely related to stocks and options and consists of trying to predict the evolution of a particular currency against one or more other currencies to try to make a profit. What are the advantages of this form of investing and what makes investing in forex so interesting?
1. Very accessible market
The goal of every investor is ultimately to generate profits, which is why forex trading lends itself perfectly to this. After all, the forex market is very large (the amount of types of currencies and possible combinations is simply gigantic), the value of currencies is constantly changing and speculation is therefore fully possible. The foreign exchange market is uniquely accessible to investors and speculators. You can discover more from Deriv South Africa.
2. Forex trading is cheaper than traditional investment products
Why Forex? Investing in currencies is simply cheaper than investing in other traditional investment products. The main costs at a broker are the financing costs on the one hand (investing with leverage) and the so-called spread (spread when opening/closing a position ). Financing interest is also only due once a position has been open for more than a day (beware during the weekend) and the transaction costs generally depend on the size of the position itself. So unlike for example stock trading, you will not receive any commission due and therefore no intermediaries are involved in the transactions themselves. Profits can be booked without too much cost, making currency trading not only cheaper but also easier. This is exactly why forex is still so important to experienced investors.
3. Transparency and clarity
Why is forex valued so much by investors? Transparency and clarity, more than ever an important part of the investment world. In this way, you always know where you stand when Day Trading in forex: you can never lose more than your input. Forex lends itself like no other to protect your money and to make a profit with many small steps. In any case, you are aware of the risk and you decide which leverage to choose.
4. Invest 24 hours a day
The foreign exchange market is open 24 hours a day (excluding weekends) to electronic investors. Where the stock market closes, the currency market is still accessible. Even after hard work, you can still trade in currencies. This makes investing in forex much more accessible than any other investment method.
5. Arbitration Options
Unlike futures and options, there are no specific standard FOREX contracts. Each broker like Forex Trading SA, therefore, sets its own conditions and sometimes has prices that deviate from the rest of the market. Introducing brokers are constantly opening up opportunities for arbitrage, competition, and favorable contracts.