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- Last Posted: 2017-07-28 10:57:14
Significance of Investing in Currencies2017-03-09 08:10:25
Economic and political skepticism, as well as some other factors have piqued the attention of investors and analysts on currency investing. Two reasons: the foreign exchange market is open 24 hours a day, seven days a week and it presents endless trading opportunities. Having the median daily turnover of more than $4 trillion, the following reasons might prompt market players to give currency investing a try.
One of the distinct features of forex trading is capital gain. That is apparent in commodities and stocks as well. Let us use the euro for this discussion. The investor will gain if the worth of all the currencies surged against the euro. Conversely, if the worth of all the currencies slumped versus the euro, the investor will sustain a loss.
Hedge against Economic Woes
There was a period that investors feared American fiscal and monetary policies will devitalize the greenback and will result in inflation in the long stretch. Why? Here are some of the possible reasons: the amount of money the Federal Reserve had produced, escalating budget deficits, and low interest rates. The forex market is formidable enough to counter the changing economic conditions. A trader can go long or short based on his perceived movement or path of the currency. He can also disburse the risk across several currencies.
Hedge against Event and Political Perils
With currency investing, a trader can cash in on his strategical evaluation of important events worldwide. For instance, he can capitalize on the impact of Donald Trump’s oath taking as the new American president, provided he knows how to do it right.
Anyone can access market news and data at any time. Unlike other markets, there are no insiders in the forex market. Values are primarily influenced by events taking place in a country and real monetary movements.
Now, that is the best thing about trading currencies. It can balance a portfolio, especially if it is primarily comprised of American stocks. Whilst currencies move relative to one another, equities move on their own.