Deciding on where to invest your money can be very tricky. There are a whole host of options available, some with more risk than others, and some offering much higher rates of return than others. Once you’ve given up your money to an investment product, there’s little more you can do to affect the outcome. This might be what some people want – to sit back and see what happens without having to think about it. For other people, a more hands-on approach might be better. You can in fact have total control over how you invest your money if you invest on the forex market.
The forex market centres around speculation on whether currency prices will rise or fall. Successful traders correctly predict the direction of a currency’s value, and profit from this from either directly trading the currency, or wagering money on the fluctuation. Signals which influence the decision to enter the market come from three main areas; news, fundamental analysis and technical analysis. The news is self-explanatory, fundamental analysis is general information about currency trends, and technical analysis is more complex indicators gleaned from charts and data.
There is a great deal of control when you trade forex because you can deposit as much or as little as you like at any given time, and you can trade as frequently as you want. If you see a particular opportunity then you can go for it; it’s your decision. With other investments, you can split up your capital among several options, but you don’t get anywhere near the same flexibility. Forex is accessible through an online platform provided by a broker.
Forex is one of the few investment opportunities which are not overly limited by the amount of capital you have at your disposal. You can trade with very little – many use forex as a source of additional income. In addition, anything you do put in can be amplified using leverage. This means you can maximise any profit you make, though you must remember it can also increase losses.
The potential returns are also very high. People can make many thousands a year without having huge portfolios. There are of course inherent risks when you trade on the financial markets, but they can be mitigated with intelligent trading, and tools such as the stop-loss. Most investment products offer only a few per cent a year ROI, but FX returns can be as high as around 20%. Many people make their entire living from trading forex, which goes to show just how lucrative it can be.
If you’re considering your investment options, then forex trading is certainly something to investigate. It’s very different from other opportunities, and it won’t be for everyone, but it does offer some significant advantages. If you want to benefit from having complete control over how your money is used, when it’s used, and at the best rates of return, then visit Alpari.co.uk to find out more on forex trading or to set up an account.