The Foreign Exchange Market: Not The Favorite But The Favorable

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$6.6 trillion daily transactions – this stellar amount is enough to name the forex market the largest and the most liquid financial market in the world. It is even greater than the most popular and sought-after counterpart, the stock market. But unlike its peer, a market crash in the forex is an extremely rare phenomenon. According to Tin Nguyen, a forex expert by profession said this is the reason why it is considered a consistent provider of investment opportunities and successes.

Is it likely for the forex market to crash? We asked the forex specialist. With confidence and conviction, he answered, “while individual currencies may crash because of socio-political or socio-economic issues, the forex market as a whole would be near impossible to completely collapse. This is because its market utilizes currencies – the lifeblood of any and all of the economies around the world.”

As the forex expert responded convincingly, another question emerged: How is that possible? Well, the man himself clearly has the answers. He further emphasized the role of foreign exchange in economies. In simple terms, all of us use currencies to do our day-to-day transactions. Whether we buy necessities or gamble our assets through investments, money is an integral part of our daily lives. Without it and the “system of exchanges”, if you may, economies would fluctuate aggressively making them unstable. In short, the market runs in the foundation of every country’s economy.

How is it different from the stock market then? As the forex professional views it, it is really simple: the main difference between the stock market and the foreign exchange market is its volatility. He also pointed out that due to its highly volatile nature, short-term and day traders profit from quick and regular price swings. While for some, this could be a big risk, by the virtue of its character, the foreign exchange market’s volatility can also be a friend in forex trading. 

As also explained on the forex expert’s website, there are several advantages if you want to pursue a career in forex trading. While the foreign exchange market environment is not ideal for inexperienced newbie traders due to complex price determination processes and lack of mentorship, with a little bit of self-discipline and initiative of seeking professional assistance, you might enjoy investing time and assets in this market without even worrying about unexpected crashes.

One of the key qualities of forex trading is its low cost. Since most forex brokers make profits from the spreads between forex currencies, you don’t have to worry about additional expenses that come from separate brokerage charges like in stocks and other financial markets. Also, forex trading is highly convenient. Since the forex markets operate all day, a busy person, like all of us actually, can position for just a few minutes and can still get profit in exchange for the little effort that you exerted. Talk about cost-efficiency!

Speaking of cost, one of the contributing factors to why forex has low costs is the low level of regulation it has. Forex trading is known to be an over-the-counter market that is widely accessible across the whole world. There is no single entity that controls it. However, since it lacks regulation, it may not be fully transparent. For example, a trader has little to no control over how his or her trade carries out. The trader might not get the best price possible due to the selected broker. But on the bright side, the regulators might not regulate the whole market, but they can regulate the activities of the brokers inside the market.

As also discussed on the forex professional’s website, forex trading offers high risks and high leverage. It means that you can get profit/loss direction multiple times in your capital. Forex markets allow leverage of 50:1. In short, you can only have $1 to position yourself in the forex market that is worth $50. While this sounds enticing for many, the forex expert advised that an efficient capital allocation plan and self-discipline are highly encouraged before making a move in this kind of financial market.

If you are planning to take your shot in this financial market, the forex specialist reminds you that you are not alone in this deep and wavy sea. While you may be considered an individual investor or a small fish, you also swim with the big ones. Banks, Investment Managers, and Multinational Corporations also trade with you. As a result, the mixture of different kinds of forex traders impacts the global economy.

Ultimately, like what the forex professional believes in, forex trading provides all of the people in the world an opportunity to acquire income from regular currency fluctuations. If you want to learn more about trading techniques, information, and more complex forex concepts, you can visit this site and get your foreign exchange trading career started today!

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