William T. Preston Enterprises LLC

Investing for one’s future is an important step everyone should take. If done correctly it will provide us with the comfort and peace of mind we all desire once we retire. Investments can be made with equities, bonds, and RRSP’s, but we should also consider FOREX. FOREX, which is short for the foreign exchange market, is a global financial market, in which corresponding nations’ currencies are exchanged versus another. Every currency has a valuation based on key economic indicating factors and the overall economic health of that nation or union.

Compared to other exchange markets, the FOREX market has many advantages. The most obvious being its size and volume. It has an average daily trading volume of $4 Trillion, with roughly $1.5 Trillion of it being retail traders trading the spot market. This in comparison dwarfs the equities markets, with the largest one being the NYSE coming in at a measly $74 billion. What this massive volume does is create a market environment with enormous liquidity, which allows traders to execute trades instantly OTC (over the counter) using the internet and a brokerage platform. The FOREX market is also a 24 hour a day market, having only one weekly open and close, where as the equities markets have a daily open and close. This difference offers the FOREX investor more flexibility and opportunity, allowing him or her to develop a trading plan that will be more conducive to his or her overall lifestyle. Another advantage worth mentioning is how the FOREX market allows traders to profit no matter what direction it is trending in. Unlike the equities markets, where the goal is to buy low and sell high, FOREX traders can profit even when a currency is depreciating. Since trading FOREX always involves a pair of currencies, there will always be one currency appreciating versus the other.

There are many currencies to be traded in the FOREX market, but 8 of them stand out above the rest and are considered the majors. The US Dollar, Euro, Japanese Yen, British Pound, Swiss Franc, Canadian Dollar, Australian Dollar, and New Zealand Dollar make up the great 8. Amongst them, the US Dollar is the most heavily traded, and is the global reserve currency. Out of the 8 individual currencies there are 7 major currency pairs formed; all of which contain the US Dollar, and these are the most widely traded. There are many other pairs that do not contain the US Dollar, but these are considered to be crosses and are not as widely traded and thus have larger spreads.

Getting into the FOREX market is easier than what many people think. All that is needed is a computer with a good internet connection and a brokerage platform installed on it. The brokerage platform being the window into the market where currency pairs are displayed, charted, analysed and traded. Further, all good brokers offer the option of signing up for a demo account to trade with paper money, which is a must before ever investing real money. This is of paramount importance to the beginner trader because it allows him or her to get comfortable with trading mechanics, market analysis, and strategy testing; all of which are needed to become a successful trader.

When it comes to investing, one should look to diversify their portfolio and there should be no reason to overlook the FOREX market. It has tremendous opportunity and has the potential to improve anyone’s financial situation. It can be traded from the comfort of home or on a sandy beach, or even on the go with a smart phone. No matter how busy a potential trader may be the FOREX market is accessible because of its hours of operation and with account sizes as small as a few hundred dollars, the opportunity is there for everyone, regardless their risk appetite. With the list of benefits and advantages the FOREX market brings to the table, it truly is an investment powerhouse and is a financial venture that should not be missed.