Why is Forex a Good Investment?
The forex market is amongst the largest and most liquid in the world, whilst its current value is estimated to be more than 2.5-times larger than the global GDP.
Whilst the sheer size of the forex market and its derivative nature may be incredibly appealing to investors, there are a host of additional reasons why currency represents a good investment in the current climate.
We’ll explore some of these below, whilst asking what advantages they offer to traders who are active in the financial marketplace.
1. There are Low Barriers to Entry
Whilst the mechanisms of the forex market cannot be described as easy to understand, this rule can be applied to every single financial niche.
However, the barrier to entry is much lower in the forex market than with any of the alternatives, thanks largely to the development of accessible trading platforms such as ATFX.
At the same time, there are numerous learning resources available to traders in the digital age, from structured guides and ebooks to immersive podcasts and even paid seminars.
It’s also important to note that forex trading is margin-based, which means that you can successfully open positions with a relatively small deposit. This has arguably removed the biggest historic barrier to trading currency.
2. Currencies Allow you to Diversify your Portfolio
In many ways, currencies add balance to your existing trading portfolio, particularly if it’s heavily focused on U.S. equities.
Forex trading therefore provides an excellent way of diversifying your portfolio, as currency prices shift relative to one another.
As a result, one currency will always rise whilst another falls, creating an opportunity to generate profit regardless of the market conditions or the prevailing economic climate.
This is an important consideration, as diversification helps you to mitigate risk as an investor and optimise the long-term profitability of your portfolio.
3. Currencies Create a Level Playing Field
Unlike the stock market, the news and events that drive currency prices are available to everyone on a real-time basis.
This means that there are no insiders in the modern foreign exchange, whilst the development of online and mobile trading platforms has enabled traders to track the live monetary flows that impact on currency valuations.
These factors combine to create a level playing field in the marketplace, and one where even inexperienced investors can make informed and successful decisions.
This wasn’t always the case in the historic forex market, and there’s no doubt that currency trading is now accessible to all in the digital age.