Forex Fx - Tutorial Part 2
Participation in the Foreign Exchange Market
As it was presented with
simple English on the Introduction to Forex article, there is a fluctuation in
the exchange rates. The value of one currency or falls relative to another,
market participants decide to buy or sell currencies to make profit.
1. The market participants
The major participants in
foreign exchange markets are institutional investors (banks, industrial
companies, trading companies, hedge funds, mutual funds, closed – end funds
etc). The advance of the web application and mobile phone application
technology during the last years is the fundamental factor for a large
participation of retail investors. Retail investors participate in forex
markets as speculators and hoping to make profit by the chances in currency
rates.
1. On an exchange
regulated by the Commodity Futures Trading Commission (CFTC), for example
Chicago Mercantile Exchange offers currency futures and options on currency
futures (for more information about currency derivatives you can study the
Currency Futures Article and Currency Options Article).
2. On an exchange
regulated by the Securities Exchange Commission (SEC) for example the
Philadelphia Stock Exchange offers options on currency futures (for more
information about currency derivatives you can study the Currency Options
Article).
3. In the off-
exchange market, called also as over – the – counter (OTC) market. In this market
a retail investor trades directly with a counter party and there is no exchange
or central clearing house to support the transaction.
4. Using Electronic
Traded Funds (ETF's), in case the retail customer (private individual) can
trade without worrying about margin and when to roll over a contract. Through
Currency ETFs investors can participate in general trends of the currency
markets and take advantage of the overall profit potential of the currency
market without having to open a separate account for currency trades.
5. Through a hedge
fund, in case there is enough cash and the individual investor can buy a (να το βρω πως το λένε) of a Currency
Oriented Hedge Fund.
6. Through currency
oriented mutual funds.
2. Which is the best?
There is a large number of
advantages and disadvantages of each option. In my point of view and according
to my experience, there is not a dogmatic and absolute best solution.
The way an individual
approaches a market varies and depends from a large number of possible factors.
These factors are the
driving forces for his / hers investment decisions. They constitute his / hers
investment profile.
Same of these factors are
related with the physical characteristic of an investor.
(1). Age
(2). Sex
(3). The age of his / hers
children
Others are related with
social and economic characteristics as:
(1). Education
(2). Income
(3). Previous investment
experience
(4). Assets
(5). enough time to study
(analyze markets) and to create a trading
strategy.
(6). Accessibility to
financial information etc
Others are related with
psychological characteristics as:
(1). Ability to manage
emotions during trading
(2). Motivation to acquire
the necessary knowledge to survive the tough forex market
(3). Ability to overcome
previous loss trades (ability to learn by mistakes)
Foreign Currency market
offers a large number of opportunities, it’s not wise to iqnore tham and to not participate. Currency markets
can be valuable as goldmines but also a hell of unlimited losses.
You can be a winner or a
great looser. In my life I have made great trades and very bad, at the end of
the day honestly I can say :
“Markets offer unique
opportunities, unforgettable experiences and unlimited gates to profit but if
you want to survive and to achieve your financial goals you need to know.
Only through study you can
build a competitive advantage.
Knowledge is the first path
in an endless adventure of financial success”.
Elias Stoikos
Relative Articles
Relative Resources
Δεν υπάρχουν σχόλια:
Δημοσίευση σχολίου