Diversifying your portfolio gives you a lot more stability with your investments and makes it easier to stay in the black. But if you already have a portfolio with a lot of different types of investments and think you know a lot about the stock market, you may be ready to invest in FOREX, or the foreign exchange. When currencies in the U.S. drop or don't grow, markets in other countries do well, which you can use to your advantage.
The biggest market is the FOREX market, which is just called "FX." You can make a lot of money quickly and easily from it. Five days a week, this market is all about the exchange rates between two currencies. There are always two currencies involved in an exchange, and there is a buy rate and a sell rate at the same time. For example, if you think that the value of the Japanese yen is about to go up, you could offer to buy it for $1.10 and sell it for $1.25, making a possible profit of $.15 per yen bought. Here are a few things you need to know to get started in the FOREX market.
Find out how it works
In general, trading on the FOREX is harder than trading on the stock market. If you don't know what you're doing, it's easier to lose money. Most online brokerages have special software that helps people learn how to deal with FOREX. This training can last up to 30 days and comes with "free money" that you can use to practise until you can consistently make money. Only then is it a good idea to start trading for real. You also need to know how to find out how the economies of different countries are doing and be able to predict how they will change. Other online businesses have a lot of free booklets that they will send you if you just ask.
Investing that might be safer
Since all FOREX deals must be made through a broker, your money may be safer. Every contract you make with a broker will include a clause that lets the broker stop the deal if they think it's a bad investment. The main reason for this is that you are actually making the deal with the broker's money. When you use FOREX, you make a kind of "loan" that gives you an operating ratio of up to 100:1. This means that for $3,000, you have control over $300,000.
The FOREX is also a better place to put your money because you can't trade on inside information. When you deal with money, things that affect it will be on the national news. Everyone has access to the same news, so everyone would know about this kind of event almost as soon as it happened.
Easy Liquidity
Every day, many trillions of dollars' worth of currencies are traded. Because of this, there is always someone willing to buy or sell dollars, so you can always get cash quickly when you need it.
No Fees
When you buy or sell FOREX, brokers do not charge you a fee. This lets you have even more control over how much money you invest and gives you a better way to track it. Brokers make money on the difference between what is bid and what is actually sold. This difference is called the spread.
