The closing bell rings and the stock market closes, your trading day is over. Now what? There’s no overtime in the stock exchange, no after-hours adjustments to be made. However, there is another market that you must get your hooks into if you want to see real, consistent, and around-the-clock returns. What you need is a robust and foolproof forex strategy to get in on the foreign currency exchange game.
If you ever trekked through Europe or Asia, then you know that not only are foreign currencies ever plentiful, some even outstrip our own in buying power. You also likely traded cash more than once during your time abroad and almost assuredly did not receive the same exchange rate each time. Admittedly, some nations ‘peg’ their price to our own but most do not, leading to the profitable and plentiful business of buying your pristine American dollars on thousands of street corners in cities all over the world.
Why invest in currencies at all?
There is a quiet cleverness when it comes to forex (short for “foreign exchange”, the global currencies market). Each transaction nets the exchange salesman a marginal profit by offering a rate just below the interbank markup rate. As the customer, you feel validated in choosing this particular dealer in cash because he or she offers no tacked on exchange fee.
The idea of buying currencies is similar to the logic that underpins the stock exchange, that is to say, buying a commodity with the calculated hopes of its value rising so that you may sell it for profit. Forex offers a few advantages to stocks though. Primarily, foreign currencies are (by nature) foreign. They span over far-flung time zones, so the exchange never sees downtime during the late hours of any nation’s standardized clock. The only closings occur during weekends or location specific holidays. This is a massive benefit to you, the investor. If you think the Japanese yen is on the rise, you can buy it whether it’s early morning in your time zone or Japan’s. The highest market movement occurs whenever markets overlap, leading to the best potential for returns, but trading can take place at any time. The trading freedom is groundbreaking and allows for trading as it fits your schedule.
Additionally, forex trading is unique in that you won’t suffer through trading or brokerage fees. The platform profits are derived from pricing markups that you would find at that market exchange stall. This means the price you buy at is slightly higher than the interbank rate, but you won’t have to calculate additional costs. The price you see is the price you are buying. And you won’t incur a cost to sell either, you simply sell for the list price when it reaches a level you want to offload your commodity at.
How to maximize forex returns
Forex trading requires a sound trading approach just as any other financial vehicle. If you jump in blind, you’re bound to fail, just like with the stock market or anywhere else. Warren Buffet himself has made many a blunder in his long and storied trading history. The most important piece of advice that you should adhere to is a dedication to learning price pair trends. Simply pick a currency you like and study the trending fluctuations between that monetary instrument and the dollar. You will quickly pick up on general movement patterns.
The most important thing to remember is to develop a strategy. This takes time, energy, and lots of reading and research. But if you invest your time before your money, you will enjoy much greater security and peace of mind when executing trades and building your budding fortune.