why Forex trading ?
This is
probably one of the questions that you need a reasonable answer. There are
hundreds of investments out there that you can prefer, but why go trading
foreign currencies instead?
Forex investment is unique in various aspects.
* Its trading
volume is relatively huge compared to other market.
* It has
extreme liquidity or the capability of either buying or selling the currency
without causing significant movement in the market price.
* It has the
largest number and variety of traders.
* It is one
of the markets that have long trading hours (24 hours each day, except during
weekends.
* Trading
locations are almost everywhere, not just in the United States or major cities
of Europe.
* There are
different factors that affect foreign exchange rate.
Another
whooping fact that will make you excited to go on Forex trading: it has an
average turnover in traditional foreign exchange market of around $1.88
trillion daily, according to the Triennial Central Bank Survey of the BIS (Bank
for International Settlements). Here are the daily averages of turnover on the
Forex market for the last 17 years:
* $500
billion (April 1989)
* $750
billion (April 1992)
* $1.18
trillion (April 1995)
* $1.48
trillion (April 1998)
* $1.16
trillion (April 2001)
* $1.88
trillion (April 2004)
From the
figures alone, you will notice that the average trend of Forex turnover is
increasing. It is estimated to reach as high as 2 to 3 trillion dollars within
the next 8 to 10 years, if the number of traders around the world will continue
to increase. As a matter of fact, everyone have the chance of getting a
substantial slice of the Forex market wealth pie, especially that the Forex
trading marketing is now on its automation process.
The concept of automation becomes the new trend to the foreign exchange trading market.
The
Interbank spot Forex market has also considered switching to the automated
method as well.
the benefits that a Forex trader can derive from automated Forex trading.
There are
several benefits that a Forex trader can derive from automated Forex trading.
Here are some of such benefits and figure out why Forex trading as well as
other investments (futures and commodities) prefer the automated process.
* Through
automated process, transactions can now be done in real time. Although manual
systems have existed for quite some time now, it is difficult to achieve such
benefit that the automated Forex system can offer to its traders. All of the
trades can happen within a few milliseconds and can be a big plus for automated
transactions against the manual system. In fact, there are problems that are
addressed using automated Forex trading especially if the trader is losing a
few times in a row that prevents him from making new trades. Such problem could
be addressed using the automatic trading system.
With automated Forex trading can trade in various markets
* With
automated Forex trading, you will have a greater diversification. It means that
you can trade in various markets in different time zones at a time. You can
execute trades with traders from Singapore or London even it is already 12
midnight in the United States. This benefit allows you a multiple exchange
model option. You can use varying trading models to evaluate short-term data.
This means that you will be able to predict the trend for a shorter period of
time, let us say from fifteen minutes to half an hour.
the liquidity in the Forex market
* As
previously mentioned, the Forex market is unique because of its extreme
liquidity. This liquidity is increased when the market goes automated.
Risk management problems and automated Forex trading
* Risk
management problems are solved through automated Forex trading. International
checks, which are commonly used in making purchases on Forex market, are
synchronized through automated technology. Since the transaction in an
automated process is now on real time, there is a slim chance that the payments
will be delayed, reducing the risk of non-payment by either parties. Although
there are problems noted with the use of the automated system, it can be fixed
through consistently-updated technologies.
With
automated Forex trading market, the prediction of $2-3 trillion average daily
turnover within the nest 8 to 10 years can be changed within the next 4 to 5
years. Given the quick yet efficient trades on varying time zones, automated
Forex trading will now be among the existing lucrative business around the
world.
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