A one or two percent price fluctuation on a single currency can bring in thousands of dollars in profits. Another attractive aspect of the forex market is that more leverage is available for a trader.
For example, 10,000 dollars can be leveraged to purchase as much as 100,000 dollars through margins. This allows the chance of great returns, even at only one percent, with less risk than might otherwise be necessary.
The Stock exchange is only open during business hours. The forex market is open 24 hours a day. A forex trader can literally work 24 hours a day, moving from the Asian market to the European to the American. Couple this with the leverage opportunities then the chances of large profit with forex are phenomenal. Also the forex market doesn't charge commission which can amount to significant savings.
Most traders with experience in the stock exchange but little knowledge about the forex believe that it is risky and returns low profits. This is because there is minimal information on the forex trade. A forex trader is required to self-educate himself. Researching as much as possible about the forex trade is required before you become an experienced trader.
Compared to the stock exchange, the forex requires much more effort in order to return profits. A person investing in blue chips in the stock exchange need not know much about it, but will return profits. For long term savings stocks are fine, but the short term large gains are definitely to be found with forex.
The forex market goes through trillions of dollars in a single day, that's how huge it is. No single investor can corner the market as has happened in the past with some stocks, and also with some precious metals and commodities.
A major characteristic of the Forex market is risk. Pension funds rarely invest in forex trading. However for the smart investor who has time to become educated, forex can be the way to go. George Soros is one such smart investor, and through the forex market has become a billionaire. At one time, he made $2 billion in profit by shorting the British pound sterling.
He operates the Quantum Fund which manages funds running to about $4 billion, generating around 65% in returns. His is an example of how profitable the forex market can be to an investor if played right.
Just to illustrate how volatile the stock market can be, George Soros lost a staggering $200 million in just one day, during the October 1987 stock market crash. His reply to this was stoic, "I made a very big mistake, because I expected the crash to come in Japan, and I was prepared for that, and it would have given me an opportunity to prepare for the falloff in this country, and actually it occurred in Wall Street and not in Japan. So I was wrong!" While this mistake cost him a great deal, it wasn’t the end of the world.
Soros philosophy is if he is right, he makes a ton of cash, and if he is wrong he pays for his mistake and keeps on moving. A prime example of how good money can be made in forex by investors who are willing to study, learn, invest and take risks. While not for the timed, the chances of a good return from forex make it the place for daring entrepreneurs to try their hand.
Gerald Njuguna is the owner of www.forextradingbrainbox.info,
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