The world market has offered people plenty of investment opportunities. But for the past five years, the macroeconomic growth seen in the globe has been associated with low numbers and figures, supported by lower inflation and interest rates. Despite this struggle of the global market to move forward, one investment opportunity has remained attractive to millions of investors – the trading of currency or popularly known as the foreign exchange.
Brimming With Water
Like a deep well, the foreign exchange is brimming with water, offering investors with great investment opportunities to choose from. Forex market would not be a daily $4 trillion- market if it does not live up to its billing as one of the most traded assets in the financial world.
Consisting of central banks, hedge funds, investment firms, and retail investors, the currency market allows investors to buy, sell, and speculate on the movements on the prices of various currency pairs.
But with lots of investment opportunities in the market, there are several ways where someone can put his money.
The most common investment in the forex market is trading in the 24-hour cash forex market or the spot market. As abovementioned, the forex market involves currency pairs including USD/GBP, GBP/EUR, USD/JPY, and many other pairs, where investors can speculate on their prices.
In spot market, traders will make a bet whether the price of currency pair they have chosen will go up or down. If a trader expects that the price will go up, he then buys the currency pair. If not, then he goes on selling.
Aside from speculation, forex market also offers currency futures contract. Under this, the buying and selling of currency pairs are done based on a standardize size and settlement date. Foreign currency option is also a perfect investment opportunity along with exchange traded funds and certificate of deposits.