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Forex Versus Other Markets
Liquidity:
FOREX markets are very liquid. That is, you
can withdraw or cash in your investments relatively faster
and cheaper than most other types of investments. Say for
example, it may take you weeks or months before you are able
to cash in on your real estate, antique collection, car, or
fixed deposit in a bank (where you might pay a surcharge for
cashing prematurely). Moreover, in all the above mentioned
scenarios, except the fixed deposit, if the buyer learns
that you need cash rather urgently, you might not get the
fair market price of your original investment!
Non-Monopolistic:
It is estimated that the daily turnover in
the FOREX market is around US$ 1.3 Trillion to US$ 4.5
Trillion. It can then be safe to state that a market of such
huge volume will be difficult, if not impossible, to be
controlled or monopolized by a single entity. It will take a
huge financial effort to target any particular investor to
incur loss or profit. A vigilant trader/investor will get a
chance to observe several indicators and take necessary
precautions before there is a big change in the exchange
rates.
Non-Stop Trading:
Almost all of the stock exchanges have
limited working hours. All the trading must be completed
within this period. It means that if you have a losing
position and could not dispose of it the same trading day,
you will have to wait for the next trading day. In the
meantime, there might be some news reports or world figures
which may affect the category of the business, or the
company of which you hold stock. But you can't do anything
about it because the exchange is closed for the day!
Foreign currencies, on the other hand, being foreign to all
but one nation, may be traded all around the world, 5 days a
week and 24 hours a day. For example, a transaction
originates in Tokyo, Japan and carried over to Hong Kong .
By the time the Hong Kong markets are closing, the European
markets are open. By the lunch time in London, the New York
markets join the action. Shortly after that, the US west
coast markets kick in. Just before the west coast markets
call it a day, the New Zealand markets are opening, and
shortly after that, the Australians start their business
day. An hour after that, the Japanese markets are open. So,
you see, the FOREX market never sleeps.
Large banks with branches in several countries usually have
at least one trading desk open until the next one joins the
action. The same is true for large brokerage houses, which
usually have trading links with several other brokerage
houses or their own branches, which form a global trading
network that is operational at any point on the globe at any
given instant!
Hence, in today's day and age, a FOREX investor/trader is
able to trade almost 24 hours a business day, 5 days a week.
Enabling him or her to take advantage of any development
anywhere in the world, while the local stock market sleeps.
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