Versus Other Markets
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
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.
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.
To get started FOREX trading,
or to learn more, visit our Homepage.