The purpose of the paper is to make an overview of the Investment opportunities in
the Forex market, provide recommendations on how to trade in Forex, how to predict
changes in Forex and how to use various methods of analyses to have clear indices of
future trends. Theoretical parts were analyzed alongside with using them in real life
situations within the framework of demo accounts on two different trading programs.
Using the researched methods of analyses it was made possible to have profits in the
demo accounts. It has been found out that the Forex market before the worldwide
crisis was more stable, however, due to its high fluctuations it is even more attractive
to new investors due to its possibilities of high profits. In this paper two different
views, regarding whether Forex is a good investment opportunity or not, can be
found, one that states that it is a good opportunity due to high profit opportunities and
the other that states that if the person does not know how to perform analyses, then
the losses may be instantaneous and to the full extent of the invested capital.
In order to perform the tasks the following methods of the research were applied:
analysis of the literature;
analysis of methods of analysis;
two demo accounts were created;
TeleTrade seminar on Forex.
What is Forex and how trading occurs in it?
The foreign exchange market (currency, ForEx, or FX) is a virtual currency market in
which the trade of currencies occurs; unlike other financial markets it has no physical
location or central exchange point. In this market banks and financial institutions
facilitate, or simply provide, the possibility of trade of foreign currencies. Forex is a
highly volatile market that operates 24 hours a day and 5 days per week. Forex market
conditions may change any time in accordance to real-time events.
Forex trade occurs when one party buys currency from another party by paying for it
in another currency. Foreign currencies are constantly and simultaneously bought and
sold across local and global markets and traders' investments increase or decrease in
value based upon currency movements. Trading in Forex mainly occurs for two
reasons, the first reason is to acquire the currency for using it in purchases, money
transfers etc. and the other one is buying currency with a sole goal of speculating with
it and selling it to other market participants whilst profiting from the ever changing
currency rates, these speculators are brokers through which a possibility exists for
individual persons to engage themselves in buying and selling currencies in the Forex
market. Since Forex is a virtual market many companies offer brokerage services for
individual people and usually they provide individuals with their own Forex trading
platform in a shape of software that allows individuals to trade in Forex, usually these
brokerage companies provide these platforms for small monthly fees.
The nowadays Forex market differs from the one that it was before the 1970s when
mostly all currencies had fixed rates. Nowadays Forex has floating exchange rates and
is one of the most liquid (easy sales with gains or no losses to seller) financial markets
in the world. The Forex incorporates trading between central banks, large commercial
banks, corporations, governments, brokers (such as those that provide individuals and
companies to trade in Forex) and other institutions.
Advantages of Forex trading
High leverage
Commencing from a minimum of 100:1, Forex market provides availability to its
traders with large amounts of leverage, thus large profit yields may be gained with
small amount deposits.
No commission
Dealing with regular financial clerks investors have to share commissions on the
deals, however, investors participating in the on-line Forex deals do not have to share
any commissions and thus can keep all their 100% profits.
Superior liquidity
Most of the currency trade occurs within a frame of seven main currency pairs. The
large amounts of sales make it possible for them to be stable and the spreads are
narrow with high levels of liquidity.…
