Potential investors all too often get bogged down in trying to decide where to invest their money. The choices are many: stocks, bonds, certificates of deposit, real estate, franchises, commodities and a host of others. One path to ultimate financial success dictates that the investor diversify for maximum profits and spreading of risk. The investor should not neglect to consider foreign exchange (FOREX) market as one of the choices for diversification.
Liquidity In Forex
The FOREX as an investment choice gives the investor a tremendous amount of liquidity. Being able to obtain cash from your investment account is generally not a problem and, in some cases, can be done instantly or at least the same day as desired. Unlike real estate, one does not have to wait weeks or months to realize the profits or proceeds from a transaction. In the context of diversification of assets, liquidity is a major consideration. While all investments may not have this feature, a certain percentage of a well-positioned portfolio should have liquidity. In case of an emergency, it is always good to be able to access cash quickly an easily.
While other assets in a diversified portfolio sit and wait for capital appreciation or markets to open, FOREX investments have the ability to be traded around the clock. This allows for on-going profits to be made. The potential for outstanding returns over a shorter period tends to be greater than that offered by most other investments. The ability to be in and out of the 24-hour market at will is quite attractive for some investors.
Investing in FOREX gives traders a broader view of the global economy. The very nature of the market requires that investors have some knowledge or connection with events which may effect the value of currencies throughout the world. Technological innovations such as the internet, eBay, telephony helps traders involved in global transactions to have a better grasp of world events and to take advantage of opportunities heretofore unavailable or not easily accessible.
When the economy of a particular country is struggling, the FOREX trader can take advantage of the change in valuation of the country's currency and does not have to be stuck with holding the same until conditions change. This may not be necessarily true with other assets. Consequently, an investment portfolio incorporating FOREX trading can help to balance the outcomes due to an ever-changing economic environment.
Sandy Robinson, J.D., Copyright 2007