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Forex Investing Vs Stock Investing

Vladimir's LST System

A person that has a knack for paying attention to the global economy may want to consider  investing  in the  Forex  market. What is the Forex market? Forex is an abbreviation of Foreign Exchange, and is the market in which different countries' currencies trade against each other. Why would a person want to do this? Well, it can be slightly riskier than investing in nothing but standard stocks, but if things work out there is a huge potential profit to be made.

Forex trading works somewhat similarly to the normal stock market, except instead of bidding on one stock symbol, like AAPL for Apple or TWX for Time Warner Cable, a person buys (or sells) a pair of currencies, such as AUD/USD (Australian dollars vs. US Dollars), USD/JPY(US Dollars vs. Japanese Yen), GBP/USD (British Pound vs US Dollars), etc. Unlike in stock trading in which one is only concerned with the performance of a single instrument (the stock they bought), in Forex the investor is concerned with the relative performance of the two currencies that make up the currency pair they are trading. There is a huge potential for profit, but because a person is pitting one country's entire market against anothers, there are many more variables involved so the risk can be a bit higher than with a standard stock. By  investing  in the  Forex  market, you can make money if one country's currency value goes up relative to the value of the opposing currency.

There are similarities between the Forex market and the stock market, however. Most of the concepts like bid / ask prices and spreads are still there, and they still mean the same thing. The spread is still the difference between the bid and ask prices, and there is still always going to be a marginal difference between the bid and ask prices. Most concepts and terminologies of standard stock market trades still apply, a person just needs to remember that instead of buying a single stock, he or she is instead betting on the relative movement of one country's currency against that of anothers.

There are plenty of speculators in the  Forex  market, but it's generally considered safer -- especially for beginners -- to plan to  invest  more long term and using less leverage so that in the event of a large move against them their account isn't completely wiped out in seconds.

There is a large potential for income in the Forex market for those willing to step out and take a chance. As said, it can be a bit riskier and global economic events can change currency exchange rates pretty quickly. For those willing to take a chance, however,  Forex   investing  can pay off big to a discerning investor.

Vladimir's LST System

Source by Keith Atkins

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