As an old Chinese proverb says “May you live in interesting times”. For Forex traders the present time could hardly be more interesting. The desire to learn more about and participate in the “largest of all markets” is growing at an astonishing pace.
The current global financial crisis has been a wake up call for all investors both large and small. The stark realization that the investment landscape has undergone a permanent change is now unmistakable. The traditional financial models of cash, stocks, and bonds for safe long term investing have become obsolete. Even real estate, long the bedrock market for many investors, has suffered tremendous losses.
The world has gone global and electronic. Money moves, literally, at the speed of light. In an uncertain world with the relentless pace of breaking news, long term fixed allocations become problematic. Investors have to be able to make major changes in a short period of time to keep their capital safe and bring in the best returns.
Sophisticated investors, sensing these seismic shifts, have been turning in droves for alternative ways to deploy their investment capital. It comes as no surprise then that many have turned to the world’s largest market – the Forex market – to add a new asset class to their investing opportunities.
The Forex market dwarfs every other market on the planet. Three and a half trillion dollars a day changes hands in currency trading every day. It is highly liquid, trades on a global spot market basis 24 hours a day and is a more honest reflection of financial opportunity and risk than most other markets.
Different than any other Market
The Forex market has its own set of dynamics that separates it from other markets. Because the potential for profit and loss due to its sheer size and depth are so staggering, the Forex market is professional to the extreme. Traders with skill sets developed over years of experience have a distinct edge over the newcomer. The learning curve for those just starting to trade Forex is often long and painful.
I have over twenty five years of trading experience and have traded professionally in stocks, options, futures and now Forex. I have experienced violent, whipsaw market moves as a floor trader trying to keep up with the black box quant guys programming their giant computer to buy or sell 3000 stocks in a few seconds.
Through it all I have always loved the dynamics, challenges and rewards of short term trading which is why I now find myself trading Forex almost exclusively.
The currency markets are macro by definition. They are less subject to the politics, manipulation and gaming that result from narrower interests plying their trade in smaller markets. The currency markets are simply too big to be pushed around for very long – even by behemoths as large as central banks let alone pip squeaks (no pun intended) like a George Soros or Warren Buffett.
That’s not to say the currency markets are subject to high volatility and of course rumors, which are often the necessary ingredients that produce opportunity. Which brings us right back to the point just made – currency markets are simply too big to be manipulated for very long. The experienced Forex trader knows this and uses it to his or her advantage.
On a day to day, hour to hour basis I find that currency pairs obey key Fibonacci support and resistance areas better than other instruments I have traded, giving me a higher level of accuracy in using my forex trading software and thus a higher percentage of winning trades.
Viewing currencies from a much longer term on a week to week, month to month basis brings to mind another old proverb and truism – “There is no trend like a currency trend”. Once currencies begin a trend they can stay on that trend for many months if not years.
To sum up, the Forex market offers traders unparalleled depth and liquidity, freedom from local manipulation, 24 hour access, truer charting characteristics and a chance to participate in the largest market on earth.
For Forex traders – We are indeed living in the most interesting of times.
Good Luck and enjoy the experience of trading.