Why Forex?
Foreign exchange is one of the most volatile of markets legally available for trading. Anyone, from individuals to national banks has the opportunity to profit (or lose) from currency fluctuations.
The simplest example might be when you go overseas on vacation. You have the opportunity to exchange some of your cash for foreign currency before you leave home, for example at your local bank, or the exchange counter at the airport when you fly out. You could also wait until you arrive at your destination, on the chance you may get a better exchange rate there.
When you return home after your relaxing time, you must exchange any foreign currency remaining for your own. Once again you can choose between "their" rate and your own, although you don't know what either will be until you get to the counter!
In most cases you will make a loss on the transactions, as the bank takes a commission when they exchange your money. However in some cases, maybe the Dollar dropped sharply, or the Euro rallied, and you actually came out ahead (or behind)!
Of course, you can hedge against too big a loss (or profit) by taking most of your money as travellers cheques, or using ATMs, and only exchanging when you need too. Be aware that exchange rates on travellers checks are different to currency rates! Also US Dollar checks are usually universally accepted, whereas some other currencies are not, or may incur a poorer exchange rate.
Other examples of exchange rate fluctuation is shown in some currencies, for instance the Swiss Franc, being more stable, over the longer term. When I was working in England in 1965, thinking of working in Switzerland, the Pound was worth 12 Swiss Francs. I later worked there in the '70s, the rate was now approximately 8 SFr. Today the rate is one Pound to 2 Swiss Francs. Maybe this explains why Swiss companies, such as Nestle find it possible to buy other European companies?
Because of the fluctuations in currencies, there is an opportunity to trade in, and profit from them. While there have been some spectacular losses in the banking world, we don't see them dropping out of the market.
This opportunity is also available to the individual. There is, of course a substantial risk involved, which many are willing to take due to the potential profits to be had.
We have attempted to show all sides of the discussion, but please take note of the warnings given by all reputable organisations, refer to our disclaimer.
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