The foreign exchange (or forex or FX) market is universally recognized as a simple but dynamic opportunity to grow an investment portfolio.

Forex Trading Strategies

Unlike the stock exchange, for example, there are always winners in the forex market. Your capacity to win is unaffected by any of the traditional factors that can disrupt other markets, such as quarterly results, annual reports, national monetary of fiscal policies, natural disasters, or weather patterns.

Forex Trading Never Stops

Every day can yield gains in forex trading if you employ the forex strategies that enable you to play the market correctly. That’s because there is always a need to exchange foreign currency. The demand never stops. As long as there is trade between different countries, there will be a need to convert one currency into another. If and when trade between any two currencies drops, there will always be trade between two or more other currencies that will rise. Apart from the need to convert currency for purposes of trade, investors with large forex portfolios are constantly looking to move their portfolios into safer currencies. The challenge is how to spot those opportunities in advance in order to take advantage of them.

Look for the classic signs that there will soon be an upturn in demand for a particular currency. A major deal, for example, that involves natural resources such as energy, a significant overseas investment by a global business powerhouse or the signing of a treaty, such as a free trade agreement, that will facilitate investment from one country to another. These are a few of the signs that currency will start to flow from one country to another and raise the value of the beneficiary country’s currency in the process. And then look for the classic signs that there will soon be a downturn in demand for a particular currency, such as protective tariffs, the sudden availability of an alternative country market or the introduction of a substitute product.

Protecting the Investor

Forex is a leveraged market. What that means is that forex brokers can lend their clients a larger amount of money than their initial investments. In this way investors immediately have a greater potential to make larger gains than they otherwise would.

But forex trading also provides investors with a brake in the event of a sudden, unpredicted turn in the market’s direction. This brake is called a stop out level. Investors may specify in advance that their trading will automatically be frozen due to a decrease in their margins to levels that will no longer support their opening positions.

Choose the Forex Strategy that’s Right for You

When trading larger amounts of forex, many investors prefer to hedge their bets by opting for online contracts for difference (CFDs). CFDs are an example of a leveraged derivative, meaning that their value is derived from another asset. To participate in online CFD trading the investor has to predict the change in the value of such as underlying asset over a defined period of time.

The primary difference between standard forex trading and CFDs is scope. Forex is limited to currency while CFDs will typically integrate a variety of contracts covering diverse assets that generate a huge proportion of the global demand for foreign exchange. These assets typically include indices, fossil fuels such as crude oil and natural gas, and precious metals such as gold, silver and platinum.

The primary advantage of online CFDs is the wide margin they provide. In this way, a relatively small principal can be used to make a significantly large trade. Moreover, by spreading trading over different currencies and/or markets, CFD strategies enable individual investors access to the widest possible global trading base. forex provides you with the information you need to make the wisest possible choices.