You trade currencies for hedging and speculative purposes. During the regular course of a business day, corporate treasurers, private individuals, and investors have currency exposure. If you have bought Euros and you expect the exchange rate to go down, then you can sidestep your currency exposure by selling your Euros for the U.S. dollar.
The currency markets are perfectly suited for speculative trading. The cost that a currency trader accrues when taking a position is called the spread. The volatility of the currency market is a measure of the maximum return that you can get with perfect foresight. This ratio is about 500 and indicates that you can gain a high profit from trading currencies. There is a possibility of earning around five times more money from trading currencies than from trading stocks.
The currency trading market is 50 times larger in volume than the volume in stock exchanging. This means that the currency trading market is the most liquid financial market on the planet. There is barely any slippage of the market price for the carrying out of large buy and sell orders. There are no constraints on currency trading like there are in stock exchanges. A currency trader can take advantage of both the up and down trends. This will definitely increase their potential for profit.
With this information in mind, there is no reason not to trade currencies. You, as an investor, can make a profitable living at doing this, especially if you do it right. Do your research and learn as much about the currency trading market as possible, then why not take a foray into the currency trading market and watch the money come in. -Ken Charnley
Why Trade Currencies?
