Have you thought about forex trading as a way of expanding your investment portfolio? Forex trading is certainly not risk-free but if you take a savvy approach then you may end up reaping significant rewards as long as you employ a fully qualified and regulated professional trader.
Here we take a look at some of the advantages and disadvantages of Forex.
Why consider forex trading as a private client?
– Forex will not sleep: As trading goes on around the world during the business hours in a host of different countries, there is always the opportunity to trade major currencies 24hrs a day and five days a week. With no set exchange hours there is nearly always something going on.
– No limitations: There is no limit with shorting currencies – so as long as your trader thinks a currency will increase it can be bought; and if they think it will drop, they should sell. It also means that it is possible to make and lose money at any time.
– Low costs: Generally, forex trading accounts consist of competitive commissions with tight spreads. You can take direct quotes from liquidity providers without any hidden mark-ups.
– Incredible liquidity: With around $4trillion trading daily in the Forex markets, there are always people trading making it easy to get in and out of trades at any time.
– Lots of leverage: Vast liquidity is available in the Forex market and professionals are able to trade with a significant leverage, potentially as high as 50:1. This means it’s possible to take advantage of even small market movements. Of course, it can have its downsides too as it can lead to increased losses.
Is there any downside to forex trading for private clients?
With forex trading there is always a risk: it is not a guaranteed method of earning money. Before you consider trading, remember the following:
– Approximately 90 per cent of forex traders globally lose money.
– There is no system that is guaranteed to bring you success: you cannot avoid the risks that come with forex trading.
Before entering the Forex markets it’s vital to think realistically about your expectations: including how much you can afford to lose and if you are willing to allocate a certain level of finance to succeed.
What about forex trading for high net worth individuals?
Forex trading is becoming increasingly popular among HNWIs and UHNWIs. It is also the asset class that is currently enjoying the highest demand in the managed account sector – which may be partially prompted by the fact that many traditional markets including real estate and stocks have performed relatively poorly over the last 10 years.
High net worth investors that wish to diversify in the Forex markets have a lot of options. There are companies able to structure a portfolio of institution-style programs for you to maximise your chances of making a profit.
There are many reasons why HNWIs may consider Forex trading. For example, it is a diverse market as it is not correlated with other traditional investments; it gives investors an increased number of choices and they are able to hedge against currency risk because their professional traders can trade many major currencies such as the Swiss Franc, British Pound, the Euro and more. In addition, it is a transparent marketplace with accounts opened in the investor’s name, segregated from the main company operating account, creating a completely secure and regulated environment which investors can see at all times.
So how can you succeed at forex trading?
In theory you could just open a trading account and try your luck at Forex trading: however, this is an almost sure-fire way to miss out on making profits and potentially make a significant loss.
While there is never a guarantee of making money in the Forex market, there are many strategies that could be employed to increase your chances of success: many of which we are mentioned in our Forex education centre. However, these practices should not be followed by new investors: it is highly recommend that you employ the services of a qualified and regulated fx trading specialist such as that available from Unite’s partner, a major investment boutique based in London. It will help manage your risk and expectations according to your own requirements with a highly personalised service designed to maximise your chances of making a profit based on your individual needs.
Fill in the form on the opposite side of the page to find out more and we’ll put you in touch so you can discuss this opportunity further.
PLEASE NOTE: This article is meant to be a general introduction to forex for private clients. It is not to be constituted as financial advice. If you are considering entering the forex markets, seek independent financial advice first.