The main ways to invest in Forex8 min read
Forex Investing Methods: in stock, to cryptocurrency, into structured products. Strategies and Useful Investment Tips.
When there is extra money, conscious person, which has at least minimal knowledge in the economy, immediately seeks to invest excess capital, to earn more on it. Unfortunately, the banking system in our country is far from ideal, therefore, putting units on deposit risk units, and inflation can ultimately eat all the interest, overgrown on your input. But the statement is true, what, lying under the pillow, your finances will not increase. Money alone is not capable of making money, their owners need to study and choose the appropriate investment method. Some profitably invest in real estate, others start their own business, but there are those, who are going to receive additional education, justifiably considering, what they invest in their future, into a more prestigious job, which they can get in the future.
In search of a solution, where to invest, many end up buying large appliances or a new car on them, but this is not an investment, as durable goods quickly lose their value. For long-term investment, you can buy souvenir coins, gold bars, precious metals or open anonymized metal accounts, but you will not be able to profit from such investments earlier than in a few years.
If you don’t want to wait a decade, to increase your capital, the best way to increase your assets may be investing in Forex. Trading in the currency exchange market, you don’t need to have a lot of capital initially, as, eg, to buy shares on the stock exchange or to buy housing on the real estate market. Another advantage of the currency exchange is its high liquidity, round-the-clock work and a balanced ratio of profitability and risk. People with the makings of analytical thinking can learn to work in the Forex market as soon as possible, and with a sufficient margin of patience and perseverance in achieving their goals, from the first days of trading, they will begin to increase their capital.
In this article, we will just look at the main methods of investing in Forex. As an intermediary for access to the currency exchange market, we have chosen one of the most reliable and popular brokers.
Before, how to invest your capital in securities, it is necessary to calculate the investment period and probable profit, since depending on the type of asset being traded, its profitability may also differ. So, eg, shares Coca— Cola annually can bring up to 10-15% extra profit, while the securities of pharmacological and cosmetic giants can be enriched 1000 times.
You can receive dividend income in the form of dividends, but in this case you should not hope for a quick enrichment, since the dividend yield is relatively low. for instance, if you buy 1 share of the company Procter&Gamble Co for 66 y.e., then with a dividend yield of such securities in +3.17% for each share you can get 2,1 y.e. arrived. For 1 thousand. at.e. You can purchase approximately 15 shares of this company and get almost 32 from.e. dividends. The purchase of shares brings a regular and stable income, but for that, to make a profit, you must initially invest a relatively substantial amount of money.
For traders, limited in funds, more affordable option is stock trading on Forex, during which there is no need to buy the asset itself, like a stock exchange, and you can earn on the difference in purchase rates/sale of securities. There are several popular strategies for investing in Forex stocks:
- buy and hold. The phrase fully conveys the essence of strategy, when you need to buy an asset and not sell it until, until the price rises to an acceptable level. This is a long-term tactic, which is not able to bring fast money, but with the right choice of company, the profit will be quite significant;
- catch the wave. This is a high-risk tactic, which at the same time brings a lot more profit. Following her, you need to wait for the crisis in the market and buy up shares at a low price, and after the crisis, sell them at a higher price;
- accumulation. This is a more complicated tactic, which involves the accumulation of an investment portfolio, additional purchase of shares and reinvestment of dividends. A solid profit from such a strategy can accumulate in at least a few years, when the portfolio that is correct in all respects is formed.
Broker already formed several options for investment portfolios, which include securities, stocks and other assets, allowing you to profit with minimal risk to your capital. The trader does not need to spend years on the selection of different options for financial instruments for investing; powerful team of specialists, using fundamental and technical analysis tools, already developed ready-made investment portfolios, helping minimize risks and earn up to 190% profit from investments.
Along with currency pairs, including national currencies of various states, in the Forex market you can earn on the change in the exchange rate of digital currencies. Among the available crypto assets at the broker there is not only the well-known bitcoin, but also lightcoin, ethereum, ripple, the throne and many others. When trading crypto, the broker provides leverage assistance, varying from 1:2 to 1:10.
The principle of trading currency pairs, including digital currencies, no different from working with national currencies. You can earn as much as growth, so on course drop, at the same time, you can use the same strategies for trading crypto, as for other asset groups.
Investing in structured products
This method of earning money in the Forex market is to invest in various types of financial instruments in order to diversify risks. Part of the funds is invested in risk-free assets, which have low profitability. And another part of the capital is invested in high-risk financial instruments with a high level of profit.
For broker’s clients not only classic currency pairs available, but also precious metals, securities, stock indices and commodities. To choose the best type of attachment, trader needs to consider 2 main parameters:
- determine the degree of protection of invested capital (need to know, what percentage of investments will be returned to the investor under any circumstances);
- participation rate (its value is formed by the potential value of profit, taking into account the timing and level of investment protection).
The degree of risk and return on the asset the trader determines independently. Higher risk, the greater the likely profit.
To increase your chances of making a profit, it is not necessary to carry out investment activities in the Forex market, relying on intuition, but strictly following a pre-selected strategy. As an example, take one of the investment strategies, offered on the site «Parallel movement».
This is an indicator strategy, which uses such a technical tool, as CCI. The indicator construction period remains standard, and levels are set to values +150 and -150. After adding CCI on the price chart it will have the following form.
Basically, this strategy works out efficiently on any trading platform, but for example, the standard broker terminal was used – MetaTrader.
To trade up, you need to wait for such a moment, when the indicator curve CCI will close above the level +150. Only signals that need to be taken into account, which are emerging, starting from oversold area.
The figure shows, that curve CCI begins to move from the oversold zone, that is, from under level -150 in the direction of the level +150, and the candle closes above this level. The rules of the strategy are followed, mean, you can open a deal to increase.
It is necessary to start lowering trading at that moment, when the indicator curve CCI drops below -150 provided, that her movement originated in the overbought zone.
In the given example, the movement of the indicator curve begins in the overbought zone, thereafter CCI falls below -150. At the close of the current candle, you can open a lower deal. As we see, in the future, an impulse falling motion did occur.
There is only one restrictive condition in this strategy – set take profit. Position must remain open until then, until the indicator curve for the second time tests the levels of overshot/oversold. When trading down, when a deal is open at the time the indicator closes below -150, position must be kept until, when the indicator for the second time does not go below the same value. When trading up, when a trade is opened after the indicator crosses the level +150, close the contract if necessary, when the indicator curve for the second time rises above the mark +150.
Forex Investing Tips
In addition to clearly following the previously chosen strategy, there are a number of recommendations, which must be followed, who wants to succeed in investing in forex:
- learn to calmly perceive drawdowns, as forex trading is inevitable;
- develop a clear investment plan, which describe in detail, where to, how much, for what and for how long do you invest;
- reaching a goal or breaking even, be sure to take profits. Remember, that the market is volatile, and at any time you can lose everything you earned on investments. Assessing the market situation, don’t rely on luck
- during trading, do not follow the illusions and do not succumb to excitement. All emotions need to be controlled;
- consider fundamental news in your work – they are the most powerful indicators of the market situation;
- diversify your investments to reduce risks;
- only cooperate with reliable brokers, who have a license to carry out their activities and a large number of positive reviews from existing customers.
Why invest in Forex with a broker?
The right broker will help the trader not only make a profit on Forex investments, but also provide its guaranteed conclusion. One of the few intermediaries, who provides quality service combined with favorable trading conditions, is an. Besides, it has a number of indisputable advantages:
- broker license;
- comfortable, multifunctional and intuitive terminal Metarader5, which can be installed on a computer, the tablet, smartphone or use the web version;
- wide range of underlying assets, with over 4 hundred financial instruments;
- starting deposit from 250 y.e., help in the form of leverage from 1:10 to 1:200, spread from 1 – 2 points;
- wide range of methods of depositing funds and withdrawing funds, including bank cards, transfers and electronic payment services;
- quality and effective training, webinar based;
- all customers are given the opportunity to test their knowledge on a free demo account, whose conditions correspond to real, but it does not require replenishment with real money;
- fast guaranteed withdrawal of profit in a maximum of 2 days, and at least – in 5 hours;
- useful analytical tools, quality market reviews and current economic and financial news;
- profitable bonus and affiliate programs, helping to quickly disperse a deposit and receive passive income.