Foreign exchange simply is trading of one currency with other currency throughout the world or we can say it is a relative value of one currency to another. For example one Indian rupees is equivalent to 0.015 United State Dollar, that means if someone want to invest his or her 100 crore money in United State he should have 1,48,40,000.00 USD. Now a days it has become very common to including Central Banks, Banks, Corporations, Retail Traders etc to invest in foreign exchange market which is far different from Capital market at the same time it has lot of risk which we are going to discuss.
A market full of menace
It is better said by someone in foreign exchange “90% of the retail trader’s losses money”. Unlike capital market foreign exchange is an OTC market, means “over the counter” market. Hence there is no regulatory body like Capital market, so if you are back bitten by your partners, brokers, fund manager or any services there is no base on which you can fight for your justice. People think it a get a rich quick scheme but there is no lack of opportunist who have eye on your money. So always need to take decision in an informed manner not in an impulsive manner. If someone wants to a profit he/her need to be conscious and careful, each and every investment he need to check how his/her money is going to enlarge. Greed can lead someone from an achiever to a beggar. This is the reality of this market when people get some profit, in excitement he invest more.Since we know anytime the currency value can increases or decreases that’s why need to be patience and diligent all the time.
Strategy with patience and effort can make you win
People think in several days they are going to be extreme prosperous in this business, so they come with a strategy of his own or may be copied from other. First, they may lose some money or there would some profit. But if they lose money they modify their strategy again if they lose, they modify the strategy and this cycle continues. And in the last the situation would be like they have invested all the money along with borrowed money with zero profit. Hence our strategy should be strong enough to tackle all the loss. Actually, people have to be diligent and conscious every time. Hence to make profit in this field people need to have a great strategy with full confidence and other is patience and hard work.
One more thing need to take care if you are an Indian during investing your currency to your broker for marginal trading outside, it comes under liberalized Remittance Scheme violation. Since Indian government has announced that Indians can’t supply money outside for marginal trading, as it affect their foreign reserves. Basically Forex market is also known as liquid financial market so there is possibility of profit along with risk.