Why Trade Currencies?
Why Trade Currencies?
- Ever since currencies ceased being linked to gold in 1972, market forces have determined exchange rates.
- As currency trading became speculative, the volume of foreign exchange trading (FOREX) has grown dramatically
- FOREX is now the largest financial market in the world, with over $4 trillion worth of transactions occurring every day
- FOREX trades 24 hours a day 5 days a week, in financial centers across the world
- Improved trading mechanisms have made trading currencies more accessible than ever
- Improved trading mechanisms and incredible liquidity have made entering and exiting currency positions incredibly easy
- There are no commissions (exchange, brokerage, or clearing fees) when trading in the foreign exchange market
- There are very few major currencies, so it’s not too difficult to understand the entire market
- Currencies have a tendency to overshoot, which leads to many opportunities
- Currencies tend to move in predictable long-term cyclical patterns
- Currencies are highly influenced by irrational investors, creating opportunities for algorithmic investors
