Understanding Forex Investing with 5 Important Factors


Is forex investing useful to your retirement plan? Most people know that investing for retirement is critical to protecting their future. Some people invest in stock ownership of big companies on the rise, while others buy foreign exchange currency. However, many people are not sure which investments will yield the best returns. Unfortunately, some also may become victims of scams. Because of these uncertainties, having more information with Compound Daily can be very beneficial to you.

The exact purpose of Compound Daily is to inform consumers about money matters, particularly about investments and retirement. We also have simple calculators available to input specific values to determine how much they want to save and how often. Calculators like this forex compounding calculator that we’ve provided for your convenience at Compound Daily. Enter the starting balance, interest rate, and length of terms of the investment you want to make to determine how much you should expect to earn at the end.

Most individuals have a 401k or other retirement plan through their job, but what if that’s not enough? What about entrepreneurs? What if you had some financial trouble and started investing later? There is no right or wrong answer to these questions, but they are fundamental concepts everyone should think about. 

What Is Forex Investing?

Foreign exchange currency, or Forex trading, is the trading of one country’s currency for another. For example, someone buying euros for U.S. dollars can be done in the forex market. The forex market is an electronic system of banks, brokers, institutions, and individual traders with no centralized location. Most interactions are between banks and brokers, but anyone can trade in the market. Trillions of dollars are changing hands every day, making the forex market the most liquid market in the world. 

Understanding Forex Investing

Understanding Forex Investing

Currencies are listed in pairs with an exchange rate. The currencies are abbreviated as the country and the type of currency they use. For example, the U.S. dollar is abbreviated as USD, the Canadian dollar is CAD, and the JPY stands for the Japanese yen, and so on. The foreign exchange market monitors and regulates the exchange rates of each of the currencies, and the individual amounts vary slightly from day to day. 

The price is usually a decimal number next to the abbreviated pair, such as EUR/USD 1.1552. This means that it costs about 1.16 euros to buy one U.S. dollar. The U.S. dollar is the most traded currency and often is the highest value currency, meaning it usually costs more of another currency to buy one U.S. dollar. A person can buy a specific currency for a lower price, and after some time, the hope is that they can trade the currency again for a higher cost and make a profit. Again, this calculator is available for you to use for free whenever you like. 

Micro, Mini, and Standard Lots

These currencies trade in lots; micro, mini, and standard. You can exchange as many as you like, as long as they are in these lot amounts. A micro lot is 1,000 worth of a given currency, a mini lot is 10,000, and a standard lot is 100,000. So, for instance, two micro lots are 2,000 of the particular currency, seven mini lots are worth 70,000 in a given currency, and ten standard lots are 1,000,000 of a specific currency. 

Trading In the Forex Market

The Foreign exchange market is open five days a week and 24 hours a day across many major financial centers. You have many opportunities to exchange in the forex market because it’s vast and operates in numerous cities around the globe. London, New York, Singapore, Hong Kong, and Tokyo are the most important trading centers. 

Trading amounts are generally very substantial. For example, in April of 2019, the foreign exchange market oversaw an average of $6.6 trillion exchanged each day of the month. This number is retrieved from the Bank for International Settlements. Owned by 63 central banks, this organization monitors and works in monetary and financial responsibility. 

Preventing Unethical Financial Behaviors

Preventing Unethical Financial Behaviors

As many people know already, long-term investments can be risky. It definitely pays to be cautious because honest people have become victims of fraud, scams, and other unethical practices. For example, people may obtain insider information in which they would know things that other investors don’t, giving them an unfair advantage. Therefore, organizations like the Bank for International Settlements exist. 

Regardless of the risks involved, financial planning for the future is a must. It’s simply more intelligent to have a method of ensuring your survival when you retire. Having more knowledge of how to prepare for your retirement gives you manageable and affordable options. Having a comfortable nest egg when you retire is good, but you may want to do other things with your time, such as travel or find a new hobby. For these reasons, Compound Daily is here to help you prepare for your future.