Forex- Speculation, Risk Aversion And Other Important Things
In this article I will try to explain you what is forex speculation, risk aversion, carry trade and what are forex signals. This is by no means a text from a professional forex trader, but of a trader who knows what is what on this exchange market. I used Binary Option Robot for binary options over some time, and therefore I have learned some important aspects of Forex trading also.
Speculation are done by well-known traders. This can influence in a both good and bad way position of a currency on the forex market. Investing in stocks is a good way of keeping yourself in the money, but most of the speculators are a different kind of people. Most of them have hedge funds and are well positioned. Go to top10binaryapps.com and you will get it. They influence the market with speculations about changes that may or may not happen. Consequences of some events can have further impact because of some speculations from this kind of people. Influx and investment in traditional instruments like bonds can and does have a positive impact to economical growth with the aid of capital it is considered a good thing. On the other hand speculations are, by many, considered as a form of gambling, which more than often interferes in a country’s economic policy which is a bad thing in most cases.
Many label speculators as bad guys but there are some who think otherwise. Some argue that speculators are just opening the eyes of majority of people and are showing them what is going to happen. These things can cause some events to happen before than they should have, which can be again both good and bad thing, considering the fact they will happen and that they can’t be avoided.
Risk aversion is done by liquidation of assets and transfer them to much safer currencies. This can be affected by connection between people and currency and it can save a currency from imminent loss of value. This happened to Dollar during a crisis back in 2008. Even though USA was strongly affected by crisis flood of people buying dollar saved it from losing value and made it the strongest currency during that period.
Carry trade is an act of buying a currency that has bigger interest rate over currency you have. This can be very profitable especially if there is big difference in interest rates. But this strategy can back-fire because big fluctuations in exchange rates can cause enormous loses. So with this kind of trade people can earn millions, and lose them in quite a short time frame.
Forex signals or trade alerts are tools of more experienced traders. These can be used in a number of ways and they cost money to use. A lot of binary options have integrated these signals in their software, like for example IQ Option. One of the way is to have a trader send you info about good trades via SMS or mail for which you pay a certain fee beforehand. There are software options, where software scans market and informs you based on its calculation what trades are or will be worth your money. There is also software that will do trading on your behalf, under parameters you set. These things don’t guarantee you a safe bet or easy money, best way to trade on forex market is to understand how it works.