BASICS OF INVESTMENTS : Lesson no 4

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A lot of people are ignorant about the currency market prevailing in the World Economy, how it works and the way people make money from it.


What is Forex Market?
 Forex Market is the short for Foreign Exchange Market. Currencies are traded (bought and sold) and exchanged in the market and people make money out of fluctuating prices of the currency in this highly volatile market environment. 

It acts on a global note and banks and other commercial institutions from all over the world are a part of this market.
This the reason they are open 24 hours a day and 5 days a week ( Monday to Friday ).

The Reserve Bank of India (RBI) acts as a regulator in the Indian Forex Market. RBI is also known as a " watchdog " of the Currency Market here. The apex institution of the country makes laws to be followed by the forex traders keeping in mind the effect this part of this has on the country's foreign exchange. 

Worldwide, the most traded currencies are 
* American Dollar (USD)
* European Pound ( EUR)
* Japanese Yen (JPY)


Though almost all big currencies are a part of this market in the world, in india only four pairs of currency trading are available and  "cross trading " is strictly not allowed. 

The four pairs are :
* USD/INR
* EUR/INR
* JPY/INR
* GBP/INR

There is quite a buzz in the market about the "RBI 's launch of 3 cross currency global pairs in the Indian Forex Market "

* USD/JPY
* GBP/USD
* EUR/USD

Risks associated with Forex Trading :

1. Only 10% of traders succeeds in this market.

2. Strict Regulation is still not present which opens the way towards scams.

3. Emotions like fear, joy, laziness, greed etc can lead to disasters and loss of money.

4. The thumb rule of trading is that " NEVER BORROW MONEY TO TRADE IN PROMISE OF HIGH RETURNS, IT IS VERY RISKY".

Warren Buffett, the most successful investor and business magnet of all times, strongly discourages trading in any of thr markets, either stocks or currency (or commodities whatsoever!!!) by the following ways :

1. He asks his followers and retail investors and beginners to hold the stocks which tey find to be fundamentally strong from all ways for atleast a decade to show its full potential. He believes in the "POWER OF COMPOUNDING "

2. He strongly disapproves people to loose even a single dollar in the market. He feels money should be saved and invested to yield high returns. 

3. Buffett ' company, The Berkshire Hathaway,  is the most reputed company around the globe but the owners have never split its share to prevent traders from trading in this organization. 

Markets which are reputed of high volatility and fluctuations, on my advise, should be prevented from trading of any sort. Infact, the entire concept of trading should not be considered as a way of making money as they are only " forms of gambling or speculation where nobody is sure about the turns it may take".

Please remember, we are in the market 
ONLY TO MAKE MONEY AND NOT TO LOOSE MONEY.

Regards,
Ankita Gupta ❤

Connect to me : connect


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