The foreign exchange market is the largest financial market in the world where trading takes place 24-hours a day. It’s designed to make investing money in international markets easy enabling you to exchange, buy, or sell and speculate on currencies.
Forex brokers can help you do a lot more than engaging in currency trading, so there are always options to explore once you get comfortable with your chosen broker.
So what your options when it comes to investing in international markets?
The way it works is somewhat simple as currencies are traded in pairs, so investors basically bet that one currency will rise and the other will fall. As currency markets are spread right across the world, you can essentially engage in trading 24-hours a day.
If you have a futures contract to either sell or buy a particular currency on a specific date in the future, foreign currency options will allow the option holder to either sell or buy a fixed amount of foreign currency on or before the specified date at a stipulated price.
Foreign currency futures are contracts on currencies that are either bought or sold based on a settlement date and a standard size. More often than not, futures contracts are based on the following:
Some trader also try investing money in foreign government bonds. These are usually distributed in the currency of the selling country, so if the value of that currency rises relative to your currency, you will earn interest when it’s converted.
There are a lot of exchange-traded funds and exchange-traded notes that can provide exposure to foreign exchange markets. Most of the time ETFs will be in a single currency, but there are othersthat purchase and manage a group of currencies.
Forex brokers can help you invest in foreign currency CDs to enable you to earn in interest at international rates. This can be in a single currency or multiple currencies (often called a basket CD).
Investing in global markets might not be for everyone, so make sure that you thoroughly research each option before you start. Further, it’s always a good idea to spread your risk among many options so that if one goes against you, the loss will be limited.
Investing money beyond tradition forex trading has the potential to earn you more money. However, like with any investment, there is always a risk associated with each option. So always exercise caution.