Investor Watch: What is forex?
FOREX stands for Foreign Exchange. The forex market, also referred to as the currency or FX market, is basically the changing of one currency for another by simultaneously buying one and selling another. Your profits and losses depend on the fluctuations in the exchange rate between the two currencies.
What should I know about forex?
Before you invest in the forex market be aware that:
- The forex market is complex and volatile. It takes expert knowledge to track and understand the many variables that affect currency exchange rates. Without this knowledge you are likely to lose your money.
- There are forex scams. The promise of high returns with low risk in the FOREX market is a red flag that the opportunity may be a scam.
- Trading on borrowed money can increase your losses. The more money you borrow to invest in the FOREX market, the higher the risk of losing your investment and possibly more.
Understanding these facts can help you identify some of the risks of investing in the FOREX market. Knowing the risks of an investment before you buy is key to making an informed investment decision.