Why Should I Consider Forex Trading?

Forex trading has multiple benefits that make it a good investment instrument. However, as with
anything, it is bound to have its shortcomings. As with the stock market, forex trading is open to
everyone, but it is not for everyone.

Diversification

Forex allows you to dip your toes into foreign markets. By investing in other currencies, you minimize
your risk by using foreign currencies to hedge against local economic downturns. Markets follow up-
and-down cycles. When the Philippine economy is down, expect other global economies to be up, and
vice versa. Investing in other currencies allows you to weather local market downturns.

With the looming interest hike from the Federal Reserve and the stronger US dollar, the Philippine peso
is taking a hit – although according to London-based think tank Capital Economics Ltd., our currency is
one of the least vulnerable among all the emerging markets. Take these factors into consideration
before going into forex.

Leverage

Leverage is borrowed capital where you take on debt for an opportunity to reap big wins on your trades.
The amount of leverage provided can be 50:1, 100:1, or even 200:1. This means that when you deposit
PHP 10,000 with a 100:1 leverage, you can trade PHP 1 million worth of currency. With leverage, when
you win, you can win big, but take note that it also works the other way around, and you can lose a
great amount of money.

24-Hour Trading

Unlike the stock market where buy and sell orders can only be made during market hours (9:30 AM to
3:00 PM), the forex market is open 24 hours a day, 5.5 days a week. This allows individuals who have no
time to trade during office hours the opportunity to do so after work.

Also, since you are trading foreign currencies, and thus trading in a global market, you can use the time
of day (or night) to your advantage. According to a research conducted by Daily FX, a portal for forex
trading news and analyses, the best time to trade European currency pairs is during their “off” hours or
7:00 PM to 11:00 AM, UK time). For forex trading in the Philippines, the “off” hours are the country's
typical working hours, which is 2:00 AM to 6:00 PM.

Lower fees

You are your own broker when you participate in the forex market. Most trading platforms do not
charge commissions, but for some, they are fixed. With forex, you’ll be paying lesser in fees (or none at
all) unlike stock trading where you pay a number of fees every time you make a trade.
Automation

Forex trading platforms have automated strategies that allow you to minimize risk without looking at
your screen.