Forex Trading Opportunities
If you are trading the forex markets then a big concern will be growth forecasts
and indications of when the various central bank stimulus packages will end. Growth has returned to the US, mainland Europe and is expected to return soon to the UK.
Looking the forex markets, the US Dollar has been out of favour for a good deal of 2009. More recently, ratings agency Fitch announced that the UKs sovereign credit rating is at risk when compared to other top-rates countries. That opinion helped push down Sterling.
Having said that, Sterling has remained fairly resilient, the general consensus seems to be that, out of the MPC, ECB and Federal Reserve, the UK will be the first to move interest rates higher next year. An increase in interest rates will naturally support Sterling.
But where and how to take advantage of these market movements? A
spread bet is one option that offer a solution which covers tax free* trading and quick access to global markets.
There are a number of useful advantages such as the wide variety of markets available. Investors are not limited to stocks and shares. You can still spread trade stocks but you can also take a position on stock market index values, commodity prices and, of course, the forex markets.
Also unlike traditional share trading, you can sell a market. Spread betting lets you trade in both directions. You do not have to bet on markets to go up. If you feel that a stock market index like the FTSE 100 or Dow Jones will go down you can speculate on it to go down. If you think that the price of a particular share will go up, you can spread bet on it to go up.
I also like that there are no commissions or broker's fees.
Naturally, you can trade online or over the phone. However, the 24-hour trading that some companies offer provides interesting opportunities. So the underlying markets may be closed but you can still trade markets like the FTSE 100 and EUR/USD from Sunday night all the way through to Friday.
All forms of financial investment have the potential for incurring losses. For example, trading in stock, property, investment funds and pensions can lead to you losing money. With spread bets your losses can exceed your initial investment.
So if you are looking at
forex spreads then note that spread bets do carry a high level of risk to your capital. You should only speculate with funds you can afford to lose. Before trading, ensure that spread betting matches your investment objectives and familiarise yourself with the risks involved. If necessary, seek independent advice.
* Based on current UK Tax law. If you pay tax in a jurisdiction other than the UK then this may be different.
by: Adam Jepsen
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