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FOREX

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There are many investment instruments that are available in the world of finance. The economy has evolved and capital driven markets are the most popular in recent years. Most of these investment instruments are usually co-related with the market data like certain sector indexes, currency prices and commodity prices.

Among all these investment opportunities, there are some very risky ones and two of the most risky of all, above bonds, stocks and funds are commodities and foreign exchange trading (FOREX). As you know the current market are very volatile, more and more investors are moving their money else where and just tipping their toes into stocks in the hope for some form of diversification.

From my perspective, I believe that Forex or also known as foreign exchange is riskier as compared to commodities trading. In commodities trading, if you were to look at the moving averages and RSI movement, you would find that the moving range is not as large as how currencies move. However, it only applies to certain currencies which are more frequently traded like USD against major currencies.

Apart from the huge movement pips, currencies are more related to news. For example, a federal rate cut will affect USD almost definitely which brings your investment decision to a point. However, following news may not necessary be profitable as many of such news were made known to the institutional investors at an earlier time, so the position that you took may be the position that they dumped.

Forex is hard to grasp, on one hand, it should be more predictable and on the other hand it is like almost an impossible chart to read due to the massive movements. That is different for commodities trading which is more largely due to demand and availability. Of course, if you were to invest in crude and gold, by now, you should be rewarded handsomely already. A major hike in commodities price had brought a new phase of investing opportunities. But if you were to look at the price movement, although similar to the movement of Forex, the level of risk is lower because it is less unpredictable.

Last but certainly not least, forex is exposed to export and trade figures. If your currency is relatively controlled and lower, your export will be more viable. And on the other side of the coin, if your currency is too low, it becomes worthless. A delicate balance is needed for currency pricing and range. You may be buying something that already is going down or rather the opposite direction. Most of the time, forex is more speculative in nature which is somewhat the same as commodities. But in terms of commodities, you are able to get the actual stuffs. That makes investing in commodities a more viable investing solution for companies dealing in those specific commodities.

It is your choice at the end of the day, which is more riskier for you. It is always the old saying, 'Caveat Emptor'.

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