Now that you know the advantages of investing your money in the stock market and not a business, we will see that investing in forex (foreign exchange) and not in other types of products (shares, warrants, CFDs, etc …) or other markets (IBEX, DAX, NYSE, NASDAQ, etc …)
What is Forex? What is the main advantage of forex?
It is the world where currencies are traded product largest market. The daily trading volume amounted to a whopping amount of 3.98 billion dollars ($ 3.980.000.000.000).
Volume old values, but as you can see, the Forex takes the cake.
And this what we want? What gives us a large volume of transactions?
The more liquid a market, that is, the more money is traded on the market, the easier we come and go at the price you desire (there are always many buyers and sellers for each price level).
The more volume is traded, the more difficult that anyone can control the market, we will be “more protected” but we must be attentive to the movements that may make hedge funds (groups of investors with great capital, which at certain times can move the market in their favor) to go in the same direction as them. Later we’ll talk about how to read the market and see where they buy and sell large investors.
Commissions, how much we pay in the IBEX vs FOREX?
The following link is a summary of what you have to pay to maintain an investment in the IBEX: http://www.mejoresbrokers.es/comparativa-brokers-comisiones-por-administracion-y-custodia/. As you can see, the committees of banks will be less aggressive with our money the more money we have. Therefore, if we are a small investor, enter the Ibex we drown before the first operation.
Note: The only thing that would save ING Direct, with a cost of 0 €, according to this table. But if we go to their website, http://www.ingdirect.es/planes-pensiones/elija-su-plan/planes-renta-variable-y-renta-fija/plan-ibex35/ahorre-en-comisiones/ We see, we charge 1.25% by management.
However, in forex, you pay 2 or 3 points of market, a variable commission for each trade you make. Always will be cheaper to do it through a bank. Depending on the amount of capital, these 2-3 points can reduce up 0.5-1 point market.
For you see it numerically suppose you choose ING Direct (the cheapest) and we choose a standard forex broker (2 pips of commission). Both invest for 10,000 € in the market:
€ 10,000 * 1.25% = 125 € commissions.
Standard Forex Broker
€ 10,000 equivalent to buy a batch of mini-forex, every pip in a mini lot is 1 €.
€ 1 € = 2 * 2pips commission.
So with the same amount of money invested very different commissions paid in ING to invest € 10,000 € 125 actions they take in Forex we charge only 2 €. This is considering that we leveraged forex and leverage the advantages of this strategy.
The forex market is open 24 hours a day except weekends (because, for example, when time is 8 Spanish, Japanese are closing their day, and when they are 2-3 pm, open markets Americans, until 10 at night. Therefore, we have a wide range of possibilities).