Alan Safahi, the San Francisco-based startup company Founder and currency exchange expert, says that currency trading could be a stable and profitable way to improve your investment portfolio as long as you do your homework and hedge against volatility.
If you don’t have a thorough knowledge of global politics, macroeconomic, and geo-economics, however, it is better for you to avoid doing currency exchange investing, according to Safahi who manages Safahi Global Advisors.
If you want to start a currency exchange business and earn profits, make sure you learn ways to create an investment strategy. Here are five beginner tips for a currency exchange investment.
1. Focus on Basics of Currency Investment
People trade different currencies on the forex market every day. The forex market operates between traders who are represented by brokers. Although currency exchange investment through forex is the best way, you can also do this by purchasing ETFs and investing in corporations.
Bear in mind that people trade currencies in “currency pairs.” The pair includes a “base currency” and a “counter currency.” The counter currency helps determine the base currency value. These currencies can appreciate or depreciate separately or together, meaning you have to monitor them closely.
2. Hire an Exchange Broker
According to Alan Safahi of Orinda, CA, beginners should hire an exchange broker or service to get started in the forex market. Professional service or broker has all the necessary knowledge and experience in forex trading.
A broker keeps an eye on the market and knows how to streamline the operations for profit. Many beginner investors find it challenging to trade currencies, but they can hire or use an authorized broker to safeguard their investment capitals.
3. Invest in Stable Currencies
The U.S Dollar, the Swiss Franc, the Swedish Krona, the Japanese Yen, and the British Pound Sterling are some of the most popular currencies for beginners to make investments. Safahi says that these are stable currencies with lower fluctuation risks, meaning beginners can earn good profits by investing in these stable currencies.
Moreover, as a beginner, you can also invest in the Singapore Dollar, the Australian Dollar, and the Norwegian Krone. Although these are stable currencies, the forex market is unpredictable, meaning anything can happen at any time.
Therefore, Safahi recommends looking at the market conditions of the time before making investments. A currency that is stable today can experience drastic changes within a matter of seconds. So, you have to be very careful and consult experts to keep things optimized.
4. Consider Various Market Factors
Before making a currency exchange investment, Safahi says it is wise to consider a few factors, evaluate them, and make an informed decision based on the results. Some of the critical factors you should consider are:
- A strong GDP
- Low Inflation
- Low unemployment rate
- High economic activities
These are key indicators that show the currency is stable enough, and making investments in it will help you earn profits.
5. Discover Opportunities
Although the forex market is full of opportunities, Alan Safahi, an entrepreneur, says that beginners should focus on discovering undeveloped and underdeveloped aspects of a nation’s economy. Alan Safahi advises that economic innovations, oil-&-gas discoveries, small business investments, and infrastructure development are indicators of a growing currency value.
Moreover, you must examine currencies that have gained value for the last couple of years. Once you have identified and analyzed these currencies, determine factors or aspects that led to the momentum or growth of the currency. Unlike other traders, if you focus on these underdeveloped aspects of a country’s economy, you can find excellent opportunities and make profits.
According to Alan Safahi, a professional currency trader has an in-depth knowledge of countries, geopolitics, geo-economics, and socioeconomics. Beginners should explore the concepts of nationalization, sovereign defaults, corruption, GDP levels, employment rates, inflation levels, and governmental instability. Changes in these factors are directly proportional to fluctuation in currency stocks.