x

Start investing with a
free Kristal.AI account.

icon

Simple. Secure.

*Error message

What Is Forex ?

Updated on 24 Feb 2020

Forex is one of those commonly-used terms which many of us don’t know the real meaning of. What you also need to know is the role it plays in your portfolio creation. Read on!

1. What is forex market?
2. What is a forex exchange?
3. Why should you trade in forex?
4. How can you invest in foreign currency markets?
5. What are the risks involved in forex trading?

What is forex market?

Forex is an amalgamation of foreign currency and foreign exchange. The process of changing 1 currency into another for a plethora of reasons, mainly tourism, trading and commerce is known as foreign exchange. According to the Bank for International Settlements, the daily average of forex trading is $5.1 trillion, which makes forex exchange market the most liquid and largest asset market globally. If you combine all the stock markets in the world, the numbers will still not match this.

Simply put, the forex market is a global market where world currencies are exchanged. Investors invest in the forex market to hedge against world currencies, interest rate risks and to diversify their portfolios and so on. Individuals even participate to speculate about geopolitical events. The most unique fact about the forex market is that it has no central marketplace. It is conducted over the counter (OTC) electronically.

The Forex market is open five and a half days every week all day. The major centres are in London, Tokyo, New York, Frankfurt, Zurich, Singapore, Hong Kong, Sydney and Paris. The Forex market is extremely active all day and the price quotes change constantly. Investment and commercial banks conduct almost all the trading in the forex markets for investors, but there are other opportunities for individuals like speculative opportunities.

What is a forex exchange?

As discussed, foreign exchange is the conversion of one currency into another country’s currency. The value of currency of any free economy depends upon the laws of demand and supply. The value of a currency is fluctuating because most countries float the currency of their country freely against the currency of other countries. There are various factors that affect the value of an economy’s currency.

The first is market forces behind the trade, the second is investment, and then we have tourism, geo-political risks and so on. All of the foreign exchange transactions fall under the Bank of International Settlements (BIS).

Why should you trade in forex?

As an investor looking to invest in foreign exchange market, you should know why it will be beneficial for you.
You can easily earn profits from the changes in the exchange rate.

  • The interest rate differential is a big earning point in foreign exchange market.
  • You can trade even with a small capital in your account as there are several online brokers who offer high leverage to traders who are not multinational corporations or hedge funds.
  • It is very easy to enter the market.
  • Forex market is live 24 hours a day in most big cities in the world.

To get into forex trading, you need to have the knowledge about world economies and fundamentals that drive the value of a currency. However, with the help of a financial expert, you can easily invest in foreign exchange. Contact our financial experts at Kristal AI who understand the microeconomics behind a currency’s value and can technically analyze the market to make your investment profitable.

How can you invest in foreign currency markets?

There are 3 ways in which every institution, corporation and individual invests in forex, through –

  • Spot market
  • Forwards market
  • Futures market

Spot market is the biggest market because the other two markets depend on it. With the start of electronic trading, the spot market witnessed a huge surge and surpassed the future market, which was previously preferred by investors and speculators. It is in the spot market that currencies are sold and bought based on their current value. It takes around two days for a trade to be settled.

The next two markets deal in contracts and not actual currencies. These are more future generic.

In the forwards market, over the counter contracts are bought and sold between two individuals or parties. They determine the terms of the agreement amongst them.

Futures market is very detail oriented. Contracts are traded on public commodities markets. Mostly, big hedge companies use forwards and futures market for trading foreign exchange. However, sometimes speculators also take part in forwards and futures markets as well.

What are the risks involved in forex trading?

Just like every other investment, there are certain risks attached to forex trading as well.

The banks have to make their own processes and accept credit risks to keep themselves safe. This can get confusing for an investor. As the price mechanism is based on demand and supply, it is difficult for new traders to influence the value of the currency.

Industry regulations are inconsistent around the world, which can be difficult to understand by the investor. Some small retailers are unregulated and they may trade against their customers, which is why it is important to choose brokers who are trustworthy.

To know more about these markets and stay safe while trading in forex, get in touch with our financial advisors. They will be able to help you determine the best market for you!

Disclaimer

The materials and data contained herein are for information only and shall in no event be construed as an offer to purchase or sell or the solicitation of an offer to purchase or sell any securities in any jurisdiction. Kristal Advisors does not make any representation, undertaking, warranty or guarantee as to the update, completeness, correctness, reliability or accuracy of the materials and data herein. All opinions, forecasts or estimation expressed herein are subject to change without prior notice. Kristal Advisors and its affiliates accept no liability or responsibility whatsoever for any direct or consequential loss and/or damages arising out of or in relation to any use of opinions, forecasts, materials and data contained herein or otherwise arising in connection therewith.

cross
Change your country to India?

You’re now visiting Kristal.AI Worldwide.
To explore diverse offerings in Indian and global products, select India as your country.

ind

India

hkg

Hong Kong

sgp

Singapore

global

Other
Accredited Investor Declaration

This is offered only to Accredited and Institutional Investors as defined under the Securities and Futures Act, Chapter 289 of Singapore (“Act”), which broadly comprises of regulated financial Institutions, large corporates, high net worth individuals and sophisticated investors.

An Accredited Investor is an individual
  • Whose net personal assets exceed in value SGD 2 million (or it’s equivalent in a foreign currency) with value of his/her primary residence capped at SGD 1 million, or
  • Whose financial assets (net of any related liabilities) exceed in value SGD 1 million (or it’s equivalent in a foreign currency), or
  • Whose income in the preceding 12 months is not less than SGD 300,000 (or it’s equivalent in a foreign currency)

I agree to opt-in as Accredited Investor and will submit required documentation to confirm the same.

< Back Proceed as Private Wealth

Wealth Management Solutions
Accredited Investor Declaration

This is offered only to Accredited and Institutional Investors as defined under the Securities and Futures Act, Chapter 289 of Singapore (“Act”), which broadly comprises of regulated financial Institutions, large corporates, high net worth individuals and sophisticated investors.

An Accredited Investor is an individual
  • Whose net personal assets exceed in value SGD 2 million (or it’s equivalent in a foreign currency) with value of his/her primary residence capped at SGD 1 million, or
  • Whose financial assets (net of any related liabilities) exceed in value SGD 1 million (or it’s equivalent in a foreign currency), or
  • Whose income in the preceding 12 months is not less than SGD 300,000 (or it’s equivalent in a foreign currency)

I agree to opt-in as Accredited Investor and will submit required documentation to confirm the same.

Proceed as Private Wealth

THEMATIC STRATEGIES

Enabling clients to invest in trending themes like FAMANGThe FAMANG Kristal invests in Facebook, Apple, Amazon, Netflix and Alphabet’s Google stocks. Assets are carefully chosen by an algorithm in order to deliver a superior returns based on past performance. The strategy is rebalanced every quarter., TECHGlobal Technology ETFs is a genetic algorithmic strategy focussed specifically on the Technology sector., ESGProvides exposure to higher rated environmental, social, and governance (ESG) companies while accessing large- and mid-cap stocks in Europe, Australia, Asia and the Far East., etc. with a single click or just create your own thematic basket.

Future-proof your portfolio and capture emerging investment themes.

OVERVIEW

Explore and Identify

Select from a range of expertly designed trending and diverse themes

Efficient Execution

Enabling easy exposure to your preferred themes without the hassle and costs of individual security selection and execution

Only the Best

A ready-made collection of Kristals that derive the best of the specific asset class or theme

Unique Mix

An optimised blend of ETFs and individual counters, enhancing efficiency and profitability

Contact our Relationship Manager
ALTERNATIVE INVESTMENTS

Diversify your portfolio with exclusive Private Equity, Pre-IPO deals, VC Funds & other investments like Bitcoin, Gold, Hedge Funds and many more.

Kristal fractionalizes difficult-to-access deals and opportunities.

OVERVIEW

Instant Access

A wide range of alternative asset classes such as Gold, Bitcoins, Hedge Funds and many more; readily made available

Risk Management

Enables investments in diversified assets hence spreading the risk

Easy Tracking

Enables you to get a consolidated view of investments in all assets at one place, hence facilitating easy monitoring and tracking

Exclusive Deals

Access to exclusive Venture Capitalist, Startup as well as pre-IPO investment opportunities

Low Investment Tickets

Facilitates fractionalization of investments in deals

Contact our Relationship Manager
FUNDS PLATFORM

Professionally managed funds with active investment strategies, screened for you by our investment committee to diversify your portfolio.

Enabling clients to access exclusive investment strategies. View Funds

OVERVIEW

Access

Provides Access to Professional Fund Managers

Low Investment Tickets

Facilitates fractionalization of investments in funds

Diversity

A wide spectrum of investment strategies ranging from Arbitrage to Credit to Hedge Funds and many more

Fees

No additional costs are charged by Kristal.AI

Exceptional Performance

Funds with an impressive track record and potential for high profitability

Leverage

Benefits from insights of the expert selection and advisory team

Easy Management

No time consuming management of portfolios

Contact our Relationship Manager
TAILOR-MADE PRODUCTS

Customize products based on your market outlook and specific needs across equities, bonds, gold and more.

For investors looking to enhance portfolio yield based on market views.

OVERVIEW

Enhanced Earnings

Structures with potential to enhance portfolio yield based on market movements

Customization

Product features can be designed to articulate investor views

Fees

A flat and transparent fee structure like nowhere else

One-Click Access

A single feature ‘Ideas’ enables you to access recently launched and trending market opportunities

Contact our Relationship Manager
BUILD YOUR OWN KRISTAL

Can’t find what you are looking for? Create your own exclusive investment strategy with risk management & periodic reporting.

For seasoned investors who prefer to design their own portfolio.

OVERVIEW

Empowered Investing

Enables clients to create their own custom portfolio based on their unique needs

Unlimited Choice

Access to all possible exchange traded assets

Flexible Management

Flexibility in delegating the portfolio management role to us or actively taking up the day to day investment decisions, in your custom Kristal

Custom Fee Structure

A simple, transparent and a customized fee structure

Access to Expertise

Custom performance reporting as well as advisory support

Contact our Relationship Manager