FOREX – Implementing Modern Portfolio Theory With Currency Trading


You could interview a hundred investment advisers and market gurus and find 100 different opinions on why the markets are where they are or what they are doing and when it will "change". The bottom line is … you can't change what the markets are doing, or predict where the economy is headed or change any of the dynamics. As an investor, you therefore have two choices. You can worry and worry and get things done about it … or worse … try to "over-analyze" and end up with analysis paralysis … and do nothing . Or … you can find a way to take advantage of it.

This is where I think Forex fits well. You see … I look at the Forex (FOReign Exchange) currency market as a type of "want -vs. -Need" market. Here's why. Investors may want to buy stocks … or want to buy bonds … or real estate or a number of "traditional" assets. But … when times are tough … or funds are tight or uncertain, they just don't have to buy … so the markets react accordingly.

Now with Forex, despite the economic conditions of the whole world … Europe, Asia, Canada, Australia or the United States … big banks, multinationals AND countries … must exchange their currency to do their business. Period! And, as long as these currencies move (change value) relative to each other, it is possible to continue this action on prices. Now there are risks in all investments and there are also risks in Forex, so every investor should do their due diligence before investing, as they would with any other opportunity, then decide if this suits his investment style.

As with any investment that investors may consider, do your research, get the facts, ask questions and do your homework. I think that once a wise investor has followed this process, Forex will find a place in its overall plan to diversify the investment portfolio.

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