The Forex Market

The Forex market is by far the biggest and the most liquid market in the world with a daily volume of $5.2 trillion USD.  The market consists of central banks, currency speculators, organizations, governments in addition to international investors and hedge funds that trade in the OTC market. Although the market is the largest financial market in the world, it has generally been inaccessible for private investors as the market has been a domain reserved for financial institutions, corporations and large hedge funds. In contrast to the stock market, the currency market does not trade from a centralised trading place. Instead, the trade takes place in a network consisting of banks, institutions and brokers that are linked by computers in the Electronic Communications Network (ECN). Given that it is a 24-hour market, it can generate significantly more buy and sell opportunities compared to other asset classes which can produce significantly higher returns compared to traditional investments.

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Forex vs Stockmarket

The forex market is available 24 hours a day from Sunday evening at 22.00 GMT when the market opens in Sydney to Friday evening at 20.00 GMT when the market closes in New York. At any given moment, currency trading desks in dozens of global financial centers are open and active in the market; as the Asian trading session ends, the European session begins, followed by the North American session and then back to the Asian session, excluding weekends. The Forex market has low correlation to other asset classes which is why is has become increasingly popular to diversify into.

• Low correlation to the equity markets and other asset classes
• High turnover and liquidity allowing for quicker executions
• Trading 24 hours a day 5 days a week
• Low transaction costs
• Opportunity for higher returns than traditional forms of investment such as stocks and mutual funds.

Risk Management

SCM’s unique trading models are created with risk management in mind that incorporates rigorous and disciplined risk control procedures in order to limit risk and achieve the smoothest possible growth in its investor account values. In order to protect our positions, SCM Auto Wealth always uses stop losses, trailing stops and profit targets. This means that pre-determined levels have been set before a position is adopted on which profits are realised and any potential losses are cut. The management operates a maximum drawdown policy which means the pre-determined share of the capital is always protected using pre-determined stop-losses.