Monday, April 15, 2024

Forex trading and economic trends in PH: A comprehensive analysis

Over recent years, the Philippine forex trading market has positioned itself as a lucrative avenue for investors, especially in a period of widespread unemployment and economic unrest.

However, it’s important to note that forex investing is not a quick fix for getting rich; there’s plenty of education and enormous risk involved. With this in mind, we will pick apart forex trading and economic trends in the Philippines.

Market Liquidity and Size

The global forex market turns over around $7.5 trillion every day, which is a staggering 30x greater than the worldwide GDP. In the Philippines, forex operates OTC within the infrastructure of non-bank financial institutions (NBFIs) and is open 24 hours a day Mon-Fri.

The strongest currency in the forex market is the US dollar, which accounts for around 84.9% of all global transactions. Coming in behind the USD are the Yen and Euro, which measure at 19% and 39.1% respectively.

In the Philippines, the forex market is a valuable asset because it helps to add liquidity to the financial economy, which is an essential element of the total growth.

Philippine Forex Vs. Other Markets

Investors have access to other markets including options, stocks, crypto, and commodities, but forex trading Philippines is the most viable because of its low deposit threshold.

Further, considering the forex market is a global economy with no single government control, currency prices can level automatically in relation to supply and demand. Finally, the forex market is decentralized, meaning investors in the Philippines have complete freedom.

Benefits of Forex Philippine Forex Investing

The most attractive benefit of investing in forex in the Philippines is the ability to diversify portfolios with a taste of foreign markets. By holding various currencies, investors can manage risk and protect their assets against Philippine economic downturns.

High-leveraged trades can also be viewed as a benefit of trading in forex. By “borrowing” liquidity from brokers, investors can make more profitable trades. However, it’s important to understand that leveraged trades only pay off if the market moves in an upward direction. A downturn can leave traders with negative balances because the leveraged assets must be repaid.

Political and Economic Influences on the Forex Market

The forex market is susceptible to influence from economic, political, and societal changes. The easiest way to see this is by looking at what happened during the global pandemic. Widespread unemployment led people to search for ways to bank money, which in turn caused a spike in the number of forex investors.

Challenges Caused by Philippine Forex Regulation

In 2018, the SEC (Securities and Exchange Commission), which is responsible for regulating forex in the Philippines, announced that forex trading was unlawful. However, the statement wasn’t 100% clear and people became confused.

Essentially, Philippine investors are allowed to interact with foreign brokers, but it’s in their hands to choose a reputable broker.

The SEC has created an unfavorable environment for forex investments in the Philippines, but that hasn’t stopped the market from growing from strength to strength, and it’s showing zero signs of slowing down in the future.

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