With the BSE liquidity sinking into a black hole and investors’ appetite for trading going bust, speculations on Forex market are now becoming an interesting alternative. In an interview to Wall-Street, Mihai Nichisoiu, analyst international markets at Vanguard, explains the main risks arising from the currency market and to which extent the Forex will be influenced by the financial crisis.
There is an inflow of investors on the international markets
Investors seemed to shift focus recently from Bucharest Stock Exchange to different stock-based financial instruments, both in terms of approach and risk aversion.
“Investors have a variety of financial instruments, commodity or stock exchanges or foreign currencies to choose from, which from the standpoint of fundamental premises, is becoming more and more interesting – that of governmental treasury notes”, Mihai Nichisoiu (photo) explained.
One of the incentives for the trading spree at Forex market is the advantage of going for long or short-term position. “The traditional investor has a “long only” mentality. This kind of strategy would have turned out to be a failure last year, but this is not the only option available in the international markets”, he added.
Unfortunately, the shift from domestic market to the international market is heavily pursued in Romania, because Romanians still lack in a mass-tradition investment, he explained.
A speculator in forex market must be highly flexible and dedicated to trading activity, if he plans for a short time-horizon investment. “The market is continuous and you always must be alert on the news, price variation, and the tolerance band. You can’t always afford the luxury to wait a few weeks before making a move, because the trend can turn against you, with 30-40 percent losses or even more on portfolio”, said Mihai Nichisoiu.
Risks of
