The Markets

Every day investors buy and sell billions of Dollars (Euros, Pounds, Yen, etc) of commodities, stocks and shares without any guarantee of either capital growth or future dividends. Capital-Builder Investments products are independent of the traditional markets. The source of our business is the Forex Market.

Why the Forex market?

Since the beginning of mankind, and until the end of time, there will be international commerce and tourism. Money has to be exchanged from the currency of one country or economic zone to another. In times when the traditional investor's markets are struggling, there are few better options to consider than the Forex Market.

About the Forex Market

The forex market is the biggest market in the world with an estimated volume of 3.6 trillion US Dollars per day. The Foreign Exchange Market is the sum total of all the international currency markets where currencies are bought, sold, traded and exchanged on a daily basis. Importers, Exporters, Bankers, Financial Institutions, Speculators and Investors all form part of this, making the Forex market the biggest market in the world.

There are unlimited buyers and sellers, providing a liquidity that is not available in any other market in the world. This also means that your investment is exposed to the total economic activity of the world and not only based on the outcome of a region or country's limitations.

The Forex market is traded 24 hours a day 5 days in a week.  At midnight on Sunday (South African time) the trading begins as markets open in Sydney and Singapore , followed by Tokyo two hours later. Then the European trading commences at approx 09:00 with London still the biggest hub of transactions. Just before the Europeans go home, the New York traders get into action, keeping the activity going until it is time for the Australians to reach their offices! Finally when New York closes at 21:00 on Friday, trading ceases for the weekend.

This allows the Investment Manager to react to favourable or unfavourable events by trading immediately. It also gives traders the added flexibility of determining their trading strategy for the day.

Long and Short positions are possible. The market does not “top or bottom out” like the stock market where this phenomena happens and sometimes takes years to recover. Unlike the equity market, there is no restriction on short selling.  

The over-the-counter structure of the forex market eliminates exchange and clearing fees, which in turn lowers transaction costs. Costs are further reduced by the efficiencies created by a purely electronic market place that allows investment managers to deal directly with the market maker, eliminating both ticket costs and middlemen.

Because the currency market offers round-the-clock liquidity, traders receive tight, competitive spreads both during the day and night. Equity traders are more vulnerable to liquidity risk and typically receive wider dealing spreads, especially during after hours trading.

Accurate risk management is possible.  Currencies rarely spend much time in tight trading ranges and have the tendency to develop strong trends. A technically trained trader can easily identify reversals, new trends and breakouts, which provide multiple opportunities to enter and exit positions.  Currency prices reflect the balance of supply and demand for currencies.

Economic indicators such as GDP, foreign investment, interest rates, unemployment statistics, and the trade balance reflect the general health of an economy and are therefore responsible for the underlying shifts in supply and demand for that currency. There is a tremendous amount of data released at regular intervals, so traders can position them strategically against this information.

The forex market is a virtual market . Unlike traditional trading, which brings buyers and sellers together in a central location (trading floors), for Forex transactions there is no centralized location. The Forex is a market where participants conduct business over the telephone, computer terminals and via world-wide Internet connections. Since 1971 until recent years the players in this market were the banks, multinational corporations and large brokerage firms (or clearing houses). Today the most important participants consist of central banks, commercial banks, clearing houses, multinational corporations and individual participants.