Due to the new scenarios created during the pandemic and the current hostilities on the territory of Ukraine, problems such as inflation have affected almost all countries, and have forced many small and medium-sized investors to rethink their investment strategies and movements so as not to lose their ability to profit from your money.At the same time, financial knowledge has spread through new content platforms and social networks, and within the range of investment options it seems even more attractive to operate in FOREX. Currency pairs are traded more frequently each time.
But we all know that the prices of currencies (dollars, euros, pounds and many more) fluctuate depending on the influence of political events or economic factors. At this point, Brazilian investors are cautious, as interest rates are highly influential in the foreign exchange market.
Typically, at the end of a recession or after a short period of decline, interest rates can be raised to control inflation and stimulate credit in the economy and, conversely, as happened during the pandemic, interest rates can be reduced as part of the stimulus and easing measures during the recession.
Higher interest rates create more demand for a given currency, thus encouraging people to buy more and stimulating capital flows from abroad. On the other hand, low interest rates reduce capital inflows and cause currency devaluation. This is why it is important to stay up to date with upcoming central bank interest rate announcements when interpreting prices, which reflects the reactions of market participants and allows us to draw conclusions about which investment option to choose.
However, until you feel more confident, investment experts always recommend diversifying investment sources, i.e., a trader should always consider investing in different asset classes, such as stock exchanges, Forex market, commodities or virtual currencies.
As the first link says: “a balanced portfolio certainly guarantees a clearer conscience, as long as the highest risk assets are kept in a smaller proportion. For example, the mix of stocks and FIIs leads to good diversification in Brazil. With the addition of ETFs, part of the portfolio no longer suffers from the aforementioned risk”
For those who invest in less risky stocks, funds that mimic major indices, such as the S&P 500 or Nasdaq, report annualized returns with higher return potential, although numerically with a lower return: even if the investor does not obtain a high return , there is less risk of losing part of the money he invested.
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Anyone who has large or small resources to invest needs to work hard to diversify their portfolio: they need to find the markets that best meet their needs, the different platforms and software that analyze market risks and returns, as well as a study of how banks define interest rates.
Although to operate in the Forex market, as well as in the stock market, you can hire an agency or broker to manage your money operations, it is advisable to be aware of the basic concepts that govern the market and how it works. It's best to find out exactly what data or ratios your broker or agency advertises.