Investment Structure – In the 70s to the late 90s, common people were more accustomed to real sector investments such as the property and plantation. But after the monetary crisis hit some countries, investors began to look for these type of investments with a large return in a short time and this is where the investment trend in the financial sector began to boom.
Investment Structure Definition
The meaning of investment structure is a strategic allot out of investment money to individuals or institutions that will strive it through joint ventures, loans, joint ventures, leveraged acquisitions, debts, and leases.
As what you can read in the previous article, to learn forex trading from scratch, you need to start with the Sitting Duck learning phase. Learning the investment structure is one of the very basics of forex knowledge. Real sector investment (for example; property) generally requires large capital and takes a relatively long time to develop due to a large amount of capital, so that its liquidity is not as fast as the financial sector.
For example; if you buy a house as an investment. The strength of its value usually never decreases but always increases. On the other hand, after a few years, you want to withdraw your investment, then you have to find someone who has enough fund to buy that house which its value may have gone up tens to hundreds of percent. Looking for a buyer like this situation is not easy. This is where a liquidity problem occurs.
It’s different to the financial sector. The investment in this sector has a tendency to be more liquid and a relatively greater return that is proportional to the risk. Another plus of investments in the financial sector is a large number of investment products on the market.
Risk and Profit in Forex Trading
So, the position of forex trading is in the money market & futures commodity exchange category. Forex trading is an investment in the financial sector that is classified as a risk-high return investment. It means, the opportunity to earn a very big profit in a single investment can even reach hundreds of percent per month but is offset by the possibility of big losses if not managed properly. Learn more about the advantages of forex trading.
You need to understand the concept of high risk-high return in forex trading. Basically, all types of investments have the possibility of losing. The magnitude of the potential loss will be proportional to the amount of its potential profit you could make. The greater its potential profit means the greater its potential loss as well.
If you are classified as a safe investor who doesn’t like risk in your investment portfolio, then forex trading seems not a type of investment that suits you. Because forex trading is a type of investment that has very fast liquidity movements and price changes. Logically, forex trading can only bring you a profit of tens to hundreds of percent in one day but it may also bring you to lose the same amount.
If you are a risk taker, then forex trading is a type of investment that suits you, in the sense of getting a big profit, then a trader is ready to bear the same potential losses.
Then, is there a way to minimize potential losses? Of course, there is! Your risk management and analytical capabilities are the main keys. The better your risk management skills and know how to analyze the market price movements, the smaller your potential loss that may occur. Finally, the profit and loss probability in forex trading is proportional.