Cash and Equivalents in Forex Trading: What to Know

Cash and equivalent forex is a financial instrument used to purchase foreign currencies. This asset class enables investors to capitalize on the fluctuations of global markets and exchange rate risk. Cash equivalent forex can be used to hedge against currency devaluation risks, benefit from decrease in price, purchase foreign currencies to offset losses from other investments, and increase the exposure to foreign markets. This asset class yields liquidity and is considered a very secure form of investment. With cash and equivalent forex, investors have the flexibility to buy and sell securities with minimal upfront investment.

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