POSSIBILITIES AND RISKS OF INVESTING IN THE FOREX MARKET

Foreign exchange market or simply FOREX is an international market of major world currencies and the most liquid market in the world. Along with the development of internet and communication technology, more and more small investors have been entering this market, trying to make profits through speculative investments. Despite having a negative connotation among the Croatian public, it is expected that FOREX will attract an increasing number of Croatian investors due to the great opportunities it provides. In this context, its potential importance for Croatian investors is predicted in this paper. Trading options unique to the FOREX market provide opportunities for numerous investors, especially the small ones. This paper is based on data analysis which shows functioning of international currency markets. Its aim is to point out the opportunities and risks that are present in the FOREX market, as well as the specifics of the market compared to other financial markets. Due to its unique aspects, the FOREX market provides great opportunities to earn profits, but, on the other hand, also a high risk of rapid and permanent loss. The paper stresses the importance of good preparation, information gathering, and knowledge accumulation before entering the FOREX market and making investment decisions, which is particularly important because the size of the market and its speculative character can cause losses that could subsequently reduce the investment potential and have the additional effect of recession.