The Swiss franc (CHF) has long been considered one of the 澳洲幸运5官方开奖结果体彩网:safe havens of the financial world. In times of trouble, investors could park their money in Switzerland’s national currency and know it would retain its 𒀰value. The financial crisis of 2007–2008 sent nervous investors flocking to buy Swiss francs.

❀ Its ste🗹ady performance during the European debt crisis made the franc even more popular. In this article, we will explore financial instruments, like ETFs and forex options, that allow investors to bet on the Swiss franc without actually buying up the currency.

When a Currency Is Too Strong

Back in 2011, when the European debt crisis was roiling, the EU and international investors looking for safety bought up Swiss francs, driving up the currency’s value. The stronger Swiss francs started to hurt the country’s exports. At this time, policymakers in Switzerland decided to artificially cap their currency at 1.20 against the euro in an attempt to prevent the Swiss franc from becoming too strong. To maintain this cap, the Swiss central bank p🌄rinted more francs and bought euros witꦏh them.

In an unanticipated move in January 2015, the 澳洲幸运5官方开奖结果体彩网:Swiss National Bank suddenly freed its currency by removing the artificial cap it had placed on the Swiss franc against the euro a little over three years before. The move came as a shock for the forex market and sent the value of the franc, a stable and conservative currency soaring. In the ensuing chaos, many traders and brokers experienced huge loss🐬es.

Despite the unexpec𝕴ted decision and its fallout, investors still see the Swiss franc as a safe haven backed by a robust financial system and strong competitive econ൲omy.

Exchange Traded Funds (ETFs)

Launched in 2006, CurrencyShares Swiss Franc Trust (NYSE: FXF) tracks the price of the Swiss franc against the U.S. dollar. Accessing the Swiss markets through an 澳洲幸运5官方开奖结果体彩网:exchange-traded fund is a good option for those looking to take advantage of tactical opportunities in the short-term and strategic opportunities in the long term𓂃 without having to own a foreign exchange account.

This route offers some advantages to investors. Investors can use their traditional brokerage accounts to buy shares of the ETF. These are treated as regular securities with transaction costs far lower than currency spot market transaction costs. The shares are traded on the 澳洲幸运5官方开奖结果体彩网:NYSE Arca daily which provides eligibility for a margin account as well as a 澳洲幸运5官方开奖结果体彩网:short sale which is permitted by the U.S. Securities and Exchange Commission (SEC).

Spot Market

Just the way a stock market provides a platform to buy and sell stocks, the foreign exchange market (commonly known as FX or forex) is the platform for trading in different currencies. Forex platforms offer a wider variety of 澳洲幸运5官方开奖结果体彩网:currency pairs.

Before plunging into forex, gain some basic knowledge of the market through a trading course or self-learning. From there, it’s simpleﷺ to open a forex trading account and begin performing currency trades in the same way as stocks.

The forex markets operate 24-hours-a-day, 5-days-a-week which provides a lot of freedom for investors and traders. However, there are times each trading day that are 澳洲幸运5官𝔉方ꦿ开奖结果体彩网:more beneficial for trading specific currencies. These markets also allow trading on margin, a way for participants to increase investment amounts without🌸 actually having the capital. When using margins, always remem♛ber that leverage works both ways—it can magnify both profit and loss.

Futures and Options

Another way to invest in the Swiss Franc is through futures and options. Many people mistakenly think the opportunity to trade these derivatives is only restricted to stocks. The 澳洲幸运5官方开奖结果体彩网:foreign exchange market offers retail traders these derivative products which manage the risks associated with currency rate fluctuation while taking advantage of profit opportunities from changes in currency rates. Forex futures and 澳洲幸运5官方开奖结果体彩网:options trading are popular hedging techniques commonly used by banks and fi🌳nancial institutio✅ns.

These products are traded at many exchanges around the world with Chicago Mercantile Exchange (CME) being the most popular. CME introduced Swiss franc futures in 1972 followed by Swiss franc options in 1985. Several brokers provide🎃 aℱ platform to trade in Swiss franc futures and options.

Binary Options

The simplicity, flexibility, and ease provided by 澳洲幸运5官方开奖结果体彩网:binary options have made them a popular choice for many in the forex market. Some of the popular currency pairs among binary options traders are the euro and U.S. dollar (EUR/USD), the British pound and U.S. dollar (GBP/USD), the euro and British pound (EUR/GBP), USD/CHF, and the U.S. do🐓llar and Japanese yen (USD/JPY). The advantage of binary options is their simplicity. All you need to do is predict if the currency will move up or down. 

The USD/CHF is a less volatile pair compared to other currency pairs, which can make predicting its movement difficult. Keep track of events that may influence the pair such as announcements regarding economic factors, monetary action by the U.S. Federal reserve, and actions by the Swiss National Bank. Other triggers to a movement between the two currencies can be gross domestic product estima🃏tes for either country, unemployment data, industrial growth figures, and national debt.

Experiment with a few other currency pairs and gain basic trading exp♈erience before moving on to the more challenging USD/CHF pair. You must also gain knowledge about technical analysis which will come in handy in forecasting the movement of the pair; these estimates must be backed by fundamental analysis.

The Bottom Line

Those interested in investing in Swiss francs must remember that foreign exchange markets, like stock markets, are prone to ups and downs which can have a negative i﷽mpact on your position. Though the Swiss franc is usually stable above all, the Swiss National Bank’s recent decision to suddenly unpeg the value of the franc from the euro destabilized the currency, sending its value soaring.  The episode is another reminder that currency movement is hugely depende𓄧nt on the policies and actions of central banks in addition to macroeconomics.

While risks exist, the Swiss franc, resting on Switzerland’s sound economy and financial system, will continue to be one of the safer investmeﷺnt opt♓ions.