Forex

[Mirage]

Does anyone here get into trading currency? I've read about people that do it, and obviously it's a popular practice, but I never got into it myself.

(And I'm not talking about a one time exchange when you visited Canada.. I'm talking about exchanging on a regular basis in order to turn a profit.)

 

[IslandGuy]

This is the place where you trade foreign currency right, based on if you think a currency's value is going to change vis-a-vis another one? For example, if you thought the Canadian dollar was going to take a dive, this would be a good place to make such an investment.

Seems pretty risky to me, as currencies change so quickly and frequently. I don't know if I'd consider it a good choice for long-term investment, but I bet you could make some money at it if you were willing to risk an investment short term and turned out to be right.

Wish I had some experience with it, but I don't. I seem to recall someone posting about having traded on ForEx though ... maybe they can wade in and tell us their experiences. It would be intriguing ... I'd like to make some quick and easy cash.

 

[Mirage]

I THINK that most money made with foreign exchange is the overnight trades. Like I said though, I haven't dabbled in it so I don't really know.

 

[stockbroker]

FOREX is good for both long and short-term trades. You can easily pick long term trends with moving averages in forex, I prefer to trade short term myself.

Andrew, many trades go pay well to hold over night because of the interest. If you buy euro against the dollar you will be borrowing USD from a bank and paying the interest ask rates and putting it into a EU bank and earning the bid rates. If these rates even differ by .25% you at 100:1 leverage that is 25% a year. At 400:1 you're looking at doubling yearly. At 400:1 however, 25 pips will put you out for good. 25 pips =.0025 or 1/4 of a cent

 

[softwarewiz]

Hmmm .... interesting discussion. Guess I won't get much for any of that Mexican money or Canadian money I picked up in my travels on spring break :lol:

Seriously, this is interesting. So in effect you're using timezone advantage to some extent? Or are there procedures in place to stop that from occurring? I'll go to investopedia to check it out, but if anyone wants to comment, please do. This sounds as risky as day trading to me, but having done neither, I don't know.

Since it's a bunch of banks involved in all the trading of currencies (if I am understanding the procedure correctly), are there enough banks involved to make it something that is free from being used or abused????

 

[stockbroker]

The interest is calculated by the minute, and if you were to try to buy at 11:59 and collect at 12:01 the spreads would make it a loss.

 

[softwarewiz]

Stockbroker, thanks again for helping in my education (maybe I should take out a student loan and pay you something .... well, maybe if I ever get a hot stock tip, I'll share.

I think the forex is way out of my league for now, but it's sure an intriguing concept. I see lots of ads for people willing to act in the forex for you, but I doubt I'd trust anyone other than myself, especially when minutes are important ... kind of like sniping an eBay auction (which I guiltily admit I have done on occasion, but I figure if Weird Al can do it, so can I ... my apologies for the obscure musical reference ... see the Poodle Hat CD if interested ... there's a great song about addiction to eBay).

I'm going to keep this one on the backburner in my mind for now, but thanks again for the advice and info. Have you ever traded on the forex yourself? If so, any further advice?

 

[stockbroker]

My only suggestion is to learn more about technical analysis. One of the best books that I can recommend is Technical Analysis from A to Z Second Edition by Steven Achelis. I trade forex for a living, trading is a lot harder when food on the table depends on your results. :lol:

The most important thing to forex is money management. This goes for everything. All systems are profitable with money management.

 

[stockbroker]

This is just pie in the sky, but if you would have invested $800 to buy one lot (100k eur) of eurusd at .8, and sold at 1.36 you would have earned 5600%. If you compounded every 1000 pips (.10) you would have even more money.

Leverage is your friend.

 

[Mirage]

Wow, stockbroker, you trade FOREX for a living? Is that your main trading interest? I would imagine by your name that you also get into actual stocks as well.