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  • FIRST POST
    • anon fisherman
    • By anon fisherman 7th Oct 16, 6:25 PM
    • 40Posts
    • 4Thanks
    anon fisherman
    Using savings to buy euros/dollars?
    • #1
    • 7th Oct 16, 6:25 PM
    Using savings to buy euros/dollars? 7th Oct 16 at 6:25 PM
    Has anybody thought about buying euros, there is talk of it falling further. Using today's rates, how far would it need to fall before one earned an amount worthwhile of the punt?
Page 1
    • Ballard
    • By Ballard 7th Oct 16, 6:32 PM
    • 1,273 Posts
    • 946 Thanks
    Ballard
    • #2
    • 7th Oct 16, 6:32 PM
    • #2
    • 7th Oct 16, 6:32 PM
    If you buy cash you would have to see massive moves to counter the spreads. If you're thinking of buying electronically then you'll need an account to hold the currency once bought.

    You could look into the likes of spread betting but from your post you probably wouldn't consider yourself a currency expert so should avoid.

    In conclusion I'd suggest that you steer clear.
    I got a letter from the government the other day. I opened it and read it. It said they were suckers.
    • mariotr
    • By mariotr 7th Oct 16, 7:28 PM
    • 6 Posts
    • 0 Thanks
    mariotr
    • #3
    • 7th Oct 16, 7:28 PM
    • #3
    • 7th Oct 16, 7:28 PM
    I was about to ask the same question, so I might as well join this thread.
    My case is possibly different, because I already have a checking account in an EU country that joined the euro, so it would be a matter of doing a transfer (perhaps through a service like TransferWise, which charges only 0.5% of the total amount).

    Obviously not the best time in the world to buy euros (or any other currency for that matter), but the situation could get really nasty, and sadly this might be a better moment than a few months down the road.

    I guess I'll have to sleep on it...
    • Glen Clark
    • By Glen Clark 7th Oct 16, 7:29 PM
    • 3,456 Posts
    • 2,498 Thanks
    Glen Clark
    • #4
    • 7th Oct 16, 7:29 PM
    • #4
    • 7th Oct 16, 7:29 PM
    What makes you think you can beat the professionals?
    For society to function well, people generally need to feel that they have a fair chance of success through their ability and efforts. The more entrenched hereditary elites we have, the less likely people are to feel that way
    • CLAPTON
    • By CLAPTON 7th Oct 16, 8:17 PM
    • 40,926 Posts
    • 29,681 Thanks
    CLAPTON
    • #5
    • 7th Oct 16, 8:17 PM
    • #5
    • 7th Oct 16, 8:17 PM
    Has anybody thought about buying euros, there is talk of it falling further. Using today's rates, how far would it need to fall before one earned an amount worthwhile of the punt?
    Originally posted by anon fisherman
    how much are you willing to lose?
    • anon fisherman
    • By anon fisherman 7th Oct 16, 11:09 PM
    • 40 Posts
    • 4 Thanks
    anon fisherman
    • #6
    • 7th Oct 16, 11:09 PM
    • #6
    • 7th Oct 16, 11:09 PM
    Take it u don't see a win then?
    • Ballard
    • By Ballard 8th Oct 16, 7:06 AM
    • 1,273 Posts
    • 946 Thanks
    Ballard
    • #7
    • 8th Oct 16, 7:06 AM
    • #7
    • 8th Oct 16, 7:06 AM
    Take it u don't see a win then?
    Originally posted by anon fisherman
    It is possible to win but unlikely. The spreads for currency trading for the average punter would mean that you'd need the price to move a fair amount before you would break even. It is a gamble where the cards are stacked against you.
    I got a letter from the government the other day. I opened it and read it. It said they were suckers.
    • eDicky
    • By eDicky 8th Oct 16, 11:40 AM
    • 1,750 Posts
    • 742 Thanks
    eDicky
    • #8
    • 8th Oct 16, 11:40 AM
    • #8
    • 8th Oct 16, 11:40 AM
    Take it u don't see a win then?
    Originally posted by anon fisherman
    The only time for a sure win on buying euros/dollars was when the referendum results were coming in and the pound began to plummet, so it was obvious what was happening.

    But now there is no certainty, as usual, and you could be buying with the pound at the bottom of its value - or not... It would be a very risky gamble.
    • Pincher
    • By Pincher 8th Oct 16, 2:11 PM
    • 5,861 Posts
    • 2,145 Thanks
    Pincher
    • #9
    • 8th Oct 16, 2:11 PM
    • #9
    • 8th Oct 16, 2:11 PM
    http://www.insightinvestment.com/insurance1/ourinvestmentrange/cashmanagement1/ilfeurocash/

    Years ago, the offer to bid spread was very small, so you could play currency speculation by buying and selling EURO units, Japanese YEN units, etc. These days, they only have US$, EURO and sterling. Haven't used them for years.




    https://www.caterallen.co.uk/euro-bank-account-for-individuals

    "this account offers a euro Cater Allen VISA Deferred-Debit Card; any card transactions made (excluding cash withdrawals) are not applied to the account until the statement date."

    Which is useful if you travel to the Eurozone a lot.
    What happens if you push this button?
    • Dan83
    • By Dan83 8th Oct 16, 2:16 PM
    • 635 Posts
    • 256 Thanks
    Dan83
    I'm no expert in this but, isn't the idea suppose to be to buy when the £ is high (£1=$2) then sell when the £ is low (£2=$1)?

    Surly this is the time to sell, not buy.
    • bowlhead99
    • By bowlhead99 8th Oct 16, 3:06 PM
    • 5,144 Posts
    • 9,076 Thanks
    bowlhead99
    I'm no expert in this but, isn't the idea suppose to be to buy when the £ is high (£1=$2) then sell when the £ is low (£2=$1)?

    Surly this is the time to sell, not buy.
    Originally posted by Dan83
    The OP is suggesting that the £ is worth more dollars now (£1=$1.24) than it will be when the £ is lower (£1= less than $1.24). They are certainly correct on that point of fact. They, like everyone, just don't know whether the £ will go appreciably lower in a reasonable timeframe, or not.

    Using today's rates, how far would it need to fall before one earned an amount worthwhile of the punt?
    If we assume you don't have massive amounts of cash with which to get the very best rates. A decent high street money changer will take 1.75% on the mid-price by tweaking the rates to buy or sell in his favour. Let's say your broker will take 2% on the conversion rate for simplicity of the maths.

    Example that follows is in dollars but the logic is the exact same for Euros.

    Say the mid price is $1.24 to the pound. You buy £10,000 of dollars which would be $12400 except you lose 2% on the trade and only get $12152 .

    Then the mid-market exchange rate falls 10% to $1.116. You feel this is enough of a fall, and ask the broker to sell your dollars and get pounds back. The $12152 is worth £10889 at 1.116 but you lose 2% on the conversion again so it's £10671 cash in your hand.

    So you end up with a £671 profit for a 10% weakening in sterling.

    Imagine instead the rate had risen 10%, from 1.24 to 1.364. Your $12152 is worth £8909 at that published rate. Less the broker's 2% to buy the pounds, leaves £8731, a loss of £1269.

    So, if you decide to buy dollars, you'll either win £671 on a 10% weakening of the pound or you'll lose £1269 on a 10% strengthening. Of course, a 10% strengthening is not the worst that could happen. Maybe the pound goes back up to 1.6 or something, then your $12152 is worth £7443 after the broker fee, a loss of £2557.

    So, if you have £10,000 spare to 'invest' in this venture you might win £671 if it goes well and you are able to cash in after the pound falls another 10%... or it might not go well for you and you end up losing £1269 or £2557 or some other big number.

    Is £671on a £10k bet 'worthwhile of the punt' for you? Probably not, in the context of maybe losing double that amount if the rate goes the other way by the same magnitude.

    If you wanted to make something more substantial, like £1k on the £10k bet (still not as much as you'd lose if the rate moved 10% the other way) you would need the rate to move far enough for the $12152 you'd bought to be worth £11,000 after conversion cost/broker fee, so you would need it to be worth £11,225 before the 2% conversion cost, so the rate would have to be $12152/11225 = $1.08 to the pound.

    Whether hitting $1.08 before it goes back the other way, is something that seems realistic to you, depends on your view of the markets.

    Similarly if you are doing it in Euros, £10k would buy about €11.1k at mid-market rates, but under €10.9k from a broker. To make the £1k profit on your £10k 'investment' you'd need the €10.9k to become worth £11k after broker fees. That could only happen once a pound is worth comfortably less than a Euro.
    • anon fisherman
    • By anon fisherman 11th Oct 16, 12:48 PM
    • 40 Posts
    • 4 Thanks
    anon fisherman
    thanks bowlhead, that makes things seem a lot clearer in my mind. The punt is not worth it too me considering your figures
    • EdSwippet
    • By EdSwippet 11th Oct 16, 1:14 PM
    • 352 Posts
    • 319 Thanks
    EdSwippet
    ...Let's say your broker will take 2% on the conversion rate for simplicity of the maths.
    Originally posted by bowlhead99
    For a pure currency punt, one way round losing broker fees both ways would be to hold an exchange traded currency (ETC) for the short term. SGBP, for example.

    I am not saying this is a good idea. It is however a possible way to work around the otherwise unwieldy forex fees you've quoted. Costs with SGBP would be 0.39% pa plus trading fees.
    • bowlhead99
    • By bowlhead99 11th Oct 16, 2:05 PM
    • 5,144 Posts
    • 9,076 Thanks
    bowlhead99
    Yes, if you keep the costs down your risk (apart from provider/issuer going bust) is just the rate moving badly against you, and you can take a view on what is reasonable for that. Worst case scenario you buy dollars or euros and they don't strengthen but end up weakening so much that the holding is virtually worthless, which sounds unlikely. If the dollar rate went back to over 2 to the pound you still only lose half your money.

    Of course if you used leveraged spread bets or riskier option contracts to make the trades, which could be a pretty efficient way of doing it, you may lose much more than your original stake if you get it wrong or don't put some kind of guaranteed stop-loss in place effectively.
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