Currency Trading

portsidejono

Hi all,

I know this has been discussed in the forums before, but they were pretty old posts, and with the current changing economy i thought it relevant to bring it back to discussion.
i am thinking of investing in the currency market, it has been something that has interested me for a while, and i wish that i had done it 4 months ago when i first thought of it, invested in dollars, as i could have made a 40% profit due to the changes in exchange rates.
so my question is, in which currency to invest? as i want to do it before the pound gets stronger to take full advantage. after reading some advice on the internet, my thought is to invest in YEN as many predict their economy to particularly boom with the result of USA coming out of their reccession and buying goods from Japan... do you think this idea to be a sensible one? i would be looking to invest around £2,500...

barrooo

Can you give bit more detail on how your planning to invest in currency, is it spreadbetting, CFDs, etc or are you looking to purchase physical currency?

Reaper

Speaking for myself I wouldn't touch currency trading with a bargepole. You are not investing, you are gambling. Unlike shares what you are buying (currency) will not go up in value by itself, just fluctuate compared to other currencies. The exception is if you think you have spotted an opportunity in that the markets have incorrectly assesed and priced a currency. In your case since you are asking which currency to go for it is clear you lack such conviction.

Here's another possibility - if you believe the Yen will go up because their economy will boom why noy buy into a Japanese based fund? That way you will gain as their ecomony booms and gain a second time as their currecny strengthens. It means you are investing as well as gambling.

Just my 2 cents.

portsidejono

i was looking into purchasing currency, and then selling when exchange rates change. it was something that i have been monitoring over the past few months, and if i bought dollars at 1.7 to the pound back in september/october i would have been able to make a profit as the pound has weakened to 1.2. i understand that it is essentially gambling, as it is high risk, but i feel my money is doing nothing for me sat in a savings account right now...

tradetime

so my question is, in which currency to invest? as i want to do it before the pound gets stronger to take full advantage

Sorry mate but this statement puzzles me, currently what is your base currency?

portsidejono

sterling... i mean in terms of currency, getting more pounds back after trading currencies...

purch

the pound has weakened to 1.2

No it hasn't :rolleyes:

The lowest GBP/USD has been for a number of years is 1.4410

do you think this idea to be a sensible one?

It might be, if you had the first clue about what you are intending to do.

Probably the best thing for you to do is to do a little research.


P.S. For what it's worth I am currently long GBP/USD at 1.4748 and GBP/EUR at 1.1108

portsidejono

i have looked into your suggestion Reaper, and believe it may be a better alternative like you suggest. looking into it i have found the Melchior Japan Opportunities to be historically profitable, and one that may interest me. however, i have no idea as to how to go about it, as i am reasonably new to this kind of thing and still learning...
as for my statement about the pound strengthening, i meant i wanted to cash in before it strengthened as i would lose investment otherwise. say trading dollars at 1.2 then the rate changing to 1.6, i would lose out as my dollars wouldnt be worth as much as i bought them for. One of the reasons i wont be buying dollars...

portsidejono

apologies i was confused with the euro trading rates... i meant the change from 1.7 4 months ago to 1.4 now...

tradetime

portsidejono wrote: »

sterling... i mean in terms of currency, getting more pounds back after trading currencies...

Ok, I'd probably proceed very cautiously if I were you.
This statement.

as i want to do it before the pound gets stronger to take full advantage

suggests you think the pound is likely to get stronger. The idea of currency trading is that you buy the currencies that you think will appreciate, and sell the currencies that you think will depreciate, if you buy for instance Yen, now quickly "before the pound gets stronger" and then convert it back to pounds you will lose money.
I wouldn't so much worry about the "gambling" tag, it's really rather semantics Gambling is defined by most sources as "Risking money or other valuables on an uncertain outcome." that covers a multitude of sins. Not all gambling is created equally. But it is critical that you fully understand the game inside and out.

tradetime

P.S. For what it's worth I am currently long GBP/USD at 1.4748 and GBP/EUR at 1.1108

Now that looks like a nice trade :beer: