Currency Trading

CLAPTON

portsidejono wrote: »

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...

bizarre .. you seem to expect the pound to strengthen but want to buy other currrencies?

Reaper

portsidejono wrote: »

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

You can learn about funds and how to buy them cheaply through a discount broker by reading Martin's article here.
You also have the option to invest as part of a stocks-and-shares ISA.

portsidejono

thanks for your replies, i was merely commenting on trading and cashing in short term, before the pound raised significantly. again i say, im still learning... i understand that the idea is to get in when the exchange rates are good, and then selling when the exchange rate of your base currency goes down, meaning you have made a profit as you will get more when trading back... this was my original idea with dollars back in september.

Sorry for sounding like i dont know what i mean, but i even confuse myself as im new to it!

tradetime

portsidejono wrote: »

thanks for your replies, i was merely commenting on trading and cashing in short term, before the pound raised significantly. again i say, im still learning... i understand that the idea is to get in when the exchange rates are good, and then selling when the exchange rate of your base currency goes down, meaning you have made a profit as you will get more when trading back... this was my original idea with dollars back in september.

Sorry for sounding like i dont know what i mean, but i even confuse myself as im new to it!

Don't worry mate, I'm not trying to make you look or feel foolish, you came here clearly stating this was stuff you didn't know about / understand from the start, thus I view your comments as much as questions as anything else, asking questions about things you don't understand is never foolish, not asking is the foolish bit. I and others from the looks of the other replies here are just trying to save you money, and start you thinking, and inquiring further. Never put money to work in anything you don't understand. Even with Reapers suggestion, be sure and research the product you are thinking of buying, as I'm sure he'd agree. Compare other funds see what else is available, and only use advice / opinion you get from the internet or anywhere else for that matter as a starting point for your own enquiries and research. We are in the middle of a financial crisis, you don't need to be invested in this market, tomorrow, next week, or in my view even, the next couple of months to be in a position to take advantage of the situation long term.

barrooo

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

Good trade on the GBP/USD, although its bounced just below the 78% fib on the last daily swing so may see a reasonable pull back.
I'll admit I've taken the opposite view on the EUR/GBP, and I've gone long at 88.35, if I'm wrong at least I'll know where my money's gone:D

Dooooooooooooooonut

Let me explain now how you will lose your entire investment:

1) You will be over leveraged and so a small fluctuation will easily wipe you out.
2) You will try to trade short term - and by doing so will incur (relatively) enormous transaction costs that you would have to surmount to even stand still
3) You will run your losses, expecting them to come back, but will close your winners far too soon
4) You are up against some of the best speculators in the world (although luckily for you forex isn't that efficient a market) which brings me onto point
5) You plainly don't know what you're doing!

Of course I could be wrong, but I have seen this kind of thing a lot...

A much safer idea, if you're really interested... there are ETFs that track currency indecies... these might be considerably safer.

I do not say that it is impossible to make money doing this. All I am saying is that odds on you don't know what you're doing and you would be best off looking into this a hell of a lot more before even considering it.

Reaper

portsidejono wrote: »

Sorry for sounding like i dont know what i mean, but i even confuse myself as im new to it!

I hope I didn't come across as overly critical. Currency trading is fine for those with spare money and informed positions on the market. I would not try to talk Purch or Tradetime out of playing on the Forex (!) but this sounds like your first venture into investing, as opposed to saving, and my feeling is that currency trading is not the place to start.

The first step is to take a view of the market - your view is that the Japanese economy is set to recover. Views work best when you feel the markets have underestimated what is going to happen otherwise future events may already be priced in. Next decide how best to make use of it - you were thinking of currency trading whereas I was suggesting a Japanese fund. Finally you have to choose who/what to invest with - that's actually quite tricky as past performance is usually a poor predictor of future performance. The press often recommends particular funds, or you can discuss invetments online (Motley Fool is a better bet than MSE for specifics) or read the objectives/strategies for the funds you are interested in (often available online) to see if their investment plans match your views.

Finally remember savings are for money you can't afford to lose, investments are for money you can afford to lose - though hopefully you won't!

Good luck.

tradetime

I would not try to talk Purch or Tradetime out of playing on the Forex

Lol, I'm in Index Futures, and stock ETF's, I would have to do a lot more study to be playing with Purch in forex, occasionally a forex trade seems to present itself that I feel it worth a punt, but with the volatility that is present currently in all markets I feel that now more than ever people should stick with the areas they truly understand

tradetime

If you have decided to step back from currency and look towards investments in funds, I might suggest that you consider whether it is wise to concentrate on just one country. Japan as an economy has a troubled history, doesn't mean it won't boom as your sources suggest, but I am not sure if I was to put all my eggs in one basket, it would be a Japanese one. Just a thought to provoke more research, really, you could possibly look at funds that diversify a bit more throughout Asia.

justpaper

i think you guys have made the OP do a runner lol

well if you do come back, read my posts here http://forums.moneysavingexpert.com/showthread.html?t=1101143

im trading short on eur/gbp at 0.94251, if you got some charts you'll see it bouncing look at 30mins, anyways alot of info on forex, like i said just read the above link, you'll figure it out if you dont atleast you had a bash, but keep at it you will lose hope at some point but keep at it,