Investing in foreign currencies

trenchwars

Is there a relatively straightforward way to invest in a range of foreign currencies (not necessarily EUR or USD)? Possible options that I can think of are:

(a) Opening foreign bank accounts: time-consuming, fees and charges, opening restrictions, tax complications.

(b) Getting paper currency from a foreign exchange or online broker: security of storage, no interest.

(c) Currency trading service like Forex (don't know much about these).

zedyy

I think Forex is the easiest but I've stayed away from Forex trading as it's quite complicated.

arcadia00

Spread betting.

Trollfever

You can speculate on a PayPal account.

Reaper

Let's be clear - you are not "investing" in foreign currencies you are gambling on them, or at best hedging.

There is an option (d) which does actually involve investment - buy overseas stocks or, much simpler, buy into a fund that invests overseas.

trenchwars

What's the difference between investing and gambling?

Blah99

trenchwars wrote: »

What's the difference between investing and gambling?

When you invest, you make an educated decision based on an understanding of the facts and conditions that affect the instrument you're investing in. For example, when you invest in a share you can investigate the company, research previous years performance, read broker advisories, look at the annual reports and so on.

When you gamble, you're making an emotional guess at making some money. You have limited or no understanding of the facts and conditions that would lead to you making money. For example, you can understand the rules of roulette but you don't know how the ball will run, how the wheel will spin etc etc.

Forex is exceptionally complex because of the number of factors involved in exchange rates. I personally don't believe anyone other than a professional trader who dedicates their time to forex stands a chance of making a profit, because you just can't do your fundamentals in the same way. There are a couple of people on here who do trade forex, but I steer well clear.

There are plenty of easier and more transparent ways to make money, IMO.

trenchwars

I wasn't so much looking for a way to make money, more of a hedge against a GPB collapse or significant further devaluation.

jon3001

Blah99 wrote: »

When you gamble, you're making an emotional guess at making some money. You have limited or no understanding of the facts and conditions that would lead to you making money. For example, you can understand the rules of roulette but you don't know how the ball will run, how the wheel will spin etc etc.

Obviously written by someone who has no understanding of gambling or probability theory.

When you gamble you make a calculated decision based on statistics and a weighted probability of outcomes that, over time, has a positive expectation.

Roulette is a game of negative expectation. The roulette wheel has 37 pockets, each representing 1 of 37 outcomes. A bet on a single number pays 35-1. If I wager £10 then 36/37 of time time I lose £10 whilst 1/37 of the time I win £350.

350 * 1/37 - 10 * 36/37 = -£0.27.

My long run expectation of wagering £10 on a straight-up bet is -27p. I don't play roulette to win. The correct decision is to not play. Other games such as poker and blackjack (with card counting) can have a positive expectation. You don't expect to win every bet but you can expect to show a profit over time.

jon3001

trenchwars wrote: »

I wasn't so much looking for a way to make money, more of a hedge against a GPB collapse or significant further devaluation.

How about a global bond fund? (Unhedged of course).

Blah99

jon3001 wrote: »

Obviously written by someone who has no understanding of gambling or probability theory.

When you gamble you make a calculated decision based on statistics and a weighted probability of outcomes that, over time, has a positive expectation.

You're missing my point. Yes, you can calculate probability as a mathematical exercise, but on any given night in a casino you cannot identify whether you will make a profit or a loss, nor how much either margin will be. The surrounding variables are too opaque and indeterminable for this. Thus, you gamble - you hope that by taking a guess (regardless of how you arrive at that guess) you will make some money. This of course only applies to games of chance, and not games of skill.

Conversely, when investing, you use specific known facts to reach a reasoned conclusion - company performance data, economic outlook and so forth.

I have a very clear understanding of probability, reversion to mean and all the related principles relevant to various types of gambling. I'm a blackjack player as well as an investor. And I also know the most important thing of all - gambling is a fun game with an inconsequential outcome.