Forex

spender

What I cannot understand is why we are not all doing forex. For days we are being told sterling is rising against the euro. Why have we all not made a killing?

jimjames

Because it's like gambling?

Currency speculation is short term, minutes and hours. Investment is long term years and decades

puk999

jimjames wrote: »

Currency speculation is short term, minutes and hours. Investment is long term years and decades

I've heard that currency trading is extremely short term but it's not apparent to me why. Can anyone give a brief explanation please?

bowlhead99

spender wrote: »

What I cannot understand is why we are not all doing forex. For days we are being told sterling is using against the euro. Why have we all not made a killing?

I guess you mean "rising" not "using"?

Most of us have a lot more cash and other assets denominated in sterling or located in UK than we do in euros or eurozone. So, when sterling rises against euro as it has in the last 6 months, we have already made a killing (in euro terms) without needing to "do forex".

Of course in some years it would be the other way round.

What is your point? That we should all take a view on forex markets and take one side or the other based on gut instinct? Of course, someone buying currency at a relatively "good price" compared to the value at another point in time is only achievable if someone else is at the same time selling at that relatively disadvantageous price. It is a zero-sum game with no long term winner and no "expected" gain. Except for that of the market-maker, who expects to take a profit as a reward for the work he does to create the market. We can't all take that job and some of them will go bust, especially if they take a personal directional position.

Typically, the direction of currencies is linked to differentials in interest rates and inflation etc with respect to the two currencies involved and there is no reason to expect an "edge". By contrast an investment in equities is ownership of a business which expects to grow and make profits with the economy and pay dividends and capital returns as compensation for risk. And similarly an interest rate is just a fixed version of the same with a different risk profile.

This is not to say that fx positions can not or should not be taken to help hedge a portfolio of investments. But I guess you are not really being serious that we should all be "doing fx" and any explanations or commentary I offer is a waste of my time

puk999 wrote: »

I've heard that currency trading is extremely short term but it's not apparent to me why. Can anyone give a brief explanation please?

Presuming this is a more genuine question... pretty much as above, really.

mn2203

Hi, looking for a bit of advice.

I had 9000 euro in a current account in Ireland as I used to live there. At New Year I transferred this into my partners Irish account as the current account was getting charges etc. This relationship has now ended and while I'm not concerned he will use the funds, obviously my family are worried this money is no longer in my name and think i should get it transferred back to the UK asap, despite the appalling exchange rate. Already I have lost had I transferred it say a week ago.

An Irish friend said to just leave it, but having done a bit of research online it seems many think the euro rate will continue to fall against the pound for some time to come, and won't reach the 0.85 it was when I was living in Ireland.

Any advice appreciated.

Gadfium

mn2203 wrote: »

This relationship has now ended

That bit should concern you a lot more than the interest rates.

You have given your money to someone else. The money is now theirs.