Can you make money using currency

skaterdude

Sorry if this is in the wrong forum,
someone was telling me that you can make a lot of money by changing your euro to english pounds then changing it to american dollars...or something along those lines by keep changing to diffrent currencys
is there any truth to this?

Zorba

skaterdude wrote: »

Sorry if this is in the wrong forum,
someone was telling me that you can make a lot of money by changing your euro to english pounds then changing it to american dollars...or something along those lines by keep changing to diffrent currencys
is there any truth to this?

Depends what rates u get, usually the banks give u crap rates, don't fully understand how u could make any money changing currencies this way never mind a lot of money !

suckslikeafox

OP are you talking about forex trading? Cant say I know much about it other than that its very risky and hard to profit from. Im sure someone else here will know more though

skaterdude

dont know what its called but that could be it
mny friend was going to america so he changed his currency to english pound or something and then back to dollars and he said he lost some money doing it but ended up making a lot more than he lost?
what is this forex trading?

Time Magazine

skaterdude wrote: »

Sorry if this is in the wrong forum,
someone was telling me that you can make a lot of money by changing your euro to english pounds then changing it to american dollars...or something along those lines by keep changing to diffrent currencys
is there any truth to this?

Short answer: no.

Antithetic wrote: »

To illustrate this, let me show you how the currency markets are currently running.



This is a square matrix of (11x11) dimension which in human terms is pretty much too big to deal with. To those who haven't studied maths post-Leaving Cert, it would probably take you a whole day and about a hundred pages to do the necessary calculations on that before you could start dividing it, etc.

But it's coherence when done by the market (the millions of people who are trading in different currencies every day) is unreal. When we go to the bank to change currency, we have to pay them a little fee for their trouble. But when the market is trading there is no such fee. So when you trade €1 into a £s you just use the actual exchange rate.

Let me take an example of when you have €100. Turn that into GBPs, you get (€100 x 0.6802) = £68.02. Then you turn this into Canadian dollars, you get (£68.02 x 2.2624 ) = CN$153.89. Turning this into US$ you get (CN$153.89 x 0.8688) = US$133.70. Turning this back into Euro gets you (US$133.70 x 0.7479) = €99.99. So you end up with what you started with (the 1c difference comes about from us only using 4 decimal places).

Long answer: they change over time so there's scope for profiting there. Wouldn't go near it unless you're very experienced in that sort of thing, though.

Idu

forex = foreign exchange trading

Basically trading on price moves in one currency versus another. Works in a similar way to trading stocks

As for the OP it is near impossible to make decent money trading currencies through banks unless you are talking about very large amounts on money because the rates they charge are so tilted in their favour

But it is possible to make small profits doing this. Assume 1euro=0.8sterling and 1 sterling=1.9us dollars which is close enough to current exchange rates (before the bank gets to it)

So if you change 100 euro to sterling you have 80 pounds which in turn can be changed for 152 dollars. The current EUR/USD rate is around 1.5 so you have made a tidy 2 dollars doing this. But as I said the bank will decimate that profit

And all that is explained much clearer above:rolleyes:

pocketdooz

skaterdude wrote: »

Sorry if this is in the wrong forum,
someone was telling me that you can make a lot of money by changing your euro to english pounds then changing it to american dollars...or something along those lines by keep changing to diffrent currencys
is there any truth to this?

Answer = No, if it was that easy mate we'd all be sitting pretty somewhere warm

You cannot make money by doing this. Maybe what that person was referring to was forex trading - but you should not go near that unless you are very experienced, have a decent amount of capital and know what really drives currency markets.

skaterdude

skaterdude wrote: »

Sorry if this is in the wrong forum,
someone was telling me that you can make a lot of money by changing your euro to english pounds then changing it to american dollars...or something along those lines by keep changing to diffrent currencys
is there any truth to this?

In theory, yes you can, through tri-angular arbitrage but only if:

You have a lot of cash ready to pump into each transaction
You have full access to live prices
The banks make a mistake

It is possible to do it, has been done many times in the past and will be done again in the future, but in reality you won't be able to as you won't have the resources or infrastructure to exploit an opportunity.

Other option is carry trading, but again, waaaayyy out of your league.

Its an interesting topic though if you are into Forex markets.