Currency trading

matt-dublin

So, with the us up **** creek, do you think now would be a good time to buy some dollars with a view of making a few bob off them??

super_furry

Speaking as a fully qualified financial advisor*, I can't see what could possibly go wrong. The smart, ballsy guys are getting into currency trading.

* Not a fully qualified financial advisor

minidazzler

Unless you're dealing in amounts in the 6 figures, you won't make very much. And even then, if you make 2 cents on the dollar with 100,000 invested you've only made 2000. Not really worth it for the non-guaranteed return, unless you could leave it long enough that the dollar actually gains strength.

NuckingFacker

Currents, see, aint always raisin, as my pappy used to say.

kneemos

minidazzler wrote: »

Unless you're dealing in amounts in the 6 figures, you won't make very much. And even then, if you make 2 cents on the dollar with 100,000 invested you've only made 2000. Not really worth it for the non-guaranteed return, unless you could leave it long enough that the dollar actually gains strength.

I have a pork belly I could trade.

Seaneh

If they default next week the dollar won't be worth much, give it a week and see how it goes.

CruelCoin

matt-dublin wrote: »

So, with the us up **** creek, do you think now would be a good time to buy some dollars with a view of making a few bob off them??

I tried my hand at a imaginary money demo account from http://www.fxcm.com/forex-trading-demo/

5 years ago i tried it. Started with $50k in fake money and really quickly traded it up to 300k, and then frighteningly quickly was down to 100 quid......

Forex is extrememly risky and volatile. The only way to generate appreciable revenue is to leverage the **** out of your bets, but double the possible gains translate to double to risks....

UCDVet

matt-dublin wrote: »

So, with the us up **** creek, do you think now would be a good time to buy some dollars with a view of making a few bob off them??

FX trading is considered high-risk, but....anytime the EUR gets up to 1.35 or so I try convert some EUR into USD.

srsly78

CruelCoin wrote: »

Forex is extrememly risky and volatile. The only way to generate appreciable revenue is to leverage the **** out of your bets, but double the possible gains translate to double to risks....

That isn't how leverage necessarily works, when used correctly risk can be reduced. See "long call", risk is limited because you can choose not to exercise the option - thus at worst you only lose the cost of the option. In FX the big players trade a lot in interest rate swaps and stuff which is even more complicated tho.

http://en.wikipedia.org/wiki/Option_(finance)
http://en.wikipedia.org/wiki/Swap_(finance)

Savoir.Faire

I like to dabble in the FX Futures market. I rarely get flustered, but I'd like those darned politicians to take some decisive action by the end of October.

bnt

Instead of dealing in currencies directly, what about Currency ETFs? Some are leveraged - e.g. you could go double short on the Euro - so you could multiply your gains just as easily as you could multiply your losses ...

mr kr0nik

Has no one already mentioned...

I don't know what a tracker mortgage is.

zl1whqvjs75cdy

Seaneh wrote: »

If they default next week the dollar won't be worth much, give it a week and see how it goes.

Think we'll probably have bigger issues if they default.

Overflow

minidazzler wrote: »

Unless you're dealing in amounts in the 6 figures, you won't make very much. And even then, if you make 2 cents on the dollar with 100,000 invested you've only made 2000. Not really worth it for the non-guaranteed return, unless you could leave it long enough that the dollar actually gains strength.

There is something called leverage in the currency trading world. You can earn a hell of a lot more than 2000 dollars with 100,000 invested, or then again, blow it all in a few minutes.

josip

Exchange rates are almsot completely at the mercy of political decisions. This makes it very risky and closer to gambling than for example investing in shares or even property where there are other fundamentals that help to smoothen out the bumps. A friend of mine was a currency trader for the various banks. He said that you could only reliably make money out of it by taking very large positions, taking a tiny margin and trading on the noise.

AnonoBoy

So you're buying money with other money?

Who arbitrarily assigns the value of one country's money against the other country's money?

What if money is just an illusion man? Then you're just buying illusions.

Save time. Go to a magic shop.

srsly78

AnonoBoy wrote: »

Who arbitrarily assigns the value of one country's money against the other country's money?

The market does, that means you and all the other traders.

super_furry

Orange juice futures are where the real money is anyway lads.

bnt

AnonoBoy wrote: »

What if money is just an illusion man? Then you're just buying illusions.

However: if you gather up a lot of this particular "illusion", and give some of it to people, they tend to give you real physical goods and services in return. That LearJet isn't going to fly itself, you know ... :P

ninebeanrows

Has to be one of the worst times to buy the dollar in recent times! You watch the news much!?

Mr.David

Weathercheck wrote: »

Has to be one of the worst times to buy the dollar in recent times! You watch the news much!?

Eh....you do know that the market prices in this stuff? So the dollar should accurately reflect the risk of default and the probability of it occurring.

That's how markets work, well certainly high liquidity markets like FX.

ninebeanrows

Mr.David wrote: »

Eh....you do know that the market prices in this stuff? So the dollar should accurately reflect the risk of default and the probability of it occurring.

That's how markets work, well certainly high liquidity markets like FX.

Yes i am no idiot. Anybody who suggests a buy on the dollar right now is an idiot however.

Hillmanhunter1

With a couple of apparent notable exceptions (stand up JP McManus) currency trading is an activity strictly for investment banks and vainglorious muppets. The rest of us should stick to a long-term portfolio of equities that we understand and, for a bit of excitement, the 3.15 at Leopardstown.

Mr.David

Weathercheck wrote: »

Yes i am no idiot. Anybody who suggests a buy on the dollar right now is an idiot however.

If you are so sure the dollar will fall then short it! I'm not saying it won't btw.

It is times of high volatility like this when real returns can be generated, be they positive or negative!

Courtesy Flush

matt-dublin wrote: »

So, with the us up **** creek, do you think now would be a good time to buy some dollars with a view of making a few bob off them??

Spoken like a trading pro...

UCDVet

Weathercheck wrote: »

Yes i am no idiot. Anybody who suggests a buy on the dollar right now is an idiot however.

An idiot? That's a pretty strong statement. I've been buying dollars.

Could you elaborate on how that makes me an idiot?

Mr.David

UCDVet wrote: »

An idiot? That's a pretty strong statement. I've been buying dollars.

Could you elaborate on how that makes me an idiot?

What level did you buy at? It doesn't make you an idiot but you must recognise the degree of risk.

I think the point being made is that the dollar will fall until the current situation is resolved, and should there be a default it could fall quite sharply. However if you are more optimistic than the mkt aggregate as to when a resolution will occur then sure, a long position could certainly pay off - see contrarian strategies.

ninebeanrows

UCDVet wrote: »

An idiot? That's a pretty strong statement. I've been buying dollars.

Could you elaborate on how that makes me an idiot?

Because the US risks default on October 17th and there are no signs of an agreement bring reached.

I do feel they will raise the debt ceiling but i expect there will be a lot of volatility on the $ in the next 10 days and the pressure will be downward.

razorblunt

super_furry wrote: »

Orange juice futures are where the real money is anyway lads.

I bet you one whole dollar that it isn't!

Conall Cernach

Here's a recent article that raises the possibility of the US simply printing a ****load of money to cover their debts. That would mean that the dollar would be devalued.

http://rt.com/business/us-debt-ceiling-default-384/

"“The United States can pay any debt it has, because we can always print money to do that. So there is zero probability of default,” Alan Greenspan said on NBC's ‘Meet the Press’ in August."

UCDVet

Weathercheck wrote: »

Because the US risks default on October 17th and there are no signs of an agreement bring reached.

I do feel they will raise the debt ceiling but i expect there will be a lot of volatility on the $ in the next 10 days and the pressure will be downward.

Am I understanding you correctly?

You 'expect' that the dollar will go down further in the next 10 days....so anyone who buys the dollar now is an idiot?

But it would be smart to buy at the low-point, which you predict to be sometime within the next 10 days?

ninebeanrows

I've no idea really. All i know is i really wouldn't buy the dollar in this situation.

Mr.David

Weathercheck wrote: »

I've no idea really. All i know is i really wouldn't buy the dollar in this situation.

The way the price of the dollar works, in theory is that it reflects all risks and opportunities as well as the likelihood of each occurring. So the current price of the dollar will already be discounted to reflect the market aggregate view of the impact of default and the probability of default (as well as all other events). So, the current price is 'fair' unless you estimate the probability or magnitude to be higher than estimated by the market, which requires complex analysis.

The reason this is the case in practice is that like yourself, many will reckon the dollar will fall and will short sell it. This increase in supply reduces the value to a point where the demand matches the supply and a fair value is reached.

Hence why people having 'feelings' with regard to currency (or equity) movements is 99.99% of the time total nonsense, unless they know something the markets do not.

josip

Mr.David wrote: »

Hence why people having 'feelings' with regard to currency (or equity) movements is 99.99% of the time total nonsense, unless they know something the markets do not.

Which is unlikely, unless you're the finance minister of a country whose currency is linked to a neighbouring currency about to be devalued.

Hoop66

Are you claiming, or at least hinting strongly, to be the Jamaican finance minister?

Because, y'know, that'd be pretty cool.

Mr.David

Mr.David wrote: »

What level did you buy at? It doesn't make you an idiot but you must recognise the degree of risk.

I think the point being made is that the dollar will fall until the current situation is resolved, and should there be a default it could fall quite sharply. However if you are more optimistic than the mkt aggregate as to when a resolution will occur then sure, a long position could certainly pay off - see contrarian strategies.

Short it so ^^

josip

Hoop66 wrote: »

Are you claiming, or at least hinting strongly, to be the Jamaican finance minister?

The country in question was at the time referred to as a banana republic alright

cnocbui

Oh, that would be Australia.

Mr.David

bluewolf wrote: »

Short it so ^^

Why would I do that? I just argued that it is currently priced at 'fair value'!

Mr.David

Mr.David wrote: »

Why would I do that? I just argued that it is currently priced at 'fair value'!

I just read the "it's definitely going to drop" bit and got mixed up with the "you're an idiot" comment

Mr.David

Probably not worth it at this stage, but one way to take a position on the dollar would be by buying calls and puts at the same strike (i.e. a straddle), which is a bet on volatility. So you win if vol increases and lose if vol decreases but whether the dollar rises or falls does not matter.

UCDVet

Mr.David wrote: »

What level did you buy at? It doesn't make you an idiot but you must recognise the degree of risk.

I think the point being made is that the dollar will fall until the current situation is resolved, and should there be a default it could fall quite sharply. However if you are more optimistic than the mkt aggregate as to when a resolution will occur then sure, a long position could certainly pay off - see contrarian strategies.

It takes me between 2-4 business days for the exchanges to complete; my last one was at 1.3609. With the fees I paid, it was an effective rate of 1.354.

bnt

Weathercheck wrote: »

I've no idea really. All i know is i really wouldn't buy the dollar in this situation.

But you don't know, of course. If you did know, then everyone would know, and then it would go down immediately. No-one wants to be left holding an overpriced commodity, so if you know it's overpriced, you'll sell immediately. There wouldn't really be a market in that case: why would anyone speculate?

Better to say that you think it's going down. That's why the "short" was invented: it's a bet that the value of a commodity will go down. If you are happy to bet that the dollar is going down, you can short it today. Assuming your broker lets you, of course, but note what I said above about ETFs.

Mr.David

UCDVet wrote: »

It takes me between 2-4 business days for the exchanges to complete; my last one was at 1.3609. With the fees I paid, it was an effective rate of 1.354.

It's quite a wide bid/ask spread, you are losing about 50bps for putting on your position and will lose the same to unwind.....so you are 1% down before there is any movement at all. The time taken to enter the position makes it more unappealing again.

You should be very careful with fx I think, its very difficult to make money on especially when you are crossing wide spreads like that. Look at fx options as an alternative maybe.

UCDVet

Mr.David wrote: »

It's quite a wide bid/ask spread, you are losing about 50bps for putting on your position and will lose the same to unwind.....so you are 1% down before there is any movement at all. The time taken to enter the position makes it more unappealing again.

You should be very careful with fx I think, its very difficult to make money on especially when you are crossing wide spreads like that. Look at fx options as an alternative maybe.

I've heard of FX trading sites that are much faster or have lower fees - but they don't actually 'sell you dollars'. They just keep track of your position, and square up with you in Euros.

I want to be able to walk into a bank in the US and withdraw USD.

JONJO THE MISER

I trade the F.X and the Dow and brent oil on Oanda.
Was down a lot of money because i shorted the Dow below 15,000 points, im now in profit today for the first time in over 4 weeks, i knew it would fall below 15,000 at some point and i would be able to take my profit.

josip

UCDVet wrote: »

I want to be able to walk into a bank in the US and withdraw USD.

Like in the Shawshank Redemption?

UCDVet

josip wrote: »

Like in the Shawshank Redemption?

Hahaha - I suspect it will feel something like that.