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Trading on Currency Fair

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  • 20-05-2015 11:48pm
    #1
    ShoulderChip
    Registered Users Posts: 3,875 ✭✭✭


    Hey,

    I am in a slightly niche situation, I am working in the UK earning GBP.
    I am saving for a deposit in Dublin so will need Euro
    I therefore have an inherent currency exhange risk.

    I have been watching the rate the last few months and it seems to follow a steady enough pattern of fluctuating from 1.35 to 1.4 (currently at 1.4)

    My initial plan was to hold my money in Sterling and to wait until the rate is 1.39 or higher (each month after paycheck) and then transfer to Euro and invest in a rabo fund, by using transferwise and then currencyfair I got an idea.

    My idea is basically to buy Euro/Sell GBP when the rate hits 1.385
    if the rate hits 1.375 I reverse. and to keep the money in currency fair for as long as its fluctuating. Were I to do this five times I would have a 5% return and have beaten a standard saving scheme. If I manage to do it 30 times I have made 45% or so.
    Worst case I end up with Euros which are too strong to sell (so I use my irish credit card to buy stuff and wait for Sterling to get stronger) or Sterling shoots up and I am still happy that I bought euro at a rate that was good at the time and now I am earning even more money in euro times.

    What do people think? I see the rate fluctuating so much that I think I could potentially make a fortune with out any thought.
    Currency fair do charge a small commission and a once off withdrawal fee of 3 euro, I am talking about roughly 4k GBP a month that I can save.

    Just to add, I am sure there are brokers out there who offer better rates, or more advanced strategies I could try, I am not ready to invest in learning how to trade forex correctly, more so just wondering if my plan adds up or if I could have missed something big and end up sucked into a wormhole


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    #2
    For ever odd
    Closed Accounts Posts: 608 ✭✭✭For ever odd


    ShoulderChip wrote: »
    Hey,

    I am in a slightly niche situation, I am working in the UK earning GBP.
    I am saving for a deposit in Dublin so will need Euro
    I therefore have an inherent currency exhange risk.

    I have been watching the rate the last few months and it seems to follow a steady enough pattern of fluctuating from 1.35 to 1.4 (currently at 1.4)

    My initial plan was to hold my money in Sterling and to wait until the rate is 1.39 or higher (each month after paycheck) and then transfer to Euro and invest in a rabo fund, by using transferwise and then currencyfair I got an idea.

    My idea is basically to buy Euro/Sell GBP when the rate hits 1.385
    if the rate hits 1.375 I reverse. and to keep the money in currency fair for as long as its fluctuating. Were I to do this five times I would have a 5% return and have beaten a standard saving scheme. If I manage to do it 30 times I have made 45% or so.
    ]Worst case I end up with Euros which are too strong to sell (so I use my irish credit card to buy stuff and wait for Sterling to get stronger) or Sterling shoots up and I am still happy that I bought euro at a rate that was good at the time and now I am earning even more money in euro times.

    What do people think? I see the rate fluctuating so much that I think I could potentially make a fortune with out any thought.
    Currency fair do charge a small commission and a once off withdrawal fee of 3 euro, I am talking about roughly 4k GBP a month that I can save.

    Just to add, I am sure there are brokers out there who offer better rates, or more advanced strategies I could try, I am not ready to invest in learning how to trade forex correctly, more so just wondering if my plan adds up or if I could have missed something big and end up sucked into a wormhole

    You are only looking at the upside,(common mistake).Your whole planning is based on sterling getting stronger against the Euro, which it may do but then again it may not.
    If you can do it 30 times on the trot,I I will buy you a pint!

    Good luck.


  • Options
    #3
    ShoulderChip
    Registered Users Posts: 3,875 ✭✭✭ShoulderChip


    For ever odd wrote: »
    You are only looking at the upside,(common mistake).Your whole planning is based on sterling getting stronger against the Euro, which it may do but then again it may not.
    If you can do it 30 times on the trot,I I will buy you a pint!

    Good luck.

    Hi if sterling keeps getting stronger my plan makes no sense, I am depending on it continuing to fluctuate, if it keeps increasing then in that case I should not trade but wait it out and transfer my money when it peaks, but of cours I don't know when that would be.
    What is the worst case you refer to?


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    #4
    For ever odd
    Closed Accounts Posts: 608 ✭✭✭For ever odd


    Euro starts to appreciate against sterling and keeps appreciating while you are watching it, and waiting for it to turn in your favour and It doesn't come back to these levels for five years.. ... Unforseen event happens in UK and sterling tanks overnight.... And so on.


  • Options
    #5
    ShoulderChip
    Registered Users Posts: 3,875 ✭✭✭ShoulderChip


    For ever odd wrote: »
    Euro starts to appreciate against sterling and keeps appreciating while you are watching it, and waiting for it to turn in your favour and It doesn't come back to these levels for five years.. ... Unforseen event happens in UK and sterling tanks overnight.... And so on.

    Right but you are not considering my situation, I am earning sterling with a view to saving euros, so given the scenario you have just described I have put all my money in euro when the rate was good, before the crash that would have affected me anyway if I simply transferred the money every month without looking at the rate. Were that situation to occur, that would be the absolute ideal thing to happen, the alternative would be I had money in sterling wasn't aware and then when I went to transfer it was worth much less.


  • Options
    #6
    For ever odd
    Closed Accounts Posts: 608 ✭✭✭For ever odd


    Sir, I did consider your situation, you said you would buy back sterling at 1.375 and wait for it to strengthen again. I was merely pointing out what a worst case might be, as opposed to what your view of worst case is.

    Good luck 🍀


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    #7
    ShoulderChip
    Registered Users Posts: 3,875 ✭✭✭ShoulderChip


    For ever odd wrote: »
    Sir, I did consider your situation, you said you would buy back sterling at 1.375 and wait for it to strengthen again. I was merely pointing out what a worst case might be, as opposed to what your view of worst case is.

    Good luck 🍀

    Cheers yes, thanks a lot for the advice!
    Didn't mean to come across sharply :)


  • Options
    #8
    For ever odd
    Closed Accounts Posts: 608 ✭✭✭For ever odd


    No worries!

    By the way I hope you make a fortune!


  • Options
    #9
    ShoulderChip
    Registered Users Posts: 3,875 ✭✭✭ShoulderChip


    For ever odd wrote: »
    No worries!

    By the way I hope you make a fortune!

    He he, sell its started pretty poorly as I bought euro at 1.38 and it 1.41 now but I'll check in in a couple of months ;)


  • Options
    #10
    Goat Paddock
    Banned (with Prison Access) Posts: 84 ✭✭Goat Paddock


    Just as a follow up to this,

    Is it alright to leave money in your currencyfair account for a couple of months or would you be better off opening a savings account in that currency I am only talking about £5000 sterling here.


  • Options
    #11
    eeepaulo
    Registered Users Posts: 1,272 ✭✭✭eeepaulo


    Goat Paddock wrote: »
    Just as a follow up to this,

    Is it alright to leave money in your currencyfair account for a couple of months or would you be better off opening a savings account in that currency I am only talking about £5000 sterling here.

    I use them, fast, knowledgable, just remember your money is not guaranteed by anyone.

    They are regulated in ireland which I believe is that they show that all customers money is kept separate from company money, so if they go bankrupt your money will not get divided up by creditors. But your money is not guaranteed by ireland or the eu.

    According to this you can set up a UK account, although they have the right to refuse, not sure in practice how easy it is. http://europa.eu/youreurope/citizens/shopping/banking/opening-bank-account/index_en.htm

    Just a back of a beermat calculation, if you can get 1.5% from an easy access account
    http://www.moneysupermarket.com/savings/easy-access-accounts/?goal=SAV_EASYACCESS

    The currencyfair costs £2.50 to transfer out, you would have to leave the money for 16 days to earn £2.50.

    Worth remembering the bank transfer takes about 24 hours (on this side anyway, never done it from a UK account, im assuming it's the same), so if you need the money instantly to trade it could be a problem


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    #12
    arrowloopboy
    Registered Users Posts: 1,154 ✭✭✭arrowloopboy


    Or,to play it safe ,you could convert a fixed amount every week on the same day,that way youll get a average rate on everything you convert ,you will neither win/nor lose .
    Forex trading is far from simple ,but,yes I understand ,in the situation your in,your going to have to participate one way or another !


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    #13
    Wilko121
    Registered Users Posts: 183 ✭✭Wilko121


    Hey man, did you have any luck?

    I had a similar idea. I'm based in Aus right now.
    I think for this to work you have to accept that your not needing/accepting a lower price and that could be 5/10 years possibly before it returns and all funds are transferred

    My setup idea was slightly more complex

    http://touch.boards.ie/thread/2057463921/1/#post96294700

    Interested to hear people thoughts


  • Options
    #14
    bamayang
    Registered Users Posts: 669 ✭✭✭bamayang


    For ever odd wrote: »
    Euro starts to appreciate against sterling and keeps appreciating while you are watching it, and waiting for it to turn in your favour and It doesn't come back to these levels for five years.. ... Unforseen event happens in UK and sterling tanks overnight.... And so on.

    Whats going to happen in the next five years?!


  • Options
    #15
    ShoulderChip
    Registered Users Posts: 3,875 ✭✭✭ShoulderChip


    bamayang wrote: »
    Whats going to happen in the next five years?!

    LOL


  • Options
    #16
    onrail
    Registered Users Posts: 1,020 ✭✭✭onrail


    Just realising that this thread begin back in 2015 - GBP2EUR rate of 1.40 is a distant memory!

    So OP, how did you fare after? I was thinking of doing something similar, but isn't the spread on GBP-EUR buying and selling through CF not huge?

    Eg. £5,000 will buy you €5,741, but if you were to immediately sell €5,741, you would only get £4,944 - thus losing 1% before you've started?

    Or am I missing something?


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