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What should I know about investing in other currencies?

asked by Tracey (102)

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Tags:  beginners  finance  money

answers

You should know that investing in other currencies, or foreign exchange trading (Forex trading) carries a lot of risk. Before getting started you should evaluate the risk involved and seek professional financial advice. Disclaimer: I am not a financial professional. Forex trading carries a lot of risk. Seek professional advice.

6 votes

First, you should learn about leverage, and how it can magnify your risk of loss beyond all reasonable belief. Then you should learn something about the different values of currencies and how they move against each other in response to changes in commodity prices, security issues, and the perception of inflation. Learn some chart reading,too, and compare different brokers.

6 votes

You should know that other currencies are usually a lot weaker, and unstable than the American dollar. The Euro and Pound are stronger, and usually take smaller climbs and falls. It is investing in the weaker currencies that can really hurt you or make you rich.

5 votes

To invest in other currencies you need to know the exchange rates as well as the buy and sell spreads. In addition you need to know the leverage that you can tolerate.

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posted by cheth (14)
5 votes

While investing in other currencies make sure that the country in which you are staying have a good money value exchange. It means if planning to invest in Kuwait Dinars, go to the nearby money exchane and check whether the currency rate is profitable to you than your normal income.

2 votes

Remember that you're actually making two bets when you do this -- you're betting on the U.S. economy as well as on that of the other country. Avoid countries with high inflation.

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posted by jackie (250)
2 votes

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