What should I know about investing in other currencies?

Answer by  LeheckaG (1826)

"Abritrage" takes advantage of market-price-differences between pairs-of-currencies; If you can find long/short-term-"patterns" between multiple-currency-pairs, and have enough-capital, and can execute currency-trades quickly-enough, there is a lot of profit to be made, but you are competing with multi-national-interests often using computers. Beware of "ForEx"-companies selling "shares" in currency/futures-contracts (rather than real-currency or real-options-contracts); THEY will profit; you will NOT necessarily profit.

Answer by  partyanimal33 (452)

Investing in other currancies is a very risky investment, especially in these volitile economic times. Many factors in the economy such as import/export cost, political unrest, fuel prices and unemployment rates can have an effect on a country's currency worth compared to the dollar. When you invest in a currency, it's value can fluctuate constantly.

Answer by  ThomasDenholm (72)

This is risky investment and only pays off if you invest a lot of money. Currency investing requires extensive knowledge of international events, finance and foreign governments.

Answer by  beck (1099)

Before investing, go online and watch currency investing websites for tips and trends in this area. Be very careful of fees involved in currency trading.

Answer by  TonyIntelligencia (18)

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.

Answer by  pyritejenny (347)

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.

Answer by  GeorgeJung (33)

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.

Answer by  cheth (17)

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.

Answer by  Jessie124 (1885)

Make sure you research the economy of the country you're looking to invest in. Try to get weekly and monthly reports so you can see how the currency has fluctuated over that time period. Foreign currency investment is a risky prospect, so only invest what you can afford to lose.

Answer by  jojogeorge (53)

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.

Answer by  jackie (276)

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.