Trading forex

  rickf 17:06 23 Sep 14
Locked

Have you done any trading and what is your experience? Been watching the programme on BBC2 and am slightly tempted to give it a go starting with a small amount.

  john bunyan 17:36 23 Sep 14

rickf

For a number of years prior to retirement I worked as a senior commodity buyer for a major multinational. In my part alone we bought $2billion worth of (mainly edible oils and fats) - mostly in US$ but in a variety of other currencies, mostly on a c.i.f basis but occasionally f.o.b. Anyone who says he can accurately forecast currency movements is either a liar or God. We used to automatically cover the currency on a back to back basis - for example if we bought, say, $5,000,000 worth of product for the UK, we would immediately "cover" the currency by using the £/$ exchange rate for the expected payment date. A totally separate "Treasury" unit would take positions in currency but individual companies in the group were not involved in such risks. A major problem with currency trading is that political events can suddenly swamp fundamental issues. (Just look at the £ during the recent referendum.) Too long here to go into the many reasons why, but my advice to a private investor is not to touch currency speculation (that is what it is) with a 10 ft barge pole.

  john bunyan 17:44 23 Sep 14

PS

If you are determined to have a go, a much less risky way is to buy currency options - a bit complex but the losses are limited. Have a read here and come back.

Currency options

  rickf 20:27 23 Sep 14

Thank you for quick response. Yes, I do consider the risks invloved. However, I am thinking of committing a very small sum like £200 to play with. If I lost the lot I would I would put it down as a learning experience cost. If I should be lucky enough to make a very small gain that would be fantastic and a confidence booster.

  bumpkin 21:39 23 Sep 14

I looked into it a few years back as I was considering it myself. Just another form of gambling which requires in depth knowledge and still carries a risk. My conclusion was that it is a game for the big boys. With £200 you will probably be able to invest in a managed fund of some sort but by the time they have taken commission I doubt very much if you will gain anything at all and of course you may lose. I don't think that it is a viable investment for a small investor but if you just want to do it for a bit of fun then I wish you good luck.

  Forum Editor 22:17 23 Sep 14

"If I lost the lot I would I would put it down as a learning experience cost. If I should be lucky enough to make a very small gain that would be fantastic and a confidence booster."

The only way you would have a chance to make any real money with currency trading is if you had a substantial sum to start with.

  rickf 22:51 23 Sep 14

I am not dreaming of becoming a millionaire. Not that stupid. Its just a bit of fun and the experience. If I managed to make 50p it would be great fun. All about learning by getting my fingers dirty. Nothing like it.

  wee eddie 01:05 24 Sep 14

As an ex-Jobber I would not advise anyone to speculate in any Market that their ability to trade was channelled through a 3rd Party.

Investing is a another world, a relatively stable one of Balance Sheets and Probabilities.

Speculation is a different matter. Markets can change in a matter of seconds and if you are unable to react in a similar manner, you have not only lost your original Stake but also have Dealing Costs to take into account. With some forms of Speculation you can actually loose more than your Stake and, because you are unable to get out with alacrity, can end up owing money.

  wee eddie 01:19 24 Sep 14

By the way - Jobbers no longer exist.

However, we have been reincarnated as Dealers and there are only two differences.

We dealt, face to face, without a computer to calculate the figures or show us the trends.

And the other difference.

It was our own money we put on the line, not the Shareholders as our glorious Bankers did. You learn to respect the Market that way!

  spuds 11:48 24 Sep 14

I also watched the BBC 2 programme, and what you may have noticed, that those that were interested in finding their around the markets, didn't actually invest in the markets, but obtained software programmes to practice with.

Surely the £200 you want to invest, and seemingly lose, might be best invested, in following what others are doing. Learn before plunging into an open and serious market by buying or obtaining some software first?.

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