USD Exchange Rate

[gwydir8]

How can I use the lowering exchange rate from USD to other currencies (pounds for example), to my advantage? I'd like to take advantage without having to live in other countries, just keep my money in that currency, because then, while USD goes down, my (pounds or euros or whatever) are actually increasing in value! Or at least, that is my theory. Suggestions?

[ekrabs]

Welcome. Well, what you are describing is the basic premise of Forex, or Foreign Exchange. That is, you swap out the currency of one country for the currency of another country.

But I would also like to warn you that it's a highly speculative form of trading, especially if you're doing this for "fast money". Very risky....

There are plenty of online places where you can trade your currencies. I don't have a personal suggestion where, but it won't be difficult finding one.

[gwydir8]

I figured I wasn't the first person to think of this. So this is not something to do unless I have a *high* risk tolerance? Or is it risky to the level to where I should only use money I expect to and can lose? Should I just steer clear and use a more conservative form of investing?

[dhofstet]

I personally do not have a "high" risk tolerance, so i steer clear of methods mentioned above. But that is just me.
I like http://www.lendingclub.com and i used etrade every once and a while. Also a Roth IRA.

[ekrabs]

So this is not something to do unless I have a *high* risk tolerance? Or is it risky to the level to where I should only use money I expect to and can lose? Should I just steer clear and use a more conservative form of investing?

Well, I tell you. I do trade stocks, and sometimes, I've even done "fast" trades that last only for a few short days.... However, I will personally never touch Forex. The premise is deceptively simple, but that simplicity is also what hides the high level of risk.

For example, fundamental valuation methods isn't just limited individual securities, industries, sectors, and even markets, but it goes as far as one country versus another country. Few would even think they are capable of doing that competently, and of those who can, fewer still actually pull that off.

Or, you can day trade on it based on a technical rule set. A kind of "set it and forget it" methodology. Proponents of it say it's "easy money" and some have hundreds of thousands of dollars to prove it. But I've seen many more who have lost tens of thousands of dollars as well, only to lose it all, close their platform, and try to warn others about the high risks involved.

I think something like Forex is best suited for a specific kind of individual. The kind that wants to risk a large sum in the hopes of making a larger sum in a very short amount of time.

True, there are those who will buy and hold a basket of currencies as a portfolio diversifier and dollar hedge, but if you want to do that, I'd say it's easier to just buy a mutual fund with that design in mind, and let them do the work for you instead.

As a personal rule, unless you risk life and limb, I would never tell anyone they can't or shouldn't do something. After all, what is life if you don't sometimes jump out there and give it a try, right? Anyway, there is a way to test out Forex in a relatively safe manner (despite some drawbacks). The best way is to sign up for a virtual account. Most major Forex sites have it. In other words, these are fake accounts that work just like the real thing, except they also give you something like $50k of fake online money for you to try it out. If you like it, then I would try a small amount of real money first. Say, maybe $5k or $10k, and go from there.

I would also find and talk to a neutral community where members may have Forex experience, but not necessarily be biased one way or another, and see what their experiences are like. Be prepared to meet strong opinions from both sides, but look at their numbers in the end and study their rule sets.

Good luck!