I saw a currency chart of the Euro against the USD. The Euro was at USD1.55 in July 2008. It dropped 20% to USD 1.25 in November (i.e. 4 months). Over the past 11 months, it increased by 20% (on its lower base) to USD 1.50 in October 2009.
Lesson: currency values can swing by 20% within a few months. It is highly volatile and risky.
not all investors are suitable for fx.
ReplyDeletethose who want to put their cash in foreign currency deposit just to earn the higher interest are not that better off becos the fluctuation of the currencies can wipe out your interests earned and might even reduced ur initial capital. its just like a gamble.
having said that, fx trading requires more on technical skills as well as vast knowledge in general market conditions. stop loss must always be in placed if one is into fx, otherwis pls do not get involve in currency trading. holdin w/o stop loss is like going to casino.
Actually like all investments, one needs to have some knowledge and awareness of market conditions. Banks offer Dual Currency trades which seems safer because if you get converted, you can convert back quickly and take a hit on loss at much less than the full spectrum of currency changes. for instance SGD-USD has moved from 1.55 to 1.38 but it was gradual and in stages; likewise SGD-AUD has moved from 0.95 to 1.28 over few months, but these movements are no more or less than STI and stock prices. So one should only invest in things one understand better.
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