Why I am not into currency trading?
Some of my colleagues are into foreign currency trading and they actually asked me for opinions whether they should buy into Pound Sterling now. I told them I have no comment since I have no experience in currency trading. Then they asked why didn’t I go into currency trading?
My answer is rather simple.
- Currency trading is trading and not investing. Just like day trading for stocks, you are trying to gain as much profit as possible within a short period of time.
Source: http://forexarbitrage.eu
- You need to be lucky since luck plays an important role in any speculation. It’s not gambling, since you do observe the history of the currency and play by the rule “whatever that went down will go back up”.
- I never like to speculate too much since I’ve burnt myself pretty badly with stock’s day trading in the past.
- You need to pay extra attention to the global economy since the currency you are holding might be affected.
- I’m bad with timing the market which is quite essential for currency trading. You merely time the buy and sell time.
- The total return is not much unless you are willing to pump in A LOT of money, which I don’t have.
- Unless you are talking about engaging a real agent or actually playing with the index (I remember someone told me about this before but I’m not very sure), you will have to hold those foreign $$$ yourselves. And considering the fact that the amount can be rather big, you will need to keep them in the safe deposit box in banks. Those require you to pay a certain amount of money to maintain.
- Also, if you’re not using an agent or getting someone licensed to help you with the trading, you might not be able to react quick enough. For example, my friends mostly exchange the foreign currencies with money changer by themselves. The advantage is that they can trade anytime and in many places, but the disadvantage is that it is not very convenient especially if they keep those currencies in banks.
- Due to the current economy, the currency rate might not change much for another 6 – 12 months. It might further actually. And for trading, holding on to the currencies for too long kinda defeat the purpose. Remember that this is not investing.
But the most important reason why I am not into currency trading has to be the luck factor. I hate relying > 80% on luck factor because I can be quite unlucky at times. I rather spend my time doing analysis on the stocks of certain companies. That way, I will know whether I can invest in those stocks. I doubt there’s anything I can study for currency trading, except for the history of the currencies.
True, I still need to rely on luck factor when it comes to stock investing. But it’s not as critical and significant.
Still, it doesn’t take away the fact that there are people out there who are making big bucks with currency trading. Just that it’s not my cup of tea.
My advice to you is to understand it well before dumping your money in. Don’t do it just because Tom, Dick and Harry are doing it. Do it because it’s suitable for you. Oh, and stop buying those currencies by yourselves. It’s too troublesome and dangerous. Get some qualified agents to do that for you.
Here’s a useful link I found – Currency trading versus investing.
Hope it helps.
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I’m not into currency trading too cos it’s way too risky for me. Can’t risk my hard earned money! Although it’s not gambling, the element of gambling is there. So not for me, unless I have got loads of money to give away : )