Wednesday, December 7, 2011
Buy foreign money when exchange rate is low, sell it when exchange rate is high?
Buy foreign money when exchange rate is low, sell it when exchange rate is high?
Is this a legit way to make money? In Australia, for every $1 Australian, you get $0.93 American. It used to be for every one Aussie dollar, you'd get like 50 US cents. If I were to buy American money now, before the exchange rate rises, could I sell it and make money? Is this illegal? Tell me your thoughts. :)
Investing - 4 Answers
Random Answers, Critics, Comments, Opinions :
1 :
yes if it doesn't take your lifetime to grow in value lol
2 :
Currency trading is very high risk for novice investors.
3 :
Nope, It's not illegal at all. It's called currency trading or sometimes "FOREX" (foreign currency exchange). The only reason any country's currency has any value is because someone is willing to trade his/her currency for someone else's currency. If it takes 1.7 american dollars to buy one Euro, then the demand for a single Euro is higher than the demand for a single dollar. When people believe a certain country is dependable, they are willing to trade their currency for that dependable country's currency in order to save their money safely. For example, if I was afraid that my country was going to run short of cash and start printing a bunch of money, I would want to keep my life savings in a safer currency or "reserve currency". Currently the US dollar is the world's reserve currency. People feel best keeping their money in US dollars because they believe that the currency is safe and will have good value and high demand for the long term future. If you are really bright you can capitalize on the fluctuations of currencies as you asked. It is very risky though because the value of different currencies is constantly fluctuating, 24 hours a day, 7 days a week. More importantly, most currency brokers will allow you to borrow enormous amounts of cash to do your currency trading. They may offer you 100:1 leverage, meaning that if you deposit $1000 into your account, you can trade with $100,000 of currency. So if your $100,000 loses only 1% of its value, you have lost the entire $1000 value of your account. Do some reading, good luck
4 :
It's legal and legitimate. Don't sell the family farm to make your fortune this way, but definitely look into it if only for the learning experience.
