Echo

Starting Currency Trading?

We are all working hard for our money but we do hope to make it work hard for us.

Currency speculation, as one of the diverse investment types, has recently raised my glasses and prompted my intention to be comprehensive of it. In general, currency speculation is to buy or sell a currency or move funds from one currency to another in anticipation of appreciation or depreciation, in hopes of making profits out of shifts in exchange rates. On the one hand, the past couple of years have witnessed reasonably significant fluctuations at certain currencies, which implied profitable opportunities. Take Chinese Yuan as an instance, the exchange rate of US Dollar to Chinese Yuan is depicted by the following figure:

Figure1: U.S. Dollar to Chinese Yuan Exchange Rate

(Source: http://uk.finance.yahoo.com/currency/convert?amt=1&from=USD&to=CNY&submit=Convert)

It is noticed that the exchange rate has gone down by approximately 0.63% just over the past year. Since China’s entering WTO (World Trade Organization), Chinese Yuan has been taking small steps toward a completely convertible currency. It was not surprising that the exchange rate has shifted up for almost 2 years and might be still stable for a while, indicating opportunities.

On the other hand, currency trading could make profits but it may as easily introduce losses. Before public data and information becomes available, there may have already been adjustments of the prices on the currency market by experts and advanced computer modelling.

I am relatively new in this area and all my personal opinions may have limitations. I am now also looking into several trading websites and identified ‘Forex’ as a popular one. I intend to start currency trading at some point, but not necessarily now or say in a couple of months.

Do you consider it a profitable investment? I would highly appreciate readers’ insightful comments and advices.