Tags: Risk | Currency | Trading | Exceed | Rewards

Risk of Currency Trading May Exceed Rewards

By    |   Monday, 11 Jul 2011 12:57 PM

With the dollar on a roller-coaster ride over the past three years and many experts expecting the same going forward, many investors are tempted to speculate in currencies.

dollar200gettybills.JPG
(Getty Images photo)
Such activity is easier than ever nowadays, with the proliferation of exchange-traded funds (ETFs). But be careful, you can easily lose your shirt.

The whipsaw trading action of the foreign exchange market can topple rookies and sophisticated investors alike, The Wall Street Journal reports.

“Managing proper trade sizes and rapid price movements — all while using ‘leverage,’ or borrowed money, to amp up bets — can be devilishly difficult. One bad trade can blow up an entire account.”

One money manager puts in stronger terms. "I think individuals should allocate zero dollars to currency trading," Joshua Brown, vice president of investments at Fusion Analytics Investment Partners, tells The Journal.

"To go to an online brokerage and think you're doing anything more than gambling is foolish."

To be sure, you can purchase conservative currency ETFs. But be careful not to take on any more risk than you can stomach.

As for the dollar, many experts say its 12 percent drop during the last year is ending, as Europe’s sovereign debt fiasco puts downward pressure on the euro.

“There’s not a lot of room left for it to weaken beyond $1.50 to the euro, and we still see it recovering to about $1.40 by year-end,” Stephen Gallo, head of market analysis at Schneider, tells Bloomberg.

© 2017 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
StreetTalk
With the dollar on a roller-coaster ride over the past three years and many experts expecting the same going forward, many investors are tempted to speculate in currencies. (Getty Images photo) Such activity is easier than ever nowadays, with the...
Risk,Currency,Trading,Exceed,Rewards
242
2011-57-11
Monday, 11 Jul 2011 12:57 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved