How to profit from currencies?

crazy canuck · #1 02-24-2005, 12:44 PM

Suppose I can predict the direction of next weeks change of a currency with 65% accuracy. Also, assume the size of the movements I get right and worng is the same.

So what would be the best way to profit from this?

I believe if I buy an option, the time decay is too much. There don't seem to be any online brokerages either that deal with currency options.

Since the currencies barely move, holding the currency itslef instead of a derivative would be useless.

I guess that leaves futures. So is it then the only way to go? Does anybody know of a good online brokerage?

Any help is appreciated.

parttimepro · #2 02-24-2005, 01:27 PM

[ QUOTE ]
Suppose I can predict the direction of next weeks change of a currency with 65% accuracy. Also, assume the size of the movements I get right and worng is the same.

[/ QUOTE ]
Then you will be a rich, rich bastard. Why do you think you can do this? If you're just betting against the dollar, I guess that's not a bad bet, but the short-term swings can kill you.

If you don't like options, standard practice is to buy currencies with a lot of leverage (100:1 is common). So if you were in euros at the beginning of the year, you'd have lost your entire initial investment and owed the brokerage twice that. On the other hand, if you were in euros this week, you'd have doubled or tripled your money. That enough movement for you?

This website will help you find a broker:
http://www.forex-brokers.com/retail.htm

crazy canuck · #3 02-24-2005, 03:38 PM

Then you will be a rich, rich bastard.

Well, I wasn't clear. I can not predict every week. I can generate signals that give me this accuracy fairly often, but definitely not every week.

If you don't like options, standard practice is to buy currencies with a lot of leverage (100:1 is common).

The problem is that I can lose 3 margins in a bad week. So for example a US/CAD future contract is 2500 US $, which means I could lose $7500 in a bad week...and I don't really have the bankroll to lose this much.

lu_hawk · #4 02-25-2005, 02:34 PM

[ QUOTE ]
I believe if I buy an option, the time decay is too much.

[/ QUOTE ]

If you are trading based on what you think happens next week then the time decay should be very minimal in that time period.

FredJones888 · #5 02-26-2005, 03:50 PM

this is true, and if you only go long options there is a built in loss limit. Better for beginners.