How To Invest in Foreign Currencies

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As with any investment, putting your money in foreign markets requires due diligence and the willingness to take risks.

To complete this How-To you will need:

Research
A brokerage or PayPal account
A bank that deals in foreign currency
A foreign currency Certificate of Deposit
A Forex online account

Step 1: Know the risks

Know the risks. Trading in foreign currencies can be very profitable if you stay on top of the global economic market. But if you don't have the time or desire to do that, it also can be very risky.

Step 2: Do your homework

Do your homework. Research the financial strength of various nations so you'll have an informed opinion as to whether their currency will strengthen or weaken.

Step 3: Open an account

You can invest in foreign currency using a brokerage account, if you have one. If you have a PayPal account, hold funds in multiple currencies at no charge. Or find a bank that allows customers to keep foreign currency accounts.

Tip: Some banks offer FDIC-insured foreign currency accounts; this protects you up to a preset amount if a foreign bank goes bust, but doesn't cover losses caused by currency fluctuations.

Step 4: Try a single play

Consider buying a Certificate of Deposit in a foreign market with a better interest rate; then "sell it forward" — you agree to sell the same amount of currency at a specific price on a future date. Known as a "single play," this protects you if the currency deflates during the duration of your CD.

Step 5: Consider a double play

Open a CD and gamble on a "double play," also known as an "open" or "naked" trade. If the foreign currency rises, you'll benefit both from the interest rate and the foreign currency being stronger than your own when you cash in. Just beware that you're also assuming the risk that the currency might deflate, which could wipe out the interest you made at cash-in time.

Step 6: Wheel and deal

Set up an online account on one of the Forex — short for Foreign Exchange — trading web sites. You'll be able to buy and sell foreign currencies anytime from Sunday at 5 p.m. eastern time to Friday at 5 p.m. eastern time, allowing you to cash in quickly on events that are likely to cause currency fluctuations.

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Category:

Howto & Style

Tags:

• finance
• money
• business
• investing
• foreign
• currencies
• markets
• stocks

[haoqh]

Don't invest in US. o_o

[AnobisBloodwing]

simple don't invest!

invest in gold and silver!

silver and gold are the strongest way and sure way to make profits!

[TheChocoTOASTIES]

ahhhhhhhhhhhh yen is very high!

good thing me have load laoad of that stuff at home

[jw16e4]

you will need: money to invest

[forexyard]

Great how to invest in forex video. Is there a how to trade forex video?.

[8447michael]

step one:dont

[inurkiewicz]

The bank and paypal suggestion is a waste of time and money. Has the author not heard of spread?

[chuecheib]

Rs does most probably stand for ruble.

[Tressco]

Well, time for tobin...!

[YourWiseSage]

wtf is rs gp