Investing legend Warren Buffett is one of the greatest value investors of all time, but he is also a brilliant FX trader. Here are 10 FX nuggets from the Buffett table.
1. Buffett quote: “Risk comes from not knowing what you’re doing.”
Some investors jump into FX trading looking for a quick profit. For the novice, currency trading carries increased risk due to the lack of a regulated exchange and the need to predict near-term currency movement driven by national policy. The real risk, however, is leaping without learning the ropes first.
2. Buffett quote: “When you combine ignorance and leverage, you get some pretty interesting results.”
FX traders use leverage as a tool of the trade, but in ignorant hands it’s like handing a loaded gun to a toddler. Traders can trade $100,000 on a deposit of $1,000. This is heady stuff for people from the investing world and even seasoned traders who let the lure of margin get the best of their
Continue reading 10 of The Best From The Buffett Table
I recently executed my second Norbert Gambit trade and I am more than please with the results. I was not very impressed with my first attempt through ScotiaITrade and you can read all about it in my first Norbert Gambit review. Through RBC Direct Investing, I decided to try the Nortber Gambit again after reading about using the DLR ETF. I was able to get 1.0321 on my US dollars and the spot rate was 1.03. Obviously the rate changes all the time but that’s pretty amazing for the cost of 2 transactions.
Norbert Gambit Transaction Steps
As I mentioned last year, I moved away from ScotiaItrade to RBC Direct Investing and I am more than pleased with this change as I was able to execute a smooth Nortbert Gambit.
Related: RBC Direct Investing Review
Step 1 – Purchase DLR.U on the TSX
Once I had my US currencies deposited, I initiated my transaction of DLR.U. Note that it
Continue reading Norbert Gambit with DLR
As a Canadian, the discount brokers available are limited. The banks have purchased many of them over the past years and only a few options are available outside of the banks such as Questrade. E*TRADE was an option until Scotia Bank purchased the Canadian division and made it ScotiaITrade. E*TRADE is still available in other countries and the US version of their platform does offer the ability to trade currencies. A feature I would particularly like to see with most discount broker as I am in need of doing currency exchange regularly.
E*TRADE is still a platform I am exposed to through our Employee Stock Purchase Plan and I must say that E*TRADE does make regular improvements and investments on their platform compared to the Canadian options.
Related: How To Manage Your Employee Stocks
There are many features available for investors to use with E*TRADE.
The foreign currency markets offer investors a unique way to speculate. Various factors have contributed to the wild popularity of foreign exchange. The market itself is enormous and dwarfs equity and bond markets. Forex markets are extremely liquid. And unlike traditional stock markets, currency trades 24 hours a day, 7 days a week. When trading markets close in the West, they are just opening up in the East. This makes forex trading convenient for anyone with an internet connection.
Leverage is another attractive forex trading feature. For example, an investor could potentially control a $50,000 position by adding just $500 to a forex account, then borrowing the rest from the broker. Equity traders do not have this type of extreme leveraging capability. Keep in mind that leverage works both ways. Yes, you can potentially make large profits. But it’s also possible to experience damaging losses. Perhaps you have been thinking about dipping your toes into forex trading. Here are some forex tips for
Continue reading Tips for Foreign Currency Exchange
The foreign exchange market, being a good example of globalizing trends, works as a form of exchange for Forex trading that refers to the decentralized trading of global currencies across the globe. In Fx trading, transactions require a trader to purchase a specific amount of a particular currency by paying in an amount of another specified currency. The Forex market has several other variations in its name such as the “Fx market” or “Foreign currency market”. Forex trading broker call it the “Currency market” or “Foreign exchange currency market”.
Related: xe.com review
Facts to be known about Forex trading and the Forex market
In practical, the Forex market is a great place for many banks, several businesses, many governments, global investors and individual traders to do exchange and speculation on international currencies. One thing should be well-known to all potential traders about the market that all activities or operations of the market are conducted ‘over the counter’ but
Continue reading Facts and Benefits of The Foreign Exchange Market
The following is a guest post by Philip.
What is the Forex market?
The Forex market is a platform to trade international currencies. Financial centers all over the world act like anchors for Forex trading. The main purpose of Forex market is to make sure the smooth functioning of international trade by facilitating currency conversions. In layman’s term Forex trade is when a person buys one currency by paying some quantity of another currency.
Apart from Forex market, two other markets which are mostly used by common people are the stock market and the commodity market.
What is Stock Market?
A stock market is platform where the stocks of publicly listed companies are traded freely. Here the transactions are made though appointed share brokers. The overall value of the world stock market is pegged at $36.6 trillion. When a company is listed in stock market the market value of that particular firm is calculated by the share price of that company.
What is Commodity Market?
Commodity is market
Continue reading Differences between Forex and Other Markets?
In a previous post about foreign exchange, I learned about xe.com as an online currency exchange house. I was quite eager to give it a try in order to avoid driving downtown just to exchange my US dollars.
Getting Setup With XE.com
The setup was a little more demanding than your standard process online and for good reason since any individual transferring money must be validated against money laundering. Don’t let the requests for identification deter you away like it did for me at first. I must have stopped on the doorway a few times until I just forge through with it.
Don’t expect to be in after 10 minutes… You’ll have to actually wait for manual verification and you may be asked some questions by email as a follow up. They requested a bank statement showing my name and account numbers to validate the information I provided. The process is heavy to validate all users wanting to do currency exchange.
Be ready with your bank account numbers
Continue reading Forex: xe.com review
Do you want to avoid foreign exchange fees? Do you still use the banks to convert your funds in other currencies? In my previous foreign exchange post, I discussed the Norbert’s Gambit. It’s definitely one way to improve on your foreign exchange fees but it can have its disadvantages. On the other hand, a better way to do foreign exchange on a regular basis is to use a forex broker platforms. I have not personally used one of those platforms yet but I have looked into a couple of them and I am hungry to know more. Before we dive into the forex platforms and what they can do for you, I’d like to establish the scenarios under which people tend to do foreign exchange.
Foreign Exchange Scenarios
Currency For Trip
Be it a family vacation, a personal or a business trip, going to a foreign country usually requires funds in the countrie’s currency for your day-to-day spending. In some cases, your
Continue reading Foreign Exchange: Using a Forex Platform
Foreign exchange is practically inevitable as your portfolio grows. You may be able to avoid it but if you intend to diversify your portfolio, chances are you will have some foreign investments requiring you to deal with foreign exchange, also known as forex. While the banks will happily convert your Canadian and US currencies, they do it at a cost by taking a small percentage as part of the currency exchange process. Fear not, there is a way to exchange your fund at the near spot rate and it’s done using Norbert’s Gambit pioneered by Norbert Schlenker.
The concept is pretty simple as it simply requires you to buy an inter-listed stock on one stock exchange and sell it on the other stock exchange. Many Canadian corporations are listed on both the Toronto Stock Exchange (TSE) and the New York Stock Exchance (NYSE) (and other US exchange where applicable) providing you with a
Continue reading Foreign Exchange: The Norbert’s Gambit
For the longest time when the dollar was low against the greenback, exchanging US dollars for CAN dollars was nice. You would get an average of 15% to 20% on your money. I would not really scrutinize the exchange rate at the time.
Nowadays, with the dollar practically on par with the greenback, every little bit counts. Exchanging currency is a requirement for me. At least twice a year, I do currency exchange to get the funds from my ESPP (Employee Stock Purchase Plan).
My current process is the following:
- Execute an international money transfer to my banking institution
- Get a bank draft in US dollars – free of charge
- Exchange it for CAN dollars at the Vancouver Bullion & Currency Exchange – I get preferential rate with larger amounts
- Deposit the CAN dollar cheque at the bank – without the 90 days hold on it