Not only can you make money with stocks, but also with foreign exchange.

Forex Trading for Beginners

Tip 1: Be clear about your investment goals!

Your individual investment goals should be decisive for the design of your investment in foreign currencies. Should foreign currencies be a source of return on your “normal” investment? Then it is important to spread across different currencies. This reduces dependence on individual decisions. As a result, the development of yields will be eliminated more steadily, larger fluctuations in value.

Your individual investment horizon is also a crucial parameter when investing. The longer this is, the riskier the money can be invested. For example, if you want to commit to only one year, a currency fixed-term deposit or a short-term bond is appropriate. On the other hand, with an investment horizon of ten years or more, you can also add stocks and other riskier asset classes. Importantly, the performance of certain investments in the past is not a reliable indicator of future performance. Therefore, one should not be blinded by historical performance data.

The text is an excerpt from his book “Just make money with currencies”

Another important factor that is determined by the individual investment objectives is the question of how much time you want to spend on investing. This depends on whether you should invest directly in currencies or resort to actively managed investment concepts such as investment funds. Basically, the less time you have (or want to have), the more investments should have active management.

Tip 2: Find out about the costs!

Depending on the type of investment, investing in foreign currencies can be quite expensive. It is therefore important to familiarize yourself with the costs incurred in advance of an investment decision. This includes both the one-off costs incurred as well as the running costs. Key one-off costs include fund spending surcharges, currency exchange fees, or differences between purchase and selling price. The most common running costs include custody fees, management costs for fund management, and certain performance-related surcharges. In addition, buyers of certain securities waive, for example, dividend or interest payments. This is particularly common in certificate constructions.

The total cost of a currency investment, i.e. one-off costs plus running costs, should be converted to the planned term of the investment. Simple products without a hedging component or active management should not cost more than 2 percent per annum, for more complex products 3 to a maximum of 3.5 percent are considered acceptable. If the resulting costs are significantly higher than these indications, we must be careful. Exceptions are investment products with special properties that make the higher costs seem acceptable. This could include, for example, full capital protection or a guaranteed minimum return.

Tip 3: Start slowly!

Start slowly to get used to the currency issue. For a first currency investment, the five major currencies OF the US dollar, British pound, Swiss franc, Chinese renminbi, or Japanese yen (海外fx おすすめ) are particularly suitable. Because these currencies are the ones that regularly provide information in the media. This usually gives us a good idea of what the current economic constitution of these countries is. This, too, is an important factor influencing future currency developments.

Before making the first investment, gather enough information about the current prospects of the currency. For example, analytical elaborations that your bank can provide to help. Even with an internet search, one usually finds what you are looking for quickly and finds expert opinions on the expected currency development. In addition, you should pay attention to the short term in the case of the first investment. First, don’t commit to more than three years to gain successive experience with a currency investment. It is true that longer-term investments can often be relocated via the stock exchange before maturity. Often, however, value reductions have to be accepted.

In addition, the initial investment should be made as simple as possible. In particular, money market products, bonds, or exchange-traded funds (ETFs) on a single currency are suitable as investment vehicles. For all three types of securities, the currency trend dominates the return.

Use your initial investment to get a “feeling” for currency investments. Here, for example, it can help to look at the performance of the investment regularly at the beginning, for example, once a month. Pay attention to particularly strong fluctuations in performance. Find out about the causes of these movements. This gives you a quick look at the key influencing factors of a currency investment.

With these experiences, you can then start to gradually spread currency investments more widely. This avoids too many individual risks.

Tip 4: Don’t be misled by high-interest surcharges!

Many investment products in foreign currencies attract with high-interest rate premiums. For example, for a bond in Turkish lira, there is often a 5 percent interest per annum. Brazilian Government bonds even quickly total the annual interest rate to a double-digit percentage. This sounds like a good way to do this, especially when compared to interest rates in Europe. But here we have to keep a cool head and not be misled. Because high-interest rates are usually a sign of particularly risky investments. The risks can be of different nature: either there is a risk of capital defaults so that all paid-in capital does not flow back. This can happen, for example, when a state or company is in financial difficulties and has to cut its debt. Or the corresponding currency is so volatile that the interest rate advantage can be quickly eaten up by currency losses. The classic high-yield currencies in particular tend to fluctuate