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31-03-2011, 07:27 AM
I don't believe in forex trading...... 
Mar 31, 2011
More investors brave forex roller-coaster
They hope to make quick buck in volatileforeign exchange markets
By Aaron Low, Economics Correspondent
IT MANAGER Roy Lim has been happily living on a knife-edge for the past two weeks, glued to his computer screen for three hours a night, watching numbers jump from blue to red, fingers poised to buy or sell.
Mr Lim, 32, is part of a growing group of investors lured by the prospect of making a quick buck in the volatile foreign exchange markets.
'Not too bad so far; I've been making about $200 a night on average, trading the Australian dollar,' he said.
'It's scary as some days I lose $300, and some nights I make $400. It's chump change compared to what institutional traders make but I find it quite exciting.'
Since the earthquake, tsunami and nuclear crisis in Japan, equity and forex markets have undergone huge swings over short periods, providing ideal trading opportunities for investors who are fast - and brave - enough to take a gamble.
Take the Australian dollar. It fell by almost 9 per cent in two days against the yen on news that there was a nuclear crisis in the making earlier this month.
It has since rallied by about 14 per cent to hit a 10-month high of 85 yen yesterday, and is at a 29-year high of US$1.0334 against the US dollar.
Analysts say this was largely because people were back on the carry trade.
The carry trade involves taking loans in a country with low interest rates and buying assets in countries with higher rates. Investors can then pocket the difference.
Australia has a cash rate of 4.75 per cent, one of the highest among developed nations, while Japan has near zero rates.
'Japanese investors are eyeing (better) yields offshore, whether it be in Australia or America or elsewhere, and that is what's pushing the yen down on a broad front,' Mr Joseph Capurso, strategist at Commonwealth Bank, told Reuters.
The increased volatility has seen higher activity among online trading platform providers such as CMC Markets, IG Markets and Saxo Capital Markets.
Trading activity has gone up some 27 per cent in the past few weeks compared with January and February, said CMC's head of education sales, Mr Goh Jun Yi.
'In periods of market volatility, as we are seeing now, there tend to be more trading opportunities and indeed we have seen a 20 per cent increase in trading at CMC overall in February on the back of global events,' he added.
Some investors have also taken to trading the Singapore dollar, which is traditionally a low volume and less volatile currency.
Banker David Chee, 29, is one betting that the Singdollar will keep rising against the euro and US dollar.
'The Singdollar is less volatile than other currencies, but I do know the local economy so I feel more confident about taking positions,' he said.
Regardless of the excitement going on in the financial markets, the local managing director for IG Markets, Mr Peter McDermott, warned that forex carries a fair amount of risk.
It mainly takes advantage of leveraged trading, meaning traders can take huge positions with the outlay of small sums.
'It's not more risky per se but the movements are quite big. For instance, $20,000 can buy you $1 million worth of currency,' he said.
'You can win big but also lose if you are holding $1 million. So traders need to be aware of that,' he added.
aaronl@sph.com.sg
Mar 31, 2011
More investors brave forex roller-coaster
They hope to make quick buck in volatileforeign exchange markets
By Aaron Low, Economics Correspondent
IT MANAGER Roy Lim has been happily living on a knife-edge for the past two weeks, glued to his computer screen for three hours a night, watching numbers jump from blue to red, fingers poised to buy or sell.
Mr Lim, 32, is part of a growing group of investors lured by the prospect of making a quick buck in the volatile foreign exchange markets.
'Not too bad so far; I've been making about $200 a night on average, trading the Australian dollar,' he said.
'It's scary as some days I lose $300, and some nights I make $400. It's chump change compared to what institutional traders make but I find it quite exciting.'
Since the earthquake, tsunami and nuclear crisis in Japan, equity and forex markets have undergone huge swings over short periods, providing ideal trading opportunities for investors who are fast - and brave - enough to take a gamble.
Take the Australian dollar. It fell by almost 9 per cent in two days against the yen on news that there was a nuclear crisis in the making earlier this month.
It has since rallied by about 14 per cent to hit a 10-month high of 85 yen yesterday, and is at a 29-year high of US$1.0334 against the US dollar.
Analysts say this was largely because people were back on the carry trade.
The carry trade involves taking loans in a country with low interest rates and buying assets in countries with higher rates. Investors can then pocket the difference.
Australia has a cash rate of 4.75 per cent, one of the highest among developed nations, while Japan has near zero rates.
'Japanese investors are eyeing (better) yields offshore, whether it be in Australia or America or elsewhere, and that is what's pushing the yen down on a broad front,' Mr Joseph Capurso, strategist at Commonwealth Bank, told Reuters.
The increased volatility has seen higher activity among online trading platform providers such as CMC Markets, IG Markets and Saxo Capital Markets.
Trading activity has gone up some 27 per cent in the past few weeks compared with January and February, said CMC's head of education sales, Mr Goh Jun Yi.
'In periods of market volatility, as we are seeing now, there tend to be more trading opportunities and indeed we have seen a 20 per cent increase in trading at CMC overall in February on the back of global events,' he added.
Some investors have also taken to trading the Singapore dollar, which is traditionally a low volume and less volatile currency.
Banker David Chee, 29, is one betting that the Singdollar will keep rising against the euro and US dollar.
'The Singdollar is less volatile than other currencies, but I do know the local economy so I feel more confident about taking positions,' he said.
Regardless of the excitement going on in the financial markets, the local managing director for IG Markets, Mr Peter McDermott, warned that forex carries a fair amount of risk.
It mainly takes advantage of leveraged trading, meaning traders can take huge positions with the outlay of small sums.
'It's not more risky per se but the movements are quite big. For instance, $20,000 can buy you $1 million worth of currency,' he said.
'You can win big but also lose if you are holding $1 million. So traders need to be aware of that,' he added.
aaronl@sph.com.sg
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
