Forex Strategies For Investors – Not Traders

I’ve spent the past week “out in the trenches”. Pulling back the curtain “just a bit” and hopefully providing short-term traders with a couple of ideas  – and the chance to make a quick buck.

For the most part this area of forex trading is extremely difficult, time-consuming , stressful , annoying and for those with little experience  – truly a fool’s game.

What I’d like to do now, is take a complete 180 degree turn and take a look at forex strategies and concepts geared more so for the investor.

Let me throw out a quick scenario.

What if I told you that your Canadian dollar exchange to Mexican Pesos is 12.79 ( simply consider a dollar being worth approx 1.27 here ) Not bad eh?

Ok… now what if I told you that the “base savings rate” at any of the excellent banks here in Mexico was 3.75% – You starting to get the message?

So what if you could go to the bank in Canada tomorrow and get a loan for 100k ( at near 0% ) Then take “said loan” and convert it to Pesos – and put it in a bank account at 3.75% – with absolutely no risk.

Boom! Forex as investment.

It’s what your local banks are doing hand over fist. It’s called the “Carry Trade”.

It’s not “new” it’s not “sketchy” – It’s a major , MAJOR driver of profit for banks across the planet.

More over the weekend……


written by F Kong

10 Responses

  1. Richard September 27, 2013 / 4:53 pm

    Hi Kong,
    How about the exchange rate? for example I transfer my Cad dollar to Mexico and collect the 3.75% interest but after 2 years when I want to bring my money back exchange rate would be 3.25 instead of 1.27?
    The reason I am saying that because I did the same with my back home bank with a much better interest rate but right now after couple of years I am break even if I want to bring my money back to Canada because of exchange rate.
    Please advise,

    • Forex Kong September 27, 2013 / 5:11 pm

      Exactly Richard!

      You’ve been trading Forex for a while now then!

      At least “now” I hope a number of readers who may have previously considered “this forex thing” as total nonsense / confusing / untouchable / blah blah….see it for what it truly is. One of the largest most liquid markets on the planet, with reach into almost every single one of our lives, in some way or another.

      Understanding the “concept in principal” then putting that concept into “application” being two different things entirely (as per your prior experience) but at least we’ve gotten past ” the mystery of it all”.

      Timing always being an issue ( as with any investment right? ) hence the retail forex market! People looking to put this into application, provided with the means – at the push of a button.

      Obviously I’ve solved the problem by literally “moving to another country” – but of course this isn’t a practical solution for everyone. Although…he.he.he….these days – too far out of the question??

      I’ll continue thru the weekend Richard – and really appreciate your “real world” experience / post.

      • Richard September 27, 2013 / 5:21 pm

        No Problem. Thank you for sharing your great knowledge with us. Have a good weekend.

  2. JSkogs September 27, 2013 / 4:57 pm

    Awesome man! Can’t wait to here more about this. Thanks again Kong. Good posts. Enjoy the weekend

    • Forex Kong September 27, 2013 / 5:02 pm

      I think I’ve opened a real can of worms here….gees.

      In “principal” I assume my post will have hit home with many. Now in “application” we’ve got a real rat’s nest here, as per Richards concerns in the prior comment.

      Have a good one JSkogs.

      • JSkogs September 27, 2013 / 5:24 pm

        Haha oh ya for sure. A lot of people won’t understand what influences the value of the trade over time and the mechanics of the transaction. When I took my derivatives course I remember coming to swaps and thinking……….and thinking some more……..thinking some more….. haha …and then (f&*k this) just going to bed for the night. Not every topic is easy to digest at first pass even for the many smart readers that are out there. Looking forward to the topic.

        I am off to get my party on in a big way! My wife just spent the last few 4 weeks opening a women’s only kick boxing circuit in town and we have 3 kids so between that, my own crap, and kids, I need a night out.

        Have a great weekend, Kong

        • Forex Kong September 27, 2013 / 5:26 pm

          I have a similar plan for this evening man……

          Enjoy! I assume you deserve it!

  3. JSkogs September 27, 2013 / 5:06 pm

    And ya short term forex or anything short term (1-14 days for me) for that matter takes a ton of babysitting. I do it often as it can be super profitable if you know what you are doing but you should charge out a skilled labour value to your profits and deduct an expense because really “you workin man” rather than setting and forgetting. And not to mention it can be stressful at times.

  4. Peter September 27, 2013 / 5:10 pm

    Hi Forex Kong,
    The statement “with absolutely no risk” is a bit misleading, isn’t it? What if the Mexican Peso falls in value?

    • Forex Kong September 27, 2013 / 5:17 pm

      He he he…..yes of course Peter.

      My point being… an “investent” forex has it’s place , and isn’t just for the “gambler/short term trader”.

      As with any investment / strategy there are “the normal risks to consider” ie…..your broker going bust , now your bank going bust or even your COUNTRY GOIN BUST! but people still dream that there’s “something out there” that’s 100% gaurenteed.

      We all make investment decisions based on our risk tolerance etc….and for me personally – I’d rather do it with currencies, than with a “single company” in a “single country” on a “single exchange” – only to read in the headlines tomorrow – the CEO’s been caught with his hand in the cookie jar – my investment gone to zero.

      Currencies just don’t work that way.

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