How to Make Money With Currency Exchange

**eeloha** · 04-26-2008 08:43 PM

I was stitting in class (macroecon) a couple days ago and our teacher showed us an example of how to make money exchanging currency. I thought it was pretty cool because it seemed like a sure way to make a guaranteed profit. When i got home i tried to figure out exactly how to do that, but couldn't seem to make more than a 1/1000 of a cent in profit by exchanging currency. is there a way to make real money by doing that. I'm not talking about buying low and selling high either.

**eeloha** · 04-27-2008 10:17 AM

There's been like 40 views and nobody has posted anything, nobody knows anything about this?

**justinbustin** · 04-27-2008 11:58 AM

Doing this is taking advantage of interest rate parity (differences in foreign interest rates). It requires using a lot of money, as in hundreds of thousands of dollars and sometimes has to be done over a year or so. Banks do it sometimes to make a few thousand. They will either buy foreign currency and invest it in the other country or do a few transactions between currencies and invest in a county...then later sell it back for their home currency.

I guess if the differences are enough you could make money just exchanging it to realize an immediate profit but that would take a ton of money. Exchange rates are kept in check by the market so it's unlikely that you could make much off of arbitrage.

What do you mean you only made a fraction of a cent? Did you actually try doing this? Any kind of short term trading usually results in losses because of fees and commissions, unless you have a lot of money and are very skilled. Put $4000 a year in an IRA and save 10-20% of your money. If you want to make money with arbitrage then camp out to buy the next big electronic then sell it on ebay, or resell an underpriced car or house.

**jasaunders** · 04-27-2008 12:15 PM

Taking advantage of currency arbitrage requires millions of dollars. Only professional traders with access to this capital trade currencies successfully.

**Korzhik** · 04-27-2008 03:54 PM

Originally Posted by jasaunders

Taking advantage of currency arbitrage requires millions of dollars. Only professional traders with access to this capital trade currencies successfully.

good call... ive looked at trading between a couple of countries and to make a dollar or so it will take at least $1000...so i agree

**eeloha** · 04-27-2008 05:26 PM

thanks guys, i guess i will lay low on the arbitrage since i don't have that much money nor the professional skills. What are some other ways to make money with currency other than arbitrage?

**jasaunders** · 04-27-2008 06:06 PM

Open a currency exchange

Although they don't make much money from exchanging currency.

**dbaca** · 01-26-2009 09:45 PM

I have tried this and think that it is the best way to make money...period! I am by no means an expert yet, but you do not need a lot of money to get started. The broker FXCM can open a micro account for as little as a $25 deposit. However they recommend trying the practice account first for 6 months before startin with real money. The practice account begins with $50,000 of practice money and it is REAL time trading, so you are making real trades in the market, but using practice money. The first couple of week I had no idea, then the more I read about it, I started learning. I started make a huge profit of thousands of dollars with my practice account and it was driving me crazy that it was practice money, so I jumped in with real money using a micro-account of $25.

Yes, to make huge amounts of money faster you need the full account, but I do not recommend it untill you are a pro with the micro account! I lost my initial $25 dollars because, then I desposited $100 to have a higher margin...I lost this also! Then I tried again with $50 and brought my accoun to $400 in a couple of weeks.

As I said I am sill learning...I lost he $400 again! I am getting ready to try again soon, and this time I am ready and will no fail..

By the way, my pracice account went from $50,000 to over $200,000! So, yes you can make money this way, but learn it first, then go for it!

Originally Posted by eeloha

I was stitting in class (macroecon) a couple days ago and our teacher showed us an example of how to make money exchanging currency. I thought it was pretty cool because it seemed like a sure way to make a guaranteed profit. When i got home i tried to figure out exactly how to do that, but couldn't seem to make more than a 1/1000 of a cent in profit by exchanging currency. is there a way to make real money by doing that. I'm not talking about buying low and selling high either.