Total newbie in need of assurance

[nupips]

Hi everyone!

I'm a total newbie to foreign exchange trading and seeking advice on what to do with my USD! I'd like to eventually increase the value of the USD in AUD in the long term 6 months, as I'm from down under. I intend to start the demo account, and read the beginners advice you have on this website having just discovered babypips.com today! Thanks, its a start and very user friendly.

So far I've just had my USD in Dual Currency Deposit (DCD) accounts with a certain bank. However, I listened to the bank's advice and kept it in USD over the past 8mths, based on the idea that the AUD/USD was too high at .7700 late 06/early 07 to convert back to AUD. Now my options have expired, still in USD, and would like to be more pro-active in my trading, now I have the time. I'm trying not to think of the loss of AUD based on pre-March AUD/USD, vs .8300 now!

The funny thing a friend not involved in anything to do with forex kept advising me the last 6 mths to get out of USD and hold AUD, based on all news including political. Should our decisions be based on more than fundamentals and technical analysis? This high profile bank seems to be providing advice based solely on past technical trends and has got 4/6 past forecasts incorrect. Their current advice is to sit on USD whilst AUD/USD is high at around .8300 and to gain some interest % in another AUD/USD DCD for 1month with a minimum -150 spread.

Instead, I prefer to gain predominantly via capital gain rather than just depend on yield interest income. I don't need it in AUD urgently. But would like the option of some AUD at minimal loss. I suppose it depends on where the AUD is headed. Could I trade in another currency? Do I have to cut my losses and convert some USD into AUD now? Do you offer forecasts? Will I learn how to diversify and hedge against adverse currency movements in my portfolio?

Instead of putting all my eggs in 1 USD basket like I've done?! I just have to be patient and weather this storm in my portfolio.

Alternatively, if I don't have that much time to dedicate to my portfolio, are there well recommended Forex companies out there who can advise me on what to do, put a strategy together for me? Does babypips.com offer this detailed advice?

Cheers,
NuPips

[pipgod]

You will do fine!

You will be OK!

Everything will be OK

[pipgod]

LOL, I'm sorry.

Welcome to babypips!

[toptick07]

Welcome aboard. Sorry about pipgod... he can't be helped.

I'm a total newbie to foreign exchange trading and seeking advice on what to do with my USD!

No one here will tell you what to do. The general theme is members helping eachother in developing strategies and techniques for trading in spot forex. This is accomplished by introducing prospective traders to forex through the "school." I highly recommend it. Additionally, several methods are demonstrated by the FX-Men in their blogs. Click through the tabs if you have not yet done so. Babypips is a good place to begin your forex experience.

Should our decisions be based on more than fundamentals and technical analysis? This high profile bank seems to be providing advice based solely on past technical trends and has got 4/6 past forecasts incorrect.

Your bank is probably doing better than most signal services and advisories!
IMHO, Prices ultimately reflect fundamental conditions such as those your friend observed. Charts, indicators, and technical studies are merely measurements. Sorry, no Holy Grail here.

Do you have other trading experience?

[pipgod]

Originally Posted by toptick07

Welcome aboard. Sorry about pipgod... he can't be helped.

Doctors have been telling me that for years.

On a more serious note : I don't like banks. I am happy their decisions move the market. I think that bank had another idea.

Check this out. The bank always says "you house is a very large asset". What they don't tell you is to whom. The bank makes about 3x what your house is worth over 30 years. An asset brings money into your pocket. If your house is mortgaged, you will pay about 300,000 for a house that is worth 100,000. Sounds like the house is an asset to the bank, not the home owner. You can check these figures in various places online. Or take your house payment and multiply it by 360(12mo. x 30yrs). I'm sure the figure is greatly more than the value of the home. The bank may say something like"Finance Charges ".

So maybe the bank had the many hold on so the bank could be the one to profit. I realy hope I am wrong. Sorry for your loss.

Again, welcome to the babypips family. We are happy you are here.

[nupips]

Hi babypips members,

Thanks for your replies and welcome.

I have limited trading experience in just DCDs - where I have an option to convert my account at my desired strike whilst earning interest. I use to have 1-2 week options. But lately I've sat on 2mth deposits earning a passive interest income, due to time limitations in managing this portfolio. So far I've not made any losses in any transaction, gaining a relatively good yield along the way. Hence my capital is intact...well in USD which is where I started. The only loss is if I convert to AUD right now and stay there forever. Which I'll restrain from doing at the moment. No other options or futures trading.

Hence my new found interest in formulating a more shock-proof portfolio, learning how to trade my way out of USD or maybe not, and learning about other currencies, not just AUD/USD. Its the strategy, understanding of the market, diversification, risk management which I need to learn from scratch. Also education in the basics which your School sounds like a definite good start. I know there's a better ROI available out there.

Does exposure to more currencies mean better risk management?
Do you have advice on a good broker, and other websites (other than babypips) with sound news, opinions and forecasts of forex?

With more basic knowledge and good industry info, I'm up for the challenge of being a more active trader.

Due to the time constraints, I've left it to the bank trader to advise me. Ditto about bank's attitudes and real intentions. I know they don't do a transaction unless they come out on top - better than the customer of course. Its the price you pay for their 'management and advice' which hasn't been that great the last 6mths. Its time for a change!

So this bank has actually forecasted pretty well, in comparison? 4 wrong out of 6 forecasts? Thanks for the tip on fundamentals.

Hows this sound for a plan in starting fresh in forex - any thoughts on this, greatly appreciated -

1. Go through Babypips School
2. Read the FX-Men blogs and forums.
3. Find a few informative forex news websites
4. Formulate my own strategy, approach, opinion - confidently and independantly (less bank opinion!)
5. Do a few test demo accounts and test this strategy - via fxcm?
6. Find a good broker
7. Do my own trades - with no bank!

Cheers,
Nupips

PS babypips.com is so much easier to view than the myriad of other forex sites out there! Thanks babypips!

[toptick07]

Does exposure to more currencies mean better risk management?

Do you refer to risk management in terms of diversification for your portfolio? My opinion is that spot forex should represent a very small part of your overall investment portfolio. You should use only risk capital. Start small and proceed with caution.

If your question is whether trading several currencies is less risky than concentrating on a few, then I think concentrating on your home currency (which you probably already understand) and a couple “majors” is probably a good start.

So this bank has actually forecasted pretty well, in comparison?

No. That was just a jab at signal and advisory services that take traders’ money and provide little more than a crash course in rapid capital erosion.

Hows this sound for a plan in starting fresh in forex –

Not a bad plan – I like the way you think. Best of luck.

[toptick07]

Originally Posted by pipgod

Check this out. The bank always says "you house is a very large asset". What they don't tell you is to whom.

You have this right. It is part of our conditioning to believe these things and accept them as factual. The real return on real estate is something like 4% annually when you figure in interest paid, taxes, and maintenance. (Come on you statisticians...let's hear it!) Equities supposedly return about 9% as measured by broad indexes over the long haul. This is my pet peeve. I'll start another thread on comparisons. Watch for it soon in a Forum near you!


Sorry for the hijack.

[nupips]

Hi toptick07,

Thanks for your tips.

I refer to the latter of how to diversify my forex portfolio. However will heed your advice on how much should be diverted to forex in the 1st place.

I am thinking along those lines and having my home currency - AUD and GBP, EURO, USD in my portfolio.

I think I'll just use my bank forex trader to do some trades for now, but be more informed and decisive on the strategy.

Have been reading Bloomberg.com: Currencies and finding it informative especially on the direction of the GBP.

Any other thoughts on advised websites, brokers as per previous query?

Thanks for helping formulate a clearer plan. Clarity now!

[pipgod]

Sorry for the hijack.

No hijack, thanks for adding.