How to Make Money Trading Currencies

Member

By offgrid
User-Submitted Article

Article Rating:

(8 Ratings)

US Dollar

Is it possible to make money trading currencies ?

Yes

Difficulty: Moderately Challenging

Instructions

Things You'll Need:

PayPal Account
$100

Step 1

You can start earning some extra cash trading currencies with as little as $100. I would only trade a currency against the US dollar that has a very stable economy. At the moment Canada is an excellent currency to trade against the US dollar. Over the past year the Canadian dollar has traded between .77 and $1.08. That's a 40 % range. That means that if you had bought 100 Canadian dollars at $.77 (Cost of $77 US) and sold them when they hit 1.08 (Make $108 US) you could have made a 40 % return on that trade.
Step 2

If you have a bank account like TD Waterhouse that allows you to transfer from US dollars to Canadian dollars this will give you the best exchange rate. If not, you can also open a PayPal account and trade back and forth between Canadian and US dollars but PayPal takes about 2% off the exchange rate.
Step 3

The idea is to hold US dollars and Canadian dollars and only trade them when you have a 10 % gain. The Canadian dollar is starting to be considered a "Petro" dollar which means that it closely follows the price of oil.
When Oil peaked at around $147 /b the Canadian dollar hit $1.08 US. When Oil dropped back down to about $38 /b the Canadian dollar hit 77 cents.
Step 4

At the moment oil is around $ 50 /b and the Canadian dollar is trading at .82 cents. So if oil climbs back to $80 there is potential to make more than 25 % by trading these two currencies. If you are starting out with $1000 US keep an eye on the Canadian dollar and buy whenever it is in the 70-80 cent range and convert back to US whenever the Canadian dollar is in the 90-100 cent range.
Step 5

Currency markets can be volatile so I only make trades of about $100 or so and am happy to make an extra $10 every few days. You have to really get to know the exchange rates and the "commissions" that banks and services like Paypal take from your exchange. If the bank takes 5% off your trade you will end up losing more than you gain.