How to form a portfolio of foreign currency

Discussion in 'Forex' started by joesan, May 30, 2007.

  1. joesan


    Well, first I have to admit, I am not a forex trader. I am a futures trader and have USD as the base currency of my trading account. But as USD is depreciating against all major currencies, I want to diversify the currency I am holding . Can you forex veterans advise me which currencies to diversify into my portfolio, and if possible, what ratio should I use ? Thanks for any hint.
  2. LarryS


    Although I trade fx, another thing I just invested in is the BRIC Note offered by Citi Group (I have an account with Smith Barney). The closing for it was today but it was the single most popular offering of that kind that they have had so I think there will be a secondary market available. The idea is that they have gone long the Rubel, INR, Yuan and another currency (I can\\\'t recall off the top of my head) all against the USD to help clients with the depreciation of their portfolios. The notes mature in 1 year and the best part is they are principle protected. Overall, I figured I would give it a shot. If they do offer a secondary offering I will look into it, getting 97 cents on the Dollar would be great, especially since even if it doesn\'t make money you still get the principle back. Gotta love it.

    Otherwise, you can also simply short the USD against several major currencies. The thing you want to watch out for is the amount of leverage a firm is offering you. It can be extremely high (400:1) so be careful to not overleverage yourself as it seems you are looking for a longer term investment. Perhaps depositing $10,000 in a account, leverage yourself 2:1 meaning I would set my trading account to 50:1 and only open a 100k position so you use $2000 out of your $10k account as money down. Depending on what currencies you trade, you may even be able to earn carry.
  3. dealer


    Your trading account may be in USD but what do you consider your "home" country to be?
  4. joesan


    I am a Chinese, but my base currency in IB account is HKD, whose forex rate is locked with USD. USD depreciates fast against RMB ( Chinese currency ) , so I need to hedge.

  5. joesan


    Thanks for the infomation. BUt I do not have business with city group, I am in china and it seems that Bric note is not available here.

  6. I am trading with a broker right now, who helps me diversify my trading. i can trade many financial products by one account, so it saves me time, and dont have to run to many brokers to open account.

    I have around $40,000 with them and have been with them since 6 months, And i tell you i am pleased with there services.

    Currencies is aggressive trading, for sure, but you should develop a strategy.
    Now what i do is i invest little in gold, silver, crude oil, currencies, futures market as well.
    What i like is, i can do Scalping also with this broker, so quick buy and sell, makes me good money. i do lose sometimes, but i be patient, and it pays :)

    I am planning to deposit more money with them to open insitutional account, so i just wanted to ask few people is Hotspot good or currenex.
  7. sim03


    If you trade fx, you should know that your example isn't 2:1. It's 10:1. Way too high for a "longer term investment", carry or no carry.