How the equity markets had changed but the brokers had not

These experiences were far different from the lessons I learned growing up. My father’s attitude toward investing was conservative. He always said to buy blue chips—buy them and hold them. In the long run, he told me, that’s how you make consistent returns.  So when I looked to start a career in finance, I didn’t stray outside the realm of traditional investing. I took an internship at a major firm in Greenwich, Conn. This was my entrée onto Wall Street.

But even before I started, my perspective had begun to change.  I have always had a contrarian streak, and I had traveled abroad and read much about the history of other cultures. Increasingly, I began to doubt the prevailing wisdom that a patient investor is rewarded over time.

Most amazing Forex case is Odessa at Dusk

In 1994, I was in Odessa, Ukraine, basically touring under the guise of studying world history for my BA. Odessa was in a unique state of flux caused by severe economic crisis. The Soviet Union had collapsed just a few years before, allowing the smaller states around Russia to spin off into independent countries. Odessa was now a part of the independent nation of Ukraine.  As in many newly formed nations, the economic situation was volatile. Between 1992 and 1996, the karbovanet, the Ukrainian currency, was ravaged by hyperinflation and fluctuation. In 1992, one dollar could buy 208 karbovanet. In 1995, that same dollar was worth 147,463 karbovanet.

Forex crises from Thailand to Laos

Thailand taught me the destructive power of the currency markets, but it was in neighboring Laos that I learned it was also an excellent trading vehicle.

I was still in Thailand when my friend and I planned a trip to Laos. While she studied the Let’s Go guide, I scanned the currency prices in the Bangkok Record and on lighted boards outside exchange vendors. The aftershocks of the Southeastern currency crisis could still be felt in Laos. The economy was weak at best.  The country’s currency—the kip—was directly linked to and reliant on Thailand and foreign investment for survival, which didn’t bring more stability. In fact, at the borders of Laos and Thailand the agents would accept only U.S. dollars or baht for entry fees, rejecting their own unstable kip.

As I crossed over the border into Laos in February 2000, one U.S. dollar bought 7,500 kip, one Thai baht bought 200 kip, and 37 Thai baht bought one U.S. dollar. I was a poor student in Southeast Asia, desperate to shave off any cost of living that I could. The currency exchange rate seemed like the ideal way.

Thailand crises with Forex :the secret facts

It was very clear that something devastating had happened. I was sitting in a restaurant in Bangkok, Thailand, enjoying a lunch of noodles and gazing at the city skyline. It looked as if it had been ravaged by a plague or war. Towers stood half-built, dark and empty. Cranes were motionless steel skeletons.  Two years before, Bangkok’s skyline was swarming with workers and alive with movement. The Thai economy was growing at torrid rates, and the land was awash with money. Visitors saw scenes of jarring contrasts in the streets of Bangkok, where an ancient culture had entered the modern era at warp speed.  The rich steered sleek Mercedes past street cleaners riding elephants and peasants tugging water buffaloes to market. Shopping malls, shiny with goods, attracted people from the countryside to gawk and marvel. Some could not grasp the concept of private property upon which the new prosperity had been built. They roasted fish over open fires on the mall’s marble floors until they were shooed away by security guards.

The Sun Never Sets on Forex

Because of its tremendous power in local life, currency rates are regularly monitored all over the world. Outside the U.S., people watch exchange rates like Americans follow the Dow. In Sri Lanka, taxi drivers can reel off exchange rates as well as New York’s foreign exchange desk dealers.

Americans may soon have to as well. As the world becomes

more interconnected, the traditional stability Americans have

enjoyed from their currency may be eroded. The newly introduced

euro might ultimately supersede the U.S. dollar. Many nations rely

on the U.S. dollar as a reserve currency, which helps sustain its value. If nations start using the euro for this role, the U.S. dollar

could be exposed to unprecedented fluctuation. In the fall of 2004, with the U.S. Congress issuing $800 billion in new debt, the market began to question the U.S.’s “risk-free” status, opening the window for other currencies to fill this void.

The Sun Never Sets on Forex

I learned these lessons long before I began to trade currencies myself. They were the result of my travels, when I saw firsthand the role of currencies and their potential for trading. One of the strongest impressions I received was in Thailand in 1999.

Forex plays out in everyday life

It is essential to understand that Forex is a market that plays out in everyday life in a way that other markets do not. A fluctuation in currency value can have an impact on a nation’s social, political, and economic conditions. In extreme situations, a nation’s entire political structure can be shaken to the core.

Because of these high stakes, a government often uses all its

power to control the value of its currency. It may decide that to

protect its private citizens from international traders and stabilize its economy the government needs to control how its currency is

traded. China, for example, has “pegged” its currency to the U.S. dollar, meaning that it has set a tight conversion rate of $1 to 7.27 yuan.  This peg has defied market forces, which are pushing for the yuan to float against the dollar because of the huge trade imbalance between the two countries. But China has kept the peg, worried that simply allowing its currency to appreciate against the dollar would damage its economic growth and possibly throw its tightly monitored society into turmoil.