Since mid-March 2014, the Euro has been depreciating steadily against Ringgit. There is no sign for the down trend to stop. According to news that I could find, the Europe need a lower currency to boost its economy, especially for its export driven growth. “A weaker Euro for a stronger Europe” as the news goes.
Over 6-month period, the EUR/MYR has dropped from its high of 4.57356 till current low of 4.10920, a total of 10.15% drop. It is quite a significant drop for a strong currency like Euro. I still have part of my saving in Euro. So I feel the impact.
Euro won’t be able to gain strength anytime soon. Given a clear trend like this, it should be a good opportunity to take advantage of by shorting the Euro. I need to hedge the Euro as an insurance to protect my saving in case the Euro continues to depreciate. This is the time to put my Forex account into use.
Let day dream a bit: using a Forex account with 1 to 50 leverage margin and a starting balance of RM 100, you can sell RM 5000 (Initial Balance x Leverage = RM 100 x 50) worth of units in the currency pair that you trade. If the currency pair dropped 10%, it means you earnedÂ RM 500 (RM 5000 x 10%). That’s a 500% (Return / Initial Balance x 100% = RM 500 / RM 100 x 100%) return on investment! The good thing is, it is scalable. You can increase the initial balance to RM 1000 or more and generate even more cash. Ha, this is only possible in dream and it always seem easy but in fact it is not if you ever tried.