Total newbie question sorry!

Hello to all,

I have inadvertently stumbled into Forex due to purchasing USD last week for a rock solid deal which has now fallen through. Now I have the options of A) selling now and losing £1K+ on exchange rate, or B) holding and selling on in the hope that the USD will rally against the GBP, bearing in mind that the funds I have tied up are also costing me money in interest.

I've worked out already that you need a crystal ball to say what will happen at the moment, but I would welcome anyone's views on short term market movement and what you would do in this situation.

Many thanks

Lindsey

PS I think I am starting to get a definite fascination with forex so i am off to read through other posts!

sorry to say but in trading your first loss often turns out to be your best loss

I'm afraid nobody can advise you on the market because nobody knows what will happen for certain - not even the US Fed Reserve knows what's going on. In general, traders trade on probability setups - as we don't know what your setup was and what your objective was for this trade, only you will be able to make the decision. Plus, you will find everyone has a different perspective from your own.

If the trade is bothering you because you can't stand to lose anymore, you should get out regardless. Accept the loss, move forward and take steps to ensure you never get into a situation where you don't know what to do - you should have a plan for every angle.

I hope whatever you decide is the right thing to do and wish you the best of luck.

JD

Another thought, though please take it with a bit of a pinch of salt as it is just my opinion. The £ has fallen against the dollar and we are now experiencing a rally. Therefore, technically speaking, it is quite likely the £ will continue to fall against the dollar in the near future, once this rally ends.

Fundamentally speaking, the UK may suffer from the current economic situation more than the US for a couple of major reasons: 1) The UK property prices inflated more than the US property prices and, therefore, are likely to suffer a more serious reaction. 2) The UK economy consists of mainly service industries and is heavily dominated by the finance sector. This has been hit hard and may struggle to recover. As we have little manufacturing and farming is minimal in this country, it is possible that the UK is going to struggle more than the US in the next few years as we don't have much in the way of backup industries. Therefore, the pound is likely to devalue against the dollar.

However, to cover my backside a bit as I've pretty much said the pound is likely to fall, there is a huge amount of uncertainty in the market with the Fed's Bailout plan. I can't see how Cable is likely to react should Congress agree to it or not or even part of it. Maybe somebody else can help out here.

Crazy times!

NICE POST JAYDEE.

CUT THE TRADE....There was no plan to get in the trade..therefore no plan to get out or cut your losses if it went bad...Take the loss ...If there is no plan there is NO trade.of course it may turn round as soon as you cut it, or it could double (or more) your loss as it stands...better to live with the loss.....just my opinion of trading SORRY..

Hey,Lindsey...

This proverb goes with "option of A)"

"Cut your losses and let your profits run."

Always you should have level/point at which you know that you were dead-wrong and that now would be the time to get out of the market.Lick your wounds and say to your self that it could be even worse than that which is true.
Also i do not know how large is your account but without stop loss order you could face with margin call and no one would like to wipe out her/his account.

"or B)"

Hope,greed,fear....There is also proverb in mine country regarding the hope..literally it says "Hope is the bitch"
This all are states of mind-emotions which we do not want to have in trading.So holding your position just because of hope and specially whit your degree of knowledge about trading and market is same as GAMBLING
I am not an old trading bump(learning for just 3 months),but believe me you do not want to gamble with market.

So make your own decision.I would not like to tell you do this or that.Who am i to tell you that??
I think that from mine reply you can see what I WOULD DO.
But it is just me.
If you like trading game learn,learn,learn,learn and then learn a bit more.Get market experience for free,on demo account.Beginner mistakes must not be costly.
Just mine 2pips!
Best regards,
VTK

Hi all and thank you for taking the time to answer me in so much detail.

I think I have made myself sound as if I were actually trying to make a profit from the trade itself and if so I have misled you. The dollars were purchased to buy a US property to refurbish and sell on, the profit was meant to come from the property side, I only really considered the currency rate as in how it affected the outlay to purchase the property, and whether I would bring profits back to the UK or leave then in the US to reinvest in another property at point of sale.

Happily I think I may have found a way to salvage the property deal, so what I have done is extended the maturity date for two months, allowing me time to either get the deal through or to hopefully sell at a more favourable rate if this isn't possible. I know that if the dollar drops I could end up losing two or three times the amount of loss I would make now, but fortunately I am in a position to be able to stand that if I had to (although obviously i don't want to!). So yes still gambling I guess but more on the deal going through than the markets, and if it doesn't and the rate are bad I will have learned a very valuable lesson... I need a better understanding of currency markets if I am trading overseas!

On this note, I spent most of last night on the Internet trying to make head or tail of what makes markets move and movement indicators .... I have to say that I may have come into this inadvertently but being from an accounting background and loving numbers I could seriously get the bug. Bearing in mind that I don't have an account, I have only known what pips are for a few hours and I have decided I am seriously lacking in Economics 101, can anyone recommend good tutorials, websites etc, and a good demo account?

Hope is the bitch, I like that...if more people realised that about property we wouldn't have bubbles bursting everywhere!

Thanks again

Lindsey

Lindsey said:

Hello to all,

I have inadvertently stumbled into Forex due to purchasing USD last week for a rock solid deal which has now fallen through. Now I have the options of A) selling now and losing £1K+ on exchange rate, or B) holding and selling on in the hope that the USD will rally against the GBP, bearing in mind that the funds I have tied up are also costing me money in interest.

I've worked out already that you need a crystal ball to say what will happen at the moment, but I would welcome anyone's views on short term market movement and what you would do in this situation.

Many thanks

Lindsey

PS I think I am starting to get a definite fascination with forex so i am off to read through other posts!

Click to expand...

what would i do in this situation :

my answer would be obviously hidden in the question, I could either lose a small amount now or 'hope' that the market does what i want and pay for the previlidge of excericising my 'opinion'

I definately wouldn't hold onto something which was based upon hope and liability.

and the first option is in absolute agreement with the axiom of cutting your losses short.

so if you want to get into trading forex, etc....then you are just about to have your first lesson in trading.

the question really is what would you do in this situation?