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| A watched
exchange rate never boils! |
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| Your Mother
was right wasn’t she and what’s more, the same rule applies to so many
other aspects of your life. No matter how many times you just touch
the paint to see if it’s wet, it will be and you’ll leave an immovable
fingerprint. It’ll dry the instant you leave it alone. And no self respecting
Taxi will drive up a street when you are scanning the horizon in search
of an orange light; they wait until you look the other way and then they
scoot up alongside you so that you see them just too late to grab the cabbies
attention. |
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| Currency exchange
rates are just the same. When I started trading currencies for a living
I realised very quickly that exchange rates are just like that cursed pan
of water. |
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| All the time
you sit and watch the exchange rate, willing it to move in your favour,
it will do a fantastic donkey impression; digging its heels in and refusing
to budge and inch.However, if you walk away for a moment to watch a kettle
boil or check the wet paint or you fall asleep from abject boredom, the
rate will whiplash all over the place until you return; at which point
it will settle back into the previous narrow channel and drive you bananas
all over again. |
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| It’s
an age old problem and one that actually gets worse the more experienced
you are. There have been too many times when I know the direction the market
will take but it resolutely refuses to do so until I look the other way. |
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| If you are
migrating, the exchange rate can prove to be almost as frustrating as waiting
for a visa; especially if you have left everything until the last minute
and have to exchange your funds at almost any price. There is a way to
avoid this annoyance and it is a two part strategy. |
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| Step one is
to start thinking about your currency and make plans plenty of time in
advance of your move. Last minute trades are notoriously ‘kettle like’
in
that the exchange rate will sit as flat as a pancake until you have to
exchange; only spiking up the instant you have completed your transaction
to the exchange rate you were desperate for. |
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| If you have
ever looked at a chart of exchange rates, you’ll be aware that they rise
and fall constantly and sometimes quite alarmingly and that provides all
sorts of opportunities to catch the exchange rate you want as long as you
allow the market gyrations to bring the exchange rate to you. And that
can take a day, a week, a month or sometimes years. |
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| It may not
get there at all of course and this is why a currency specialist is a ‘must-have’
accessory in this respect. Someone with the experience of sitting in the
market watching the rates all day can make a massive difference to your
understanding of what is achievable. There is nothing worse than watching
the exchange rate rise to within a whisker of the rate you have targeted
only to drop like a stone because you were just a tad too ambitious. |
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| Early discussion
of your requirements will ensure that you aim high but only high enough
to get the best of the market without missing out. |
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| And once you
have chosen your target price, don’t sit up all night watching the rates,
(remember
the kettle) try placing an order with a currency specialist to capture
the best exchange rate for you. This type of order is called a ‘Limit’
order; something that you may will be familiar with if you have traded
in shares. It is a great tool used generally for speculators to capture
the highest expected price for their shares or currency but it has been
adopted by specialist currency dealers as a means for companies and private
clients to buy at the right price for the physical exchange of funds rather
than for speculation. |
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| I would urge
you to use these tools of the trade in line with market analysis to determine
a sensible exchange rate to target. It is pointless placing an order to
buy US Dollars against the pound at $2.20 when the market is clearly unlikely
to get to that level. This is a wasted opportunity and a waste of the trader’s
time as well. |
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| ‘That’s all
very well’, you might say, ‘but I won’t know how much I have to convert
for months yet.’ That shouldn’t stop you planning your currency exchange.
Of course if you know the amount you have to convert, it does make life
easier but even if you only have a vague idea of the amount involved, you
can still protect yourself against the rigours of the exchange rates. |
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| It is often
better to get the best exchange rate for a proportion of your funds rather
than missing out completely just because you haven’t finalised the exact
quantity. You can always buy more of the currency you need but it can be
a hassle if you overbook. The best option is to buy half or three quarters
of your needs, topping up the amount once the exact amounts are clear. |
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| Of course
the exchange rate might reach your chosen level well before you are ready
to actually exchange your funds. That is a common occurrence and easily
overcome. Your dealer should be able to offer you a forward contract to
secure that exchange rate but delay the exchange of funds until your money
is free. You will be asked to provide a deposit against this contract but
that is a part payment taken off the balance payable when the contract
is settled in full. |
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| In essence,
early planning and the use of all the information and market tolls at your
disposal will make a great difference to the wealth you arrive with in
your new home. Thankfully, as I have found so many times, once migrants
understand the advantages of using the services of a specialist, they can
relax and scrub currency off their ‘To Do’ list; along with watching kettles
and touching wet paint. |
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