So you have wanted to trade currencies, but the whole FOREX world has you confounded? Or you like the idea, but the fact that banks and governments are involved has you scared out of your wits!
Here are a couple of options for ones that want to take advantage of the opportunities in foreign currency without the huge learning curve to learn the FOREX market.
Maybe the pairs have you stumped. Which pair to trade and when? Can't I just park some of my money in a Foreign currency and not have it all in USD? We will get to that in a minute, but first let's cover a simple way to trade and invest in currency.
You can now use ETFs (exchange traded funds) to trade or invest in currencies through your current stock brokerage account. Many brokers don't know much about these because they focus on other areas, so don't waste your time asking them too many questions.
But, you can use ETFs to buy many of the world's major currencies. You can buy ETFs that track the Euro (stock symbol FXE), the British pound (FXB), the Australian dollar (FXA), the Japanese yen (FXY), the Swiss franc (FXF), and the Canadian dollar (FXC).
There are even ETFs for some of the smaller currencies. For instance you can play Sweden's krona (FXS) and even the Mexican peso (FXM). And, more currency ETFs are coming out all the time. There are even ETFs that cover a basket of currencies, like the Asian (check the Yahoo Finance web site for more) currencies.
Instead of having to open up a FOREX account, you can buy these ETFs right from your Scottrade (my favorite), Ameritrade, or any stock brokerage account (Just ask Chuck).
There are a couple of drawbacks to investing in currency ETFs. First, ETFs don't provide the leverage you can get with a Forex account (which can be good since leverage can also mean larger losses). Second, you will need to pay commissions as you would on your stock trades. This might be considered a disadvantage for some since one of the big selling points with FOREX is the supposed "No Commissions" (but like everything in the investment world, they will get fees out of you in other ways).
If you do your homework, you could be trading currencies right there in your E*Trade or Charles Schwab account. With all the talk of the USD dropping into oblivion, it might be good to park some of your money in other currencies!
One other way you can do that is to look into the options they have for you at Everbank.
Everbank is an online bank that has some truly innovative products. They offer several accounts that are held in, or profit from foreign currency. Most of these are in the form of Certificates of Deposit (CD's) and may or may not offer the protection of FDIC insurance.
There you have it, two simple ways to invest in currencies without opening up a FOREX account, or leaving the country!