April, when you talk about foreign currencies are you talking about buying and selling currencies to make money, like you would in the stock market? I’m thinking we haven’t understood your question correctly.
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Confusion over financial subjects
- Thread starter AprilR
- Start date
AprilR
Well-Known Member
Yes, that is right. I am sorry i did not explain properly.
I also mentioned budgeting, because i am unemployed and the only way for me to pay my bills is via my savings.
Whenever I feel confused by a math problem, I try to do the same operations just using single-digit numbers. For me, that makes it much easier to see the relationships and verify that my method is correct. Then I plug in the numbers of I need to calculate and process them the same way.
For someone without any background knowledge or experience, FOREX trading is gambling.
The big players (banks etc) in FOREX have resources that normal individuals can't match, which makes short-term trading difficult for smaller players.
In theory an individual can buy and sit on a currency that appreciates over time, but if that appreciation is predictable, the big players will have better information, and react faster. If it's not predictable, it's gambling.
Note that banks can earn interest on the majority or their (electronic) currency holdings. You may not be able to do that.
This is just my personal opinion, but trading in foreign currencies is very complicated and would be considered advanced. I would say, learn how to do your budget first. That is basic.
There are some apps that can help you.
Goodbudget
Nerd Wallet
Every Dollar
Goodbudget is the simplist, I think. There are many more. I used Goodbudget for about a year.
For more advanced budgeting, I recommend Dave Ramsey's book Total Money Makeover. He explains things pretty well. Suze Orman also writes a popular budget book, but I don't know anything about it.
I once went into debt one time before, when I was paying for a lawyer in the custody battle over my foster daughter. I got out of it using Dave Ramsey's book and got out of it then and am confident I can find some way out of it this time too.
Start simple.
Okay... To everyone in this thread with "get rich quickly" hopes: You should be aware of, and understand, concepts like the random walk, efficient market theory, alpha decay, and arbitrage opportunity elimination.
About the subject itself: Currency trading (and any kind of trading actually) should be forgotten if you don't have studies in finance and macro economics. Novices should stick to index funds, and when gained some accounting skills, then you can advance to some direct stock market picking as long term investment (because it is a good assumption that you can't beat the markets and that stocks are more or less correctly priced and you can't know for sure which way it really is). No derivatives, they also require some actual skills and understanding.
About the subject itself: Currency trading (and any kind of trading actually) should be forgotten if you don't have studies in finance and macro economics. Novices should stick to index funds, and when gained some accounting skills, then you can advance to some direct stock market picking as long term investment (because it is a good assumption that you can't beat the markets and that stocks are more or less correctly priced and you can't know for sure which way it really is). No derivatives, they also require some actual skills and understanding.
AprilR
Well-Known Member
I am not trying to get rich quickly. I am trying to make savings because inflation rate is so high in my country putting money in a bank makes it disappear. I am also unemployed and i have bills to pay.
Almost everyone i know invests in this stuff, including my parents who have no education about finance whatsoever.
I made this thread because i thought maybe this is related to autism, difficulty understanding abstract subjects in particular. I thought maybe other people have an advice to understand such things better
Almost everyone i know invests in this stuff, including my parents who have no education about finance whatsoever.
I made this thread because i thought maybe this is related to autism, difficulty understanding abstract subjects in particular. I thought maybe other people have an advice to understand such things better
That is not a problem many of us have. I’m sorry you’re in a country with uncontrolled inflation.
You will still need to learn to budget.
Now, if I understand the foreign currency trading question, your goal is to purchase a more stable currency so your savings doesn’t dwindle away on its own. I think this is different than currency trading to make money.
My guess is - based on the amount of knowledge in my little finger - is you want to choose and buy a stable currency and keep your savings there. I suspect there are laws pertaining to how you do this. And it also is complicated by how do you store your foreign currency. Are there banks that fo that? Probably.
Have you tried asking ChatGPT? Not as something to rely on but maybe to give you some ideas to work with?
Trading and investing are very different things.
If you're in a situation where your country is actively damaging its own economy (**), and you want to protect existing savings, moving them to a different currency would make sense.
But countries doing that usually have quite strict controls to make this difficult or impossible for their own citizens, because it has additional negative effects on the economy.
If you're in a situation like that, you should explain.
If you can do math at a non-trivial level, you're capable of working out how money works.
It's often taught very badly though, especially in the kind of places that mismanage their economy, or are trying hard to fix old problems (***).
Your posts suggest you'd benefit from some education in the basics.
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(**) There are some current examples, but every time such a thing happens it's due to political choices, most of which are controversial, so I won't provide any.
(***) There's at least one ongoing case of this in the world at the moment. It's always "economically uncomfortable" for some citizens.
If April is anything like me, when confronted with a complicated problem, I usually don't even know the words, or if I use the words, I use them incorrectly. Investing? Trading? Who knows? Not me. This has been shown to me in spades as I try to do home repairs and the people who know about home repairs don't know what I am talking about because I use the wrong words.
I think we, in general, tend to assume we are all in the the wider British countries (England, US, Canada, Australia) and that is our error.
I know there are people here from under represented countries, but I can forget that and we need to remember that. For that matter, I don't know where Hypnalis is from. Your posts are extremely useful. Thank you for that. I just felt compelled to stick up for April.
Familiar thing to me. I can be an expert on a matter, but I just don't remember terminology or recall the terms, and tend to mix terms when trying to talk in normal pace. It is like I am more tuned to remember concepts rather than words. Converting a concept to words is like making an extra effort to translate from one language to other.
I don't understand how Boogs and others can write a wall of text in just couple of minutes (I mean, I can't do that even in my native language which is not English). I always need time to pull my thoughts together before producing words, and after that comes endless proof-reading and doubting if I am making myself clear
Yeah. I can't promise that I'll remain active enough to be able to put any serious effort on this, but I can try.
Back to basic question:
What is really needed here? Basics of financial literacy (how to handle money in such way that it lasts to next payday), or some easy-to-remember rules of thumb to implement such financial literacy in a concrete way (like: "when changing currency X to currency Y, google 'X Y rate', higher number is better giving more of Y for one X -> when number drops, it is time to switch Y back to X")?
Is there some particular concrete example situation that we can analyze and see how to make it more understandable?
It is possible to be good at calculating even complex sets of equations with numbers (arithmetic), but not being able to understand how and why different equations relate to each other (algebra). I love to keep telling people that when I was a child, it took me too long time to realize that division and fractional numbers are actually same thing while I was still able to calculate decimal numbers out from those two fluently
This explains me better than I did. When I put the work into figuring out something (that is not a special interest), my brain records the answer, but not the work to get there. (I hated the teachers who wanted you to show your work. My work was in my brain.) Then someone will challenge me and I don't remember why this way is best for me. It just is.
I'm great at straight money in/out, or fixed interest rates. Anything I can make a spreadsheet for, I will.
But when it comes to any sort of risk taking, I'm lost. Like stocks and things. To me it's as good as gambling, which I consider the same as throwing my money in the shredder.
But when it comes to any sort of risk taking, I'm lost. Like stocks and things. To me it's as good as gambling, which I consider the same as throwing my money in the shredder.
Oh boy, hope nobody is mad at me for not going thru posts, but l am wiped out today. My quick solution, go online. Find conversion websites that give you value for that day. Go online, find a calculator that figures out interest. I can sorta figure interest rates without too much thought, however l do double check online to back myself up. Maybe this just presents too much for you to do on a regular day. Plan a day to figure something out, sit down , use online resources until you find an answer. But l will go back read posts for the forum's input.
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I’m not sure if I understood the questions.
I don’t know how to calculate foreign money conversion rates and I don’t think your parents do, unless they are working for a bank at a middle management level.
As for the interest rate, each bank has its own interest rate, and how they establish it is not the customers’ concern. I could go into details describing how they come up with their interest rates, but no one would ask customers to calculate them.
You said that you were good at math but these concepts are frustrating for you. This tells me one thing – these simple concepts were not presented to you properly; your lack of understanding is not your fault. Your parents, probably, know what they are talking about, but their teaching skills are not very good. Not all people are good teachers even if they are top-notch experts in their field.
Im on disability and i struggle with understanding money so much. Ive had to talk to my thrapist a lot lately about how to handle things in life involving money. Money is one of my biggest anxiety triggers. I actually think conversion currency is the one part that does make sense to me. Its simple enough that google will immediately give me the answer if I search for it.
I don't care how conversion rate is being established because it has nothing to do with my occupation. I guess that in your line of work you don't have to deal with it, either, so there is no reason for being anxious about it.
