STUDENTS STEP INTO THE TRADING ROOM

UNC Charlotte students no longer have to rely on their imaginations to guess what goes on in the trading rooms of major banks and financial organizations. Now they can step inside a third-floor classroom in the Friday Building. On Tuesday, the university will formally dedicate the new Belk College of Business' financial trading room. It has many of the same tools used by professional money managers. There's a stock ticker. Twenty-five Sun Ray computers for

Diana Clement: Try your hand at forex trading

It's the world's largest, most liquid, and most influential financial market: foreign exchange (forex). It's a market that virtually everyone who has ever left the country has traded in. Increasingly, private investors are using the market to try to make a profit.

At a basic level forex trading is quite simple. You have a hunch, or even better some research suggesting, say, that the kiwi dollar is going to fall against the US dollar or another currency. You buy that other currency and when the kiwi falls, you buy it back again and take a profit along the way.

A UK company - opened its New Zealand offices it was surprised just how popular foreign exchange trading was with Kiwis. In the UK, says CMC's general manager for New Zealand, Sargon Elias, about 5 per cent of the company's business is in foreign exchange. "Here about 35 per cent to 40 per cent of clients want to do forex only."

Proponents of forex trading say it's not as risky as some other investments. OM Financial's head of derivatives, Kevin O'Sullivan, says equities can be more volatile than currencies and cites the tumble that Telecom's share price took when the Government announced the unbundling of the local loop.

Sensible forex traders, he says, use systems to stop themselves losing too much such as stop loss orders.

"People who manage their risk know from the moment they do a trade what their worst case scenario is and they know when they are going to take a loss," says O'Sullivan.

Conversely, many traders get out of a market too soon once they've made a profit. "People sold the kiwi at 76c (against the US dollar) and they brought it back at 69c. Three months later it went to 59c." To make a success of forex trading you need to follow foreign exchange and economic news very closely indeed. Trading platforms often provide free news and economic data updates. There are also forex news feeds and data on websites such as sharechat.co.nz.

Just how careful you need to be with forex trading was demonstrated over the past week with the kiwi dollar defying gravity and bouncing above 65c to the surprise of many.

Investors had been shorting the currency, says Sullivan, betting on it going lower. As a result, some people are nursing losses of $5000 to $10,000, and even up to $100,000.

It is, of course, possible to walk down to your nearest bank branch with a wodge of New Zealand dollars in your pocket and trade them in for greenbacks, which you then stuff under your mattress.

But increasingly private individuals are treating forex as a commodity that they trade online or through a broker. Those who want to make (or lose) even more money can trade on margin - which means they effectively borrow money and trade that, thus amplifying their gains or losses on their capital.