Most currency traders do not bother with visiting the country whose currency they are speculating i, but I go to Brazil often and consider my observations important for my own trades. My business needs require frequent forex between gold, USD, silver, BRL, and occasionally Euro and CHF.

If I am on the right side of the trade, then Brazil/USD currency trading can be a screaming source of profits.

Here is why the BRL offers such outsized returns:

Brazil's Real vs. U.S. Dollar Foreign Exchange Rate

Unlike China, where much of the growth is financed by zombie banks, Brazil’s banks have relatively more solid balance sheets, along with more stable producers to invest in. With the agricultural supply tightness across almost all soft commodities – witness the sugar and rice escalations – Brazil’s banks are funding ag, as opposed to another narrow margin, oversupplied electronics or widget manufacturer in China. Besides, the BRL has so much volatility relative to the USD, there are profits to be made coming and going.

The Yuan/USD peg keeps the Asian behemoth out of the forex spec play. Brazil’s Real is definitely an exotic, and can be a tricky one to find a counter party on, but if you can, there is both a long term and short term trading opportunity of year making profit potential.
I have both won and lost on the BRL trade, depending on my business needs in Brazil. As it stands, I am heavily long the BRL and see no near term reasons to change my mind.

So long as the world continues to eat, Brazil’s currency will continue to escalate. Brazil is becoming the margin producer of many food items, while production across both N. America, Europe, and Asia continues to suffer from weather dislocations.

For the gunslingers, the BRL/USD trade in the forex trading market is a prime opportunity to ride the fall of the USD, and rise of a new powerful currency. For the longer term investor, ETF’s that invest in Brazil or Ag commodities will bring much the same trend, though without the day to day profit potential.

A profitable trading day to all!

Where it not for lousy trading charges tagged onto the minor currencies,  I prefer trading the exotic currencies. Singapore offers a strong currency that can be considered in many ways like buying Chinese Yuan.   Much more commonly traded though are the regulars – GBP, Swiss, Canadian, Yen, etc.

While the moves have been good in the majors, they are more challenging to predict because the manipulations from central banks come in huge waves. The minor currencies are less likely to experience such a coordinated attack and tend to prewarn much more.

The best trade against the USD though has been gold. We cannot get the leverage – that makes forex trading like cocaine addiction – when going into a gold/USD swap.  My early Forex trades employed 50:1 leverage.  Insanely stupid at the time -even while I did have some seriously profitable trades, I have dialed back to 10-20x leverage in my Forex trades and much prefer Options on ETF’s with only 2:1 margin. The trend is much more predictable while the time line of the trade is much longer, risks are reduced.

Right now I am setting up a few Forex trades. I went long Canadian and already banked good profits. Long Brazilian Real which does not follow the Yen line at all on moves against the dollar. The Real moves to it’s own tune, but the trend is probably to correct an over valued position then rocket higher shortly.  Lastly, the Aussie central bank is putting the interest rate screws to the system and leaving the Fed stuck in the starting block.

Borrow USD and buy almost anything else for an easy 3% guaranteed profit. Juice this with 20:1 leverage and the former Yen carry trade has been supplanted by three other letters: USD carry trade.

Viva la financial engineering!!