Currencies do often seem to have long-term trends. Trading on them works well until it doesn't. Since currencies move slowly, brokers can allow you to borrow

Currencies do often seem to have long-term trends. Trading on them works well until it doesn't. Since currencies move slowly, brokers can allow you to borrow much more than your capital to leverage it. It really is gambling, though, since it is zero-sum. At least with your money in stocks, you can hope for a long-term upward trend to balance out short-term fluctuations. Typical news stories: 1. Amateur currency traders in Japan, making a fortune until they don't. > Most of these accounts involve margin trading, in which investors place a cash deposit with a brokerage that allows them to borrow up to 20 or even 100 times their holdings for trading. http://www.nytimes.com/2007/09/16/business/worldbusiness/16housewives.html http://www.nytimes.com/2007/09/16/business/worldbusiness/16h... 2. A similar story in Europe, when the Swiss dropped their currency peg > Europe has no caps in place, in contrast to other jurisdictions, such as the US, Hong Kong and Singapore. Clients deposit money with trading venues and use this as collateral to borrow a much larger amount and magnify their trading positions. In London it is usually 100-200 times the amount deposited into a retail account, but can be upwards of 500 times. http://www.ft.com/cms/s/0/8676c6c6-9d97-11e4-8946-00144feabdc0.html http://www.ft.com/cms/s/0/8676c6c6-9d97-11e4-8946-00144feabd...