Forex Trading can be very profitable as I have stated if done properly and if you are willing to look at the whole picture and understand and watch the economic and political changes of a country and then invest in currency pairs at the right moment. It is key to have a diversified investment portfolio, so many invest in stock and bonds in foreign countries which can be very profitable. You however have to understand when investing in foreign stocks and bonds that the exchange rates can impact significantly the return on your investments overseas, so many hedge their foreign stock and bond investments by investing in currency futures and forwards and options. In these tougher economic times where the S&P 500 has fallen almost 40% from January 2000 to June 2009, many investors are playing it safe and restricting their trades to US Stocks though there are still huge profits to be made in foreign stocks and currency investments.

In these changing economic period during the same time frame from January 2000 to June 2009 the Canadian S&P/TSX out performed the S&P 500 by 75.7% or about 7.5% annually. The main reasons for the strong performance of the Canadian S&P is rising commodity prices and strong and thriving economy. The investors who took the initiative and invested in Canadian market during this period did much betters than their fellow US investors who kept investments locally. In terms of total return in US Dollars the S&P/TSX gained over 63.2% and the total returns including dividends was 98.3% or 7.5% annually, or to simplify things Canadian S&P outperformed the S&P 500 by 124.3% cumulatively or a total of 10.3% annually which bodes well for those who invested abroad. For those who are not really good at math, if you invested $10,000 form from January 2000 to June 2009 in S&P your investment would have reduced to $7,400, and conversely if you had invested in the Canadian S&P you same $10,000 from January 2000 to June 2009 would have appreciated to $19,830 which is a huge difference and shows you the benefit of foreign investment diversification.

You may ask would hedging have been helpful during the time frame from January 2000 to June 2009, however with many investors vested in foreign investments due to weak US currency this would not have been a great time to hedge their investments