Nguyen Le Kha, chief executive officer of Sigma Financial Consulting firm, underscores the need to equip the community with financial knowledge as this will contribute to the economic development of Vietnam. The Saigon Times Daily spoke with Kha about currency trading and related issues. Excerpts:
Financial knowledge is key
Nguyen Le Kha Nguyen Le Kha, chief executive officer of Sigma Financial Consulting firm, underscores the need to equip the community with financial knowledge as this will contribute to the economic development of Vietnam. The Saigon Times Daily spoke with Kha about currency trading and related issues. Excerpts:
The Saigon Times Daily: Can you share how currency trading works in Vietnam?
- Nguyen Le Kha: All banks in Vietnam run this business. But individuals who want to enter this market must go through a consulting company. That being said, every exchange transaction must be made via a bank.
Are there many risks?
- Of course there are risks. However, what makes a difference is to know how to minimize risks and to do so, one must be educated.
So should currency trading be encouraged?
- At present, Vietnam mostly exports low value-added products and buys technologies from overseas, bringing about low economic efficiency. We have to learn to use the currency correctly to generate more money from money. We should learn from Singapore, a country that is boosting high value-added industries such as financial services.
The government should promote a common playground of forex trading for both local and foreign investors, advocating them to invest in the financial sector.
The recent financial crisis has spawned enormous troubles to countries worldwide. If Vietnam is to promote currency trading, will this exaggerate its economic burden?
- Any business has its own risks. In agriculture, for example, planting coffee means risking against nature (natural disasters) and the market (price crashes). Again, only educating investors with means to anticipate and limit risks will make things work.
So you mean everything must start with studying. How about capital?
- Currency trading does not require a large amount of capital; even only VND2 million will suffice. If you do not have capital but are competent, others might be willing to lend you the money. So the key is to have adequate knowledge.
Have you ever lost money in currency trading?
- Yes. I first learned of this form of trading when working as an interpreter. Then, I was able to meet with the billionaires and millionaires from the United States and Britain; they guided me and gave me advice. I also had a chance to learn more about it during my study in the U.S. So I decided to venture into currency trading. At the time, the lack of knowledge brought me a lot of losses. That’s why I’ve kept emphasizing that you need knowledge before venturing into anything. What makes currency trading special is that anyone can learn to trade at no cost via virtual transactions available on the internet.
So I started my first investment in 2004 and lost two billion dong. I treated it as a tuition fee. As time passes, with the experience that I have built up and advice from others, I know the right time to stop. Before I did not know when to stop; the more I lost, the more I invested to compensate for it. And so the loss kept escalating. The market does not function accordingly to anyone’s wish. This is similar to the stock market. We need to keep in mind the price floor at which we will disinvest. We must know when to stop to look back and restructure our investment portfolios.
And then what happened?
- Generally, now I stand more chance to gain than lose. And when losses occur, I try to minimize the losses instead of pouring in more money. I allow myself to perform only two to three transactions per day. Previously, I made nearly one hundred transactions every day because the currency market operates 24/24, unlike the stock market that runs only in the morning. I would like to remind you that once we make a mistake, we will keep making more mistakes. And the first mistake anyone can make is not setting rules for herself or himself. There are Vietnamese banks that are severely hurt when trading currency. For example, in 2004, a bank lost US$33 million in this business alone.
Reported by Ngoc Tran