What the financial markets give with one hand, they often take away with the other.

This is no surprise to longtime investors. But right now we see a sharp reminder of how this can affect people who invest in foreign securities: Fluctuations in currency exchange rates can turn gains into losses, upending even the smartest strategy.

Of course, it also can do the opposite, turning losses into gains. But we’re not in one of those happy periods just now.

Take, for example, the Dow Jones Stoxx 50, an index of 50 European blue-chip stocks. From the end of last year, it was up about 2.4 percent. But for investors using dollars, it had lost 4.5 percent once currency fluctuations were taken into account.

Had you invested in that index last year, your dollars would have been converted into euros, which would have been used to buy the stocks. If you’d sold the stocks last week, you’d have received euros, which would then have been exchanged for dollars.

Since the beginning of the year, the euro has fallen about 7 percent relative to the dollar. So the euros you received from the sale would have bought fewer dollars than they would have in December, turning your “profit” into a loss.

The same thing would have happened with many other European stocks. The CAC 40 Index of French stocks has gained nearly 5 percent this year, but it lost 2.2 percent in dollar terms. The 4.4 percent gain in the OMX Stockholm 30 Index of Swedish stocks turns into a 5 percent loss with exchange rates considered.

International currency markets are enormous, with speculators trading trillions of dollars worth of various currencies every week. The changes in exchange rates that result are notoriously fickle, and often quite mysterious even to the pros.

During the first three months of this year, for example, the holding company Berkshire Hathaway lost $310 million when its chief, legendary investor Warren Buffett, bet incorrectly that the dollar would fall in value.

Many experts recommend that small U.S. investors keep 10 percent, 20 percent – even 30 or 40 percent – of their stock portfolios in foreign and international issues.

These are seen as a way to diversify a portfolio, to reduce the sharp up and down swings. That’s because factors moving stocks in other countries are often different from those driving stocks in the United States.

Many experts also believe that less-developed foreign economies have the potential for fast growth, making some foreign stocks more promising than American ones.

But foreign stocks pose many risks different from those of U.S. stocks. Foreign accounting standards often are quite different – typically looser. Compared to the United States, many countries have shaky economies, more corruption and political instability and less stringent requirements for public disclosure of information that can affect share prices.

Add currency fluctuations and foreign investing can be very hazardous.

Institutional investors betting millions or billions can offset some of the currency risk with complex maneuvers using futures contracts, which work like insurance policies guaranteeing set exchange rates for a given period. But few small investors have the knowledge or resources for this.

The solution?

First, use broad diversification to spread your risks. Don’t bet on a single stock, or even the stocks of a single foreign country. Use mutual funds to divide your eggs among many baskets.

Second, invest for the long-term. Over long periods, the temporary ups and downs of exchange rates often even out.

Finally, keep in mind that any time you reach for bigger-than-usual returns, you’re likely to face greater risks. Figure what portion of your portfolio you can afford to put into risky investments, and don’t let your foreign-stock holdings get bigger than that.