Gregory DeVictor asked:


The foreign exchange market, or Forex market, is an around-the-clock cash market where the currencies of nations are bought and sold. Forex trading is always done in currency pairs. For example, you buy Euros, paying with U.S. Dollars, or you sell Canadian Dollars for Japanese Yen. The value of your Forex investment increases or decreases because of changes in the currency exchange rate or forex rate. These changes can occur at any time, and often result from economic and political events. Using a hypothetical Forex investment, this article shows you how to calculate profit and loss in Forex trading .

To understand how the exchange rate can affect the value of your Forex investment, you need to learn how to read a Forex quote. forex quotes are always expressed in pairs. In the following example, your pair of currencies are the U.S. Dollar (USD) and the Canadian Dollar (CAD). The Forex quote, USD/CAD = 170.50, means that one U.S. Dollar is equal to 170.50 Canadian Dollars. The currency to the left of the “/” (USD in this example) is referred to as base currency and its value is always 1. The currency to the right of the “/” (CAD in this example) is referred to as the counter currency. In this example, one USD can buy 170.50 CAD, because it is the stronger of the two currencies. The U.S. Dollar is regarded as the central currency of the Forex market, and it is always treated as the base currency in any Forex quote where it is one of the pairs.

Let’s go now to our hypothetical forex investment to show how you can profit or come up short in Forex trading. In this example, your pair of currencies are the U.S. Dollar and the Euro. The Forex rate of EUR/USD on August 26, 2003 was 1.0857, which means that one U.S. Dollar was equal to 1.0857 Euros, and was the weaker of the two currencies. If you had bought 1,000 Euros on that date, you would have paid $1,085.70.

One year later, the Forex rate of EUR/USD was 1.2083, which means that the value of the Euro increased in relation to the USD. If you had sold the 1,000 Euros one year later, you would have received $1,208.30, which is $122.60 more than what you had started with one year earlier.

Conversely, if the Forex rate one year later had been EUR/USD = 1.0576, the value of the Euro would have weakened in relation to the U.S. Dollar. If you had sold the 1,000 Euros at this forex rate, you would have received $1,057.60, which is $28.10 less than what you had started out with one year earlier.

As with stocks and mutual funds, there is risk in Forex trading. The risk results from fluctuations in the currency exchange market. Investments with a low level of risk (for example, long-term government bonds) often have a low return. Investments with a higher level of risk (for example, forex trading) can have a higher return. To achieve your short-term and long-term financial goals, you need to balance security and risk to the comfort level that works best for you.



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Gregory DeVictor asked:


The forex trading market is an around-the-clock cash market where the currencies of nations are bought and sold, typically via brokers. For example, you buy Euros, paying with U.S. Dollars, or you sell Canadian Dollars for Japanese Yen. forex trading market conditions can change at any moment in response to real-time events, such as political unrest or the rate of inflation. The purpose of this article is to give you an introduction to common Forex trading terms and their definitions.

Ask Price: The ask price is the price you can buy at.

Base Currency: The currency to the left of the / in a Forex quote is the base currency. Its value is always 1. In the Forex quote, EUR/USD = 1.3489, EUR is the base currency.

Bid/Ask Spread: The bid/ask spread or simply spread is the “distance” between the bid and ask prices. This spread is usually expressed in pips.

Bid Price: The bid price is the price you can sell at.

Counter Currency: The currency to the right of the / in a Forex quote is the counter currency. In the forex quote, EUR/USD = 1.3489, USD is the counter currency.

Forex Deal: The purchase or sale of a currency.

Forex Quote: Forex quotes are always expressed in pairs. In the following example, your “pair” of currencies are the U.S. Dollar (USD) and the Euro (EUR). The forex quote, EUR/USD = 1.3489, means that one Euro is equal to 1.3489 U.S. dollars.

Fundamental Analysis: A fundamental analysis uses economic and political factors, such as housing starts, the unemployment rate, or inflation, as a means of predicting currency movements. Fundamental analysis is concerned with the reasons for currency movements.

Long Position: A long position is a market position that appreciates in value if the market price increases.

Lot: 1 lot is equal to 100,000 units of the base. Likewise, 2 lots are equal to 200,000 units of the base, 3 lots are equal to 300,000 units of the base, and so on.

Margin: Margin is referred to as the collateral needed to facilitate A forex deal. Usually, this is a very small portion of the entire deal, say 1% or 1:100. However, margin is a “double-edged sword.” Without the proper use of risk management tools (that is, stop-loss and take-profit orders), you can experience substantial losses as well as gains.

Open Position: When your Forex deal is running, you hold an “open position.”

Pip: The spread between the bid and ask prices.

Short Position: A short position is a market position that appreciates in value if the market price decreases.

Stop Loss Order: A market order to close a Forex position if or when losses reach a pre-set threshold.

Take Profit Order: A market order to close a Forex position if or when profits reach a pre-set threshold.

Technical Analysis: A technical analysis uses historical data as a means of predicting currency movements. The technical analyst believes that history repeats itself over and over again. Technical analysis is not concerned with the reasons for currency movements (for example, interest rates or inflation). Instead, it believes that historical currency movements are a clear indication of future ones.

As with stocks and mutual funds, there is risk in forex trading . The risk results from fluctuations in the currency exchange market. Investments with a low level of risk (for example, long-term government bonds) often have a low return. Investments with a higher level of risk (for example, forex trading) can have a higher return. To achieve your short-term and long-term financial goals, you need to balance security and risk to the comfort level that works best for you.



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acmarkets asked:


Forex market is operating through electronic network of banks, corporate firms and individuals without any central body and central exchange. Money from all over the world is used for trading in the forex market. For example, a broker might buy a pound when the pound to dollar ratio increases, then sell the pounds and buy back American dollars for a profit.

If you are entering to the currency trading it’s really difficult to decide the best currencies to trade with. Choosing the right currency is like wining the half battle. Prices of the currencies are influenced by several f actors like political conditions of the issuing country, social and economic conditions. Stability of the market, interest rates, inflation also plays a major role in the price raising or falling.

Each currency playing in the forex market is given its own three letter code that is used in the forex quotes. USD (U.S. dollars), GBP (United Kingdom pounds), JPY (Japanese yen), CAD (Canadian dollars), EUR (European euros), AUD (Australian dollars) and CHF (Swiss francs) are the top currencies used in the forex market. The prices of the foreign currency exchanges are specified in pairs by the forex quotes. By using a currency pair of U.S. dollars and Japanese Yens means that the first currency is the base (which is always at 1) and the second currency is the quote. The quote currency or second currency shows how much it costs to buy one unit of the USD, or base currency)

Apart from the above mentioned top currencies there are some other one’s which are not on the top but are able to make some good investments. CNY (China yuan), CZK (Czech koruna), HKD (Hong Kong dollar), HUF (Hungarian Forint), INR (Indian Rupee), KRW (Korean Won), MXN (Mexican Peso), PLN (Polish Zloty), SGD (Singapore dollar), ZAR (South African Rand), and THB (Thai Baht).

Try to concentrate on the major pairs as they are the top traded and therefore charting patterns and technical indicators are generally more reliable. These pairs have the tightest spreads. This is extremely important because you really don’t want to be trading pairs that have wide spreads simply because it limits your profits more and puts added pressure on you to make correct calls.

Another factor to be considered is location and time at which you are available for trading. For example, the GBP/USD is most active between around 8.00 GMT and 20.00 GMT, and if you are based in Australia due to time difference you would miss most of the action if you wanted to trade in the daytime.

It’s generally recommended to stick to three of the four major currency pairs – GBP/USD, EUR/USD and USD/JPY but the emerging currencies can also make profit if traded wisely. Sticking to the right currency and playing with it will let you high in the currency trading game and you will always touch the profit. There aren’t really any best currencies to trade; each pair is potentially very profitable.



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Mohammed Walji asked:


I bet you are well aware of the existent of FOREX trading nowadays. FOREX market exists wherever one currency is traded for another. FOREX, or Foreign Exchange Market, is generally works as an international currency exchange market. Investors and speculators are allowed to trade currencies from all around the world thru FOREX trading. Major currencies traded nowadays are United States dollars, Australian Dollars, Japanese Yens, British Pounds, Swiss Francs, Canadian Dollars, and the Euro Dollars.

FOREX is a very unique type of trading where traders are buying and selling ‘money’ in the same time. The trades are done in pairs, such as Euro/JPY, USD/CHF, and CAD/USD. It is the world largest trading market where an average of $1.9 trillion trades is done on a daily basis. The turnover rates in FOREX are nearly 30 times larger than the total volume of equity trades in United States.

Despite its large volume of trades done daily, forex is relative new to the publics nonetheless. It is only made available to publics in year 1998 where big sized inter-bank units are sliced into smaller pieces and offered to individual traders like you and me. Before that, FOREX is a game only for banks, multi national cooperation, and big currency dealers. Only those with large business size and strong financial background were permitted to trade foreign currencies.

As a matter of fact, large international banks are still the major traders in currency exchange market. Deutsche Bank is one of the top currency traders; along with other major banks like UBS, Citi Group, HSBC, Barclays, J. P. Morgan Chase, Coldman Sachs, ABN Amro, Morgan Stanley, and Merril Lynch; these banks are said to be responsible for more than 70% trades in currency market.

If you are new to FOREX trading, I bet the FOREX quotes will confuse you. USD/JPY 119.8, EUR/JPY 127.95, EUR/USD 1.2385/1.2390, and GBP/USD 1.7360/65 these figures are just too complicated.

While FOREX quotes might looks like Greeks to the new comers, the concept behind of it is simple. Currency quoted in pairs simply means the relative value compare to the other. Always remember, currency listed at first in a forex quote has a constant value of 1. If you see USD/JPY 119.8, this means 1 USD (the first currency listed has a constant value of 1) is equal to 119.8 Japanese Yens. The currency USD in our example is known as base currency; while we normally call the currency listed in the second as the counter.

When you are trading FOREX with currency dealer, the FOREX quotes might look a bit different from our previous example. Often, a two-sided quote, consisting of ‘bid’ and ‘ask’ price, is listed when dealing with currency brokers. For example, EUR/USD 1.2385/1.2390: 1.2385 is known as the ‘bid’ price while 1.2390 is commonly known as the ‘ask’ or ‘buy’ price. The ‘bid’ is the price at which you can sell the base currency; while the ‘ask’ is the price at which you can buy the base currency. As you study the numbers, you might realize that the two-sided currency price is quoted against you. Traders are forced to buy the currency in a higher price than the selling one. This is done because FOREX trades are done without any commission chargers. Thru quoting currency ‘bid & ask’ price differently in this way, the currency brokers are manage to make profit without charging their client commission fees directly.

Strategies in FOREX trading: Fundamental analysis and Technical analysis

Fundamental analysis refers to the study of the core underlying elements that influence the economy of a particular entity. As in FOREX trading, government policies, bank policies, natural disasters, and speculators mood are some of the fundamentals considered to predict the currency market trends. Fundamental FOREX traders will review a country economy’s situation base on these fundamental elements and respond accordingly. To gain max, fundamentalists often apply precise method to convert study’s results into accurate entry/exit price indicator.

Instead of reviewing on the fundamental issues, traders from technical side define market movement according to data purely generated from the market. The term ‘Technical’ is applied in all trading fields, from commodity stocks exchange to option trading, from FOREX to futures.

Generally, the purpose of technical analysis is to find potential price reversal or pivotal points. These points basically refer the change of market trends, which then indicates when to enter or exit from the market. It is important to know that as with any other techniques in your trading system, these technical analysis indicators could be used alone or with other indicators. Traders are always recommended to learn more different technical methods to analyze different market data because none of these techniques are 100% accurate and 100% foolproof. Taking example of the ‘price’ data and the ‘time’ data, which are widely used by FOREX trader. There are some techniques consider solely on the ‘price’ factor, while some solely rely on the ‘time’ factor. The fact is if you know both technical methods, you can take both price and time into consideration during estimating market future trends. This will of course then reduce the risks of losing money in FOREX market. Also, it would be wise if traders combine both technical and fundamental techniques when trading FOREX, as a country currency value depends a lot on fundamental variables such as war, change of national leaders, terrorism attacks, as well as natural disasters.

Without a doubt, FOREX is gaining its popularity fast against other kind of trading. No limited market access, no liquidity issues-after market hours, zero commission fees, low capital requirements with high leverage rates, and no restrictions on short selling — FOREX can be very beneficial to a variety of people. Like any other trading business, if you are new to it, best advice you can get is to learn and practice more before you test your ‘wings’. Forex trading course, seminars, eBooks, Internet, papers, all these are helpful to raise your confidence level before you trade with your real hard-earn dollars. Plan your investment wisely by investing first on yourself; you shall get your reward at the end of the road.



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Gregory Marathonge asked:


Forex involves the trading of currencies. It is the largest financial market in the world and has an estimated daily turnover of 1.9 trillion dollars. This turnover is larger than all the worlds’ stock market on any given day.

The forex market does not have a fixed exchange. The forex market is considered an over-the-counter (OTC) market. The forex market is completely electronic and trades are executed over the phone or on the Internet. Until 10 years ago the forex market was the preserve of large financial institutions. Now an ever-increasing amount of individual traders thanks to the advent of the Internet and an increasing amount of online forex brokers are trading forex.

Currencies are always traded in pairs. A typ ical pair would be EUR/USD (Euro over US dollars). The first currency is the base. The second currency is the counter currency. The pair can be viewed, as the amount of the secondary currency that is needed to buy 1 unit of the first currency. If you were to buy the above pair you would buy Euro and simultaneously selling US dollars. If the pair were sold the reverse would happen you would sell the Euro and buy the US dollar. This might sound confusing but simply think of the pair as one item and you are buying or selling one item. If you think the Euro will go up against the US dollar you buy the EUR/USD pair. If you think the EUR will decrease against the US dollar you sell the EUR/USD pair.

When you see forex quotes you will see two numbers. If we use the EUR/USD as an example you might see 1.2350/1.2355 the first number 1.2350 is the bid price and is the price traders are prepared to buy euros against the US dollar. The second number 1.2355 is the offer price and is the price traders are prepared to sell the EURO against the US dollar. The difference between the bid and the offer price is the called the spread. The spread for the major currencies is usually 3 to 5 pips (explained later).

The most common increment of currencies is the pip. If the EUR/USD moves from 1.2350 to 1.2351 that is one pip. A pip is the last decimal point of quotation. Most currencies quoted to 4 decimal points. The exception is the Yen, which is quoted to 2 decimal points eg 139.41. The term pip is just forex lingo so if a forex trader says the EURO has gone up 20 pips against the US dollar add 20 points to decimal part of EUR/USD pair.

Forex is traditionally traded in lots also referred to as contracts. The standard size for a lot is $100,000. In the last few a mini lot size of 10,000 dollars has been introduced and this has become increasing popular. Forex trading is leveraged with most forex brokers offering 1% margins. This means you can control one standard lot of $100000 with $1000. Typically you would need a minium of $2500 to open a standard size forex account.

A mini account can be opened with $300 with most forex brokers. To trade a one mini lot you need a margin of $100, which in turn controls $10000. If the currency goes up 1% and if you traded one mini lot of $10000 you would make $100 dollars or 100% of your original margin. forex trading is a very lucrative market to get into and it is suggested that traders new to forex trading trade a mini account for an extended amount of time. Trading a mini account is a low cost entry to the forex market, as only $300 is required to open an account. You can still make money while you become more experienced in forex trading. You can trade one mini lot until you have made your first $100 dollars then start trading 2 mini lots. As you gain more experience you can trade standard sized lots.

forex trading is becoming increasing popular with traders of other financial products. It can be traded in amounts a lot smaller than other financial products, which makes learning forex trading safer than other markets. Forex trading can be a very lucrative market, which no trader can dismiss.



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Jan Erik Miranda asked:


Congratulations on taking the next step in learning about forex trading markets and how to make money trading global currencies. The basic concept and principals of forex are pretty simple. It gets a bit more complex as you go along, but stay with us and soon you’ll be buying and selling like the pros.

The road to charting trends and understanding technical analysis or even developing your own trading strategy starts with some further understanding of the process. So, let’s start with understanding how to read Forex language and quotes.

Most traders focus on “The Majors”, which are the world’s most liquid currency pairs. Over 85% of forex trading across the world every day is done in the US Dollar, the Canadian Dollar, British Pound, Euro, Japanese Yen, Swiss Franc and the Australian Dollar.

When reading a Forex quote, there are two things to remember. Currencies are traded in pairs, so quotes always appear as two numbers The first currency listed is the base currency. In most cases, the US Dollar is used as the base to which all others are compared. The value of the base is always one. When the second number goes up, that means that the US Dollar has strengthened and the other currency has lost value. To clarify, a rising quote indicates that the US Dollar can buy more, or is worth more, than the other currency.

Now the US Dollar is used as a standard in Forex trading, however, there are some exceptions. When a different currency is used as the base in a quote, these are referred to as cross currencies. Those are British pounds(GBP) the Australian dollar (AUD) and the Euro (EUR). When these are paired, the quote is based on the first currency. A rising quote indicates that the other currency in the pair is strengthening which means the US Dollar is weakening.

You may have experience with the stock market and may be familiar with the process of the “bid” and the “ask”. Again, because trading is done is pairs, a Forex quote has two sides, and these are the “bid” and the “ask”, which are separated by the “spread”. The bid price is for selling your base and the ask price is for buying your base currency. The spread is, obviously, the difference in the amount between the bid and the ask. This is the cost of trading . In forex trading, the spreads are narrower that those in other markets so trading on small price movements can be cost effective.

If this information intrigues you, there are many forex websites which can help you get started in the fascinating world of foreign exchange. Education is the key, so keep reading and researching and soon you’ll be on your way to making some serious money.



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Andy Hook asked:


Why are there a lot of people who invest in forex when the market is said to be bullish? What is the difference between ask and bid price? Most definitely, it would be difficult for you to make the most of forex trading if you don’t know what certain terms mean.

For those who are learning more about forex, it’s time to know what these words stand:

forex

This comes in different terms. You have currency market, FX, forex, and, of course, foreign exchange. This word refers to a place where different institutions from all over the world, including banks and huge companies, would invest their money r trade in currencies. In fact, countries would also take note of foreign exchange since it allows them when they want to make international investments or go for global trading .

Bull

A bull is usually a description of a market that has steadily increasing prices. This means that your currency will have a higher exchange rate in the market, allowing you to earn profits in the end. This, however, doesn’t just refer to one currency. Normally, they are being evaluated as a pair, such as the exchange rate between British pounds and Japanese yen. Most investors would want to grab a bullish market because of high returns.

An antonym of bull is the bear market, where the prices quickly and steadily decline.

Ask Price

The ask price refers to the price of the currency that you’re willing to buy. An opposite of this is the bid price, which is the price you are willing to accept as sale cost for your currency.

Forex Quotes

This refers to the equivalent values of currencies. They are also expressed in pairs. For instance, a U.S. dollar is equal to 1.5478 in euros. This is the forex quote of USD=EUR.

Margin

This word refers to the collateral that you have to set aside for you to be able to close a deal in forex market. This is usually equal to 1 percent of the sale price. Depending on your risk management strategies, it may be both a boon and a bane for investors.

Technical Analysis

This is a process where an investor or a broker looks into the historical forex data to check the current and future trends of certain currencies in the market. Most would often leave this work to a technical analyst, whose only work is to monitor the market in different factors such as inflation or interest rate. However, there are already others who are using software to help them in that.

Base Currency

In a forex quote, the currency that is found on the left side is known as the base currency. This doesn’t have any value except 1. The other side is called counter currency. Both make up the forex quote.

Forex Deal

When you’re able to make a sale, it means that you have made a forex deal. If you’re still in the process of making a deal, you are referred to as in an open position.



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Vahid asked:


To have a better insight about currency exchange rate and how it affects the value of your forex investment, we will discuss everything about Forex Quote in this article.

As a Forex trading broker you have to basically understand that cumulative buying and selling of a currency in the Forex market causes the value of investment to fluctuate. Meaning, it may either go down or move up because of cumulative buying and selling that takes place in the Forex market.

There are many factors that are responsible for causing such fluctuations in exchange rate. Factors like, political and social or fundamental economic environment of a country, central banks fiscal policy of these countries, interest rate adjustment etc to are some of the popular factors.

Currencies are traded in pairs and each currency has its own symbol. For the Euro dollar- it is EUR, Japanese Yen – it is JPY, for the Pounds Sterling – it is GBP, and for the Swiss Franc – it is CHF. Hence, EUR/USD would be Euro-Dollar pair. GBP/USD would be pounds Sterling-Dollar pair and USD/CHF would be Dollar-Swiss Franc pair and so on and so forth.

You will always see the USD quoted first (with exceptions like Pounds Sterling, Euro Dollar, Australia Dollar (AUD) and New Zealand Dollar (NZD). The first currency quoted is called the base currency and the U.S. dollar is regarded as the central currency of the Forex market and it is part of majority of the forex transactions happening across the globe.

So now coming back to our basic lesson – how are these currency pairs quoted on the Forex market and how to read the quotes? The Forex trader will see two distinct numbers on all Forex quotes. The first one is the bid and the second is offer or asking price.

When you are reading these numbers you will notice that there exists a difference between the bid and the offer price. This difference is what is termed as the spread.

There is another popular term that you will come across called Pip. Pip is the way by which currency profit is measured. PIP stands for price interest point.

The single most important objective of a Forex Trader is to book profits from currency movements and fluctuations in the foreign exchange market. Along with the risks, even the rewards of trading in forex are huge and the amount of money a Forex trader can earn can be life changing and may ultimately lead you to achieve financial freedom that you never even dared to dream of.

But to get there you will require continuous and in-depth understanding and training in Forex. This may include understanding fundamental analysis, technical analysis, chart pattern and formation, trade management, risk management such as stop loss and profit target and finally money anagement – trading beyond your means is assign of bad money management and can ruin you to the extent that may take you long to recover from. But if you can get the right Forex Trading knowledge, you will enjoy long term currency trading success and build wealth of a lifetime.



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Ahmed Elnaggar asked:


The Forex, and also known as “The Foreign Exchange” market exists wherever one currency is traded for another. It’s the largest financial market in the world. Simply if we compare the New York Stock Exchange trades vs changing hands in forex , we will discover Forex market is a lot of times larger than both Equity and Treasury markets combined.

Forex or “Foreign Exchange” is where the money f one nation is traded with another. The most important and popular pairs of exchange in the forex market are “Euro Dollar”, and you will see this pairs in all forex display screens as “EUR/USD”. There are also a lot of others pairs but sure not important and not famous as “EUR/USD” pairs, like:-

1-The British Pound, and you will see this pairs in all forex display screens as “GBP/USD”.

2- The Japanese Yen, and you will see this pairs in all forex display screens as “USD/JPY”.

3- The Swiss Franc, and you will see this pairs in all forex display screens as “USD/CHF”.

However there is a problem in the forex market until this day, there is no one central exchange where everyone can exchange the currency. All the currency traded are done over the telephone and online through a very big networks that connects all the banks, brokers and currency traders with each others.

Currency trading in the past was just for the banks, but today and after the new revolution electronic economy, online forex trading companies start to offer a lot of services to all traders around the world. Today if anyone have a computer and internet connection can easily start to trade currencies, but sure the experience and analysis is very important to success in forex game.

Forex broker providing up-to-date forex Quotes, Forex articles, news and press release. Also you may visit Ambatchdotcom SeoContest if you want to earn more money from the internet



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Regi Ross asked:


Did you know that you can find a market that is open 24 hours a day? The market is called Forex market and if you go there, you can’t find services, commodities and goods. The Forex market is the place where different kinds of currencies are traded. In every trade, two currencies are involved. For instance, you can sell your Canadian dollars for Euros; or you can pay Japanese Yen for US dollars. Forex rates or exchange rates can change unexpectedly. You need to monitor these exchange rates in order to determine if the price of a certain currency increased or decreased.

Changes in the forex market usually occur quickly and so it is important for traders to keep track of the market. Political and economic events can influence the changes in the Forex market. If you want to determine whether you’re gaining or losing in Forex trading, this article can help you with the calculations.

The href="http://foolproofforex.com/mega" style="text-decoration: none; border-bottom: 1px #ae0000 solid; color: #ae0000;" rel="nofollow" target="_blank" >forex investment is greatly affected by the exchange rate and in order to understand the relationship between the two, you should also be familiar with Forex quotes. Like the currency pairs, Forex quotes can be found in pairs as well. Here is a very good example:

1.Suppose the currency pair is USD (US dollar) and CAD (Canadian dollar)

The forex quote for this pair is USD/CAD=170.50; this is interpreted as ‘every one US dollar is equivalent to 170.50 CAD. The currency found at the left side is known as the base currency and it is always equivalent to 1. The currency found at the right side is called counter currency. The stronger currency is always the base currency and in this case, the USD. The Forex quote’s central currency is USD and so you can find it in most Forex quotes.

How can you determine if you’re earning profits or not? You can use another example.

2.This time use EUR to USD. Assuming that the forex rate is 1.0857; in this example, the USD is the weaker currency. If you bought 1,000 Euros, you will need to pay $1,085.70. After a year, the forex rate was at 1.2083 and this means that the Euro’s value increased. If you decide to sell the 1,000 Euros now, you will get $1,208.30; now, in this transaction, you gained $122.60. What if the forex rate a year after was 1.0576? This means that the Euro’s value weakened. If you still decide to sell the 1,000 Euros, you will only receive $1,057.60 which means that you lost $28.10; did you get it?

Forex trading involves a lot of risks just like mutual funds and stocks. The fluctuations in the exchange market are responsible for such risks. Low level risks like government bonds in the long-term can give returns but are quite low. If you want to get higher returns, you need to invest in forex trading but you need to face higher level risks.

You must set financial goals for the short term, as well as for the long term. By doing so, it will be much easier to balance the risks involved and the security. You will be able to conduct your trades with ease and comfort. Make use of all the available forex trading tools so that you can make wise and profitable trades. After reading this article, you can already calculate if you’re gaining profits or not.

 



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