How To Make Money Trading Forex
Forex is the knowledge and business of making money through exchanging foreign currencies. Forex is not a new business and its history is as old as the history of money.
There are people who have been making money through Forex from many years ago. Fortunately, with the help of computer and internet, Forex trading has become much easier. You can sit at your personal computer and trade from home without having to make any phone call or referring to any bank.
How is it possible?
There are broker companies that enable you to buy and sell different currencies through the Internet and some simple softwares. For any trade that you make, you pay a small commission to the broker company that you are trading through it. You need to find a good, reliable and well-known broker company and sign up for an account with it. Then you have to fund your account. You use the money you have in your account to trade. Any profit that you make, will be added to your account and vise versa. Then you can withdraw the money you have made.
What currencies can you trade?
In Forex, you deal with currency pairs. There are four main currency pairs: British Pound and USD (GBP/USD), Euro and USD (EUR/USD), USD and Japanese Yen (USD/JPY), USD and Swiss Frank (USD/CHF).
In each currency pair, the first currency works as the commodity and the second one works as the money. For example when you choose the GBP/USD to trade, if you buy, you buy British Pound against USD and if you sell, you sell British Pound against USD. It doesn’t matter what currency you have in your account. The trading software makes the exchanges automatically.
Fundamental analysis has a long term usage but good traders can predict the sudden changes that happen after releasing an important news about economic situation of an important country. For example when the news says that economic situation of USA is improved for 5% in comparison to the last month, USD will become stronger and people start buying it. So the value of USD will go up because of the sudden increase of demand. If you know the effect of the news on the price, you can take the proper position and make money. Of course there are two sides in this story which means if you take the wrong position, you will lose.
Foreign exchange is market where exchange of currencies takes place for another currency. Foreign exchange is the exchange activity takes place between currencies and provides liquidity and accessibility to the traders availing the service provided. Foreign exchange is referred as a market or network which provides service to the customers or traders all over the world. Foreign exchange is the market where exchange of currencies takes place for more and different number of foreign county. Foreign exchange is nothing but buying and selling of foreign currencies in exchange of another. In the foreign exchange market, more of number of foreign currencies will be exchanged by the members and other traders with fluctuations of market price.
Foreign exchange is created to provide more useful services to the customer, traders and participants. Some of the participants or traders of foreign exchange market are commercial banks , central banks, investment banks, brokers, registered dealers, global money managers, option traders and speculators. The rate of exchange fixed for the foreign currency varies as per the demand and fluctuation of foreign exchange market. Foreign currencies will be exchanged based on the requirement and demand for other foreign currency. The difference in the rate of foreign currencies will be made on the political, economic factors and with reference to the stability of the market.
Since, the main purpose of foreign exchange market is buying and selling of foreign currencies, more county are coming forward to exchange their currency for another. The entry of any foreign currency is free and any number of counties can enter the foreign exchange market by buying and selling foreign exchange currencies. Nowadays, foreign exchange market becomes the general and common market for more number of buyers and sellers to buy and sell at a profit. Trading in a foreign exchange market helps the buyer and seller to come up with good foreign currencies and profits for the currencies. Sometimes, the foreign exchange market may finds fluctuations for the foreign currencies listed with respect to political and economic condition of the foreign currency in the market.
The main reason for the establishment of foreign exchange market is to have a uniform rate for the currency listed in the market. Foreign exchange is very similar to stock market, but the difference is that, here in the foreign exchange the exchange takes place with respect to the currencies. Though foreign exchange fetches the good demand in the market, the currency prices also finds fluctuation in the market. With more number of customers and traders, foreign exchange serves the purpose for which it is established and offer better opportunity to come up with different and more number of foreign currencies as per their requirement.