Definition of Forex Trading
The Foreign Exchange Market, also known as FOREX or FX, is the world’s currency trading market. It has a daily volume of $5.3 trillion, making it the biggest and most liquefied financial market in the world. People involved in Forex market are those coming from huge financial organizations to individuals who trade a few dollars.
How to Join Forex Trading?
For individuals, you can trade the same way as those large banks out there. All you have to do is get a fast internet access, a computer and create an account in a Forex broker.
How Forex Trading Works
It is very simple. In the Forex market, exchange of currencies takes place. The most important thing about Forex market is the exchange rate of two currencies also known as a currency pair.
It is important to understand that the exchange rate changes very rapidly even in a matter of seconds. This means, a lot of things happen in one day, 5 days in a week. The put it short, the currency exchange defines the health of the country’s economy. If countries using Euro does better than those countries use USD, then the Euro will go up than a dollar.
How To Make Money On Forex Trade
For instance, you buy 2 000 euros against USD. By that time, the EUR/USD exchange rate by which you can buy at 2.4500 so you had to pay $2 450. Soon after, the exchange rate for EUR/USD where you can sell euros for USD is 2.5500. You can now sell your 2 000 euros and get $2 550. You now earned $100 because you started buying at $2,450 but you sold it at $2,550.
Spread
Look at the Forex quotes situated in your trading platform. You will see two different prices for the currency pair. One is the “ask price” or the price at which you can buy and the “bid price” or the price at which you can sell. The difference between those two is called SPREAD. As it goes all the time, “ask price” always goes higher than “bid price”.
How To Make Your First Forex Trade Deal
Create an account in a reputable Forex broker, then log in. Choose a currency pair like EUR/USD, pick a quantity, then tap the “BUY” button if you think that its value will rise later. You are now trading in Forex, where millions of people all over the world are hooked. If the value of EUR/USD rises, you will earn money but if it goes down, you will lose. You can then check your profit/loss when you go to the open positions window. Check this tab whenever you want. However, if you want to leave your position, just press X in the Open Positions window.
Forex trading can become tricky especially if you are a beginner who doesn’t know much about trading. Nonetheless, you can learn along the way through experience and some useful webinars on the web. Do not forget to educate yourself about trading first before investing so you won’t lose a lot of your hard-earned money.
