Forex Trade, Learn Forex Trading
How To Make Money as a Forex Trader?
Making Money Online as an FX (Forex or Foreign Exchange) Trader is often dismissed as too complicated and risky...
... however with a good strategy & some simple techniques many people are making more money with currency trading than they do with their day jobs.
Generating a Decent Income With Forex Trading is not as hard as you think »
Forex Trading offers a great opportunity to not only generate a healthy online income but to actually make really decent money by buying and selling currencies and this is why many potential forex traders are captivated by the allure of making lots of easy money.
The difference of course between the successful forex traders and those who are less so, is the knowledge, experience, techniques & strategies that the successful traders employ.
The reality of Forex Trading is that it is a fairly complex system but, as with most things in life, what you put in will determine what you get out.
So let's get down to the nitty gritty...
What Exactly Is Forex Trading & How to Make Money with It?
- How Forex Trading Works
Forex Trading, ie transactions in foreign currencies, are not centralized on an exchange like say the NYSE for example, and therefore take place all over the world, via telecommunications, all the time - 24/7.
As a trader, you would normally speculate on currency prices by establishing a credit line (from as low as $500) and start buying & selling currency online which is explained in greater depth below.
- How to Profit With FX Trading
To realise a profit, ie to make money, as a Forex Trader you would want to exchange one currency for another with the expectation that the value of the currency that you bought will increase in value compared to the one you sold.
To explain this concept have a look at the table below
These Are the Actions that You Would Take as a Currency Trader EUR USD You use $13,500 to purchase 10,000 euros at the EUR/USD exchange rate of 1.35 +10,000 -13,500* Two weeks later, you sell your 10,000 euros for US dollars at the exchange rate of 1.4684 -10,000 +14,684** You generate a profit of $1,184 0 1,184
*EUR $10,000 x 1.35 = US $13,500
** EUR $10,000 x 1.4684 = US $14,684
So as you can see if you could conduct a few of these types of transactions every so often it could become quite a lucrative enterprise. - Understanding an FX Quote
Currencies are always quoted in pairs, such as EUR/USD or GBP/USD as in every foreign exchange transaction there is the simultaneous buying of one currency and the selling of the other.
Let's look at this example of the foreign exchange rate of the Euro vs the US dollar...
EUR/USD = 1.4684
The currency listed to the left of the slash, ie the EUR is known as the base currency while the one on the right is called the counter or quote currency.
Therefore whether you are buying or selling you can easily see how much 1 Euro unit is worth in terms of USD or how many USD you would receive for each Euro unit sold.
In summary the base currency is the “basis” for the buy or the sell, so if you buy EUR/USD this simply means that you are buying the base currency and simultaneously selling the quote currency.
- Long/Short
Once you've decided whether you want to buy or sell you will know whether you want the base currency to rise in value or fall in value
If you are buying (buy the base currency and sell the quote currency) you would need the currency to rise and then sell it back at a higher price after it has had time to increase in value - this is known as "going long" or taking a "long position" - therefore: long = buy.
By the same token if you are selling (sell the base currency and buy the quote currency) you would need the base currency to fall and then buy it back at a lower price after it has had time to fall in value - this is known as "going short" or taking a "short position" - therefore: short = sell.
- Bid/Ask - Spread
All Foreign Exchange quotes include a two-way price, ie. the bid and ask (sell and buy) where the bid is always lower than the ask price.
The bid is the price in which the dealer is willing to buy the base currency in exchange for the quote currency which means the bid is the price at which you (as the forex trader) will sell.
The ask is the price at which the dealer will sell the base currency in exchange for the quote currency which means the ask is the price at which you (as the forex trader) will buy.
The difference between the bid and the ask price is known as the spread.
However, having said that you could cut short the learning process by getting to learn how to do it right the first time with AVA FX Online Trading Center.
Get started now by trying out their platform with a free $100,000 practice account and learn how to become successful at Forex Trading here »
PS. Don't forget to get a free $100,000 practice Forex account to learn Currency Trading here »
