Forex online currency trading is becoming increasingly popular as more and more traders want to take their shot at the largest trading market in the world. The lure of nearly $2 trillion in trading going on each and every day is too much for most traders to resist.
So what is the Forex market, and how does currency trading work? Forex is an abbreviated term for foreign exchange market. The Forex is the largest financial market in the entire world, with an average trade volume of nearly two trillion dollars per day. The modern Forex market is what evolved from initial currency trading.
The idea is to use fluctuating currency rates to make money out of money. For example, let's say you buy one mini lot (1 mini lot = 10,000 currency) of the EUR/USD at a rate of 1.1500. Two days later the markets shift and the EUR/USD is now 1.1525, and so you decide to sell. Using the formula to figure out profits/losses, 1.1525-1.1500 is .0025 * 10,000 (the size of the mini-lot) = $25. In this case, a $100 investment for one mini lot yielded a $25 profit, or 25% in only two days. Not a bad percentage by any count. That's quite a profit for two days.
The reason for this is that to trade forex trading you are basically simultaneously buying one of the currencies, while selling the other. If you are selling the EUR/USD pair, then you are selling Euros in order to buy dollars. There always has to be a pair. To buy one currency, you have to do it with another. To sell a currency, you need to get your profits back in another. There must always be two currencies in any Forex currency trading.
By: Jason Fielder
So what is the Forex market, and how does currency trading work? Forex is an abbreviated term for foreign exchange market. The Forex is the largest financial market in the entire world, with an average trade volume of nearly two trillion dollars per day. The modern Forex market is what evolved from initial currency trading.
The idea is to use fluctuating currency rates to make money out of money. For example, let's say you buy one mini lot (1 mini lot = 10,000 currency) of the EUR/USD at a rate of 1.1500. Two days later the markets shift and the EUR/USD is now 1.1525, and so you decide to sell. Using the formula to figure out profits/losses, 1.1525-1.1500 is .0025 * 10,000 (the size of the mini-lot) = $25. In this case, a $100 investment for one mini lot yielded a $25 profit, or 25% in only two days. Not a bad percentage by any count. That's quite a profit for two days.
The reason for this is that to trade forex trading you are basically simultaneously buying one of the currencies, while selling the other. If you are selling the EUR/USD pair, then you are selling Euros in order to buy dollars. There always has to be a pair. To buy one currency, you have to do it with another. To sell a currency, you need to get your profits back in another. There must always be two currencies in any Forex currency trading.
By: Jason Fielder
1 comments:
Hey im into Forex, just a newbie. I find your post helpful to get me through the forex jargons. I am using easy forex plaform it has very nice interface and automated buying and selling system. the charts uses java JVM.
related post.
Invest money in Forex
Post a Comment