Your first trade in the forex market

In this lesson, the basic currency trading, you will learn about follow age theme:

What Forex / foreign exchange trading is something Understanding changes in exchange rates How much money you can earn on currency Your next step

Understanding changes in exchange rates

We assume that you already know what an exchange rate is. But in case you do not, we'll explain it briefly: A currency can be exchanged for another currency, and it is indicated how much one currency is worth in relation to another currency. An exchange rate indicates the value of the relationship between two currencies, and is not stable but fluctuates up and down.

An exchange rate represents the price of a country's currency relative to another currency. Note that most financial websites and newspapers expressing the value in U.S. dollars .

Example: An exchange rate of 1.35 Canadian dollars to Euro means that one Euro can be purchased for 1.35 Canadian dollars. Conversely, to replace one Canadian dollar for 0743 Euro. Similarly, one U.S. dollar currently worth around 85.7 Japanese Yen, while one Japanese Yen is worth about 0.0117 U.S. dollars. Most major financial websites lists real-time rates for all national currencies.

What is Forex / currency market?

Forex, short for foreign exchange investing (or currency exchange), referring to the global market where currencies are traded. Forex market is the largest and most liquid market in the world with an average traded value that exceeds $ 1900000000000 per day and includes all currencies in the world.

Any person, or any firm or country can trade currencies in the Forex market. It is open in 24 hours a day, five days a week. Forex market has no physical marketplace where people buy and sell currencies. Instead of dealing with a given exchange agreements traders deal directly with other traders and agencies. As such, market for foreign exchange a decentralized market.

Forex traders use the Internet to check the exchange rates of various currencies. For each currency pair, there are two valutakruser: purchase price and selling price. Forex brokers around the world enter these rates, and buys and sells these currencies online.

Despite the fact that there is no central marketplace for foreign exchange, Forex market rooted in financial centers around the world, Frankfurt, Hong Kong, London, New York, Paris, Singapore, Sydney, Tokyo and Zurich. Can you make money in forex?

There probably will not be a surprise Yes, you can make money in the Forex market. When to buy and sell the currency as described earlier, you can achieve a profit every second every trading day.

It does not matter if the stock market rises or falls. You can make money both when house prices are rising or are about to crash. You can gain profit in forex trading regardless of whether the bond markets go up or down. All you need to do is be on the right side of the trade.

Example of making money in forex

Given that the U.S. Dollar and the Euro has an exchange rate of 0,765 (EUR / USD = 0.765). This means that: 1) If you buy this currency pair, you are buying 0.765 Euro for every U.S. dollar you sell. 2) If you then sell this currency pair, you buy back U.S. Dollar for every 0.765 Euro you selling.

When you buy a USD / EUR currency pair, you buy the first U.S. Dollar currency and sell Euro currency. And when you sell the currency pair, you buy Euros and sell back U.S. Dollar.

How to earn money: After you have bought U.S. dollars, should the U.S. dollar go up in value against the Euro. You can then "switch back" your USD, Euro and USD ago is now worth more than Euro when you sell, you can get more Euro than what you had to begin with. difference in the transaction is your profit. Learn more about currency trading by making it

Of course, the best way to learn how to act in the forex market is to actually do it. When you are confident that you understand the basics of foreign exchange, we encourage you to open an account with a currency broker.